The Role of Business Case Development in the Diffusion of Innovations Theory for Enterprise Information Systems

The Role of Business Case Development in the Diffusion of Innovations Theory for Enterprise Information Systems

Francisco Chia Cua (Otago Polytechnic, New Zealand) and Tony C. Garrett (Korea University, Republic of Korea)
Copyright: © 2009 |Pages: 10
DOI: 10.4018/978-1-60566-026-4.ch528
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Abstract

A successful organisation continually initiates and implements radical innovations. The innovation must not only be new. A radical innovation has a significant impact on how the organisation undertakes its business process. Impacting is different from affecting. The former has a more substantial effect on the organisation. This is precisely why new enterprise information systems represent a radical innovation. To be successful, the organisation undertakes an innovation-decision process to align itself, as much as possible, with the ever-changing external realities. The innovation-decision process dictates selling an idea (the business case) that the new enterprise information systems possess economic value to upper management. This paper depicts a bird’s-eye view of how innovation, in this case, the new enterprise information systems, diffuses (episteme) via business case development (techne) in the innovation-decision process. As shown in Figure 1, the adoption and implementation of new enterprise information systems constitute a radical change (prerequisite F). New enterprise information systems represent radical innovation. An innovation-decision process starts with an initiation phase through which the individuals or decision-making units move from identifying and knowing the new enterprise information systems, to the forming of an attitude toward the different competing software packages, and subsequently to deciding whether to adopt or reject the implementation and use of the new idea. A business case is a formally written document that argues about the adoption to a certain course of action. It contains a point-by-point analysis to making a decision for a set of alternative courses of action to accomplish a specific goal. A business case process walks through the initiation phase of the innovation-decision process and talks about the project plans that concern the implementation phase, which follows the initiation phase. The business case document justifies, in detail, the innovation-decision process: what has transpired in the initiation phase and what will transpire in the implementation phase. It takes into account the innovation-decision process. In short, a business case process develops a detailed business case document of the innovation-decision process. Thus, a business case is both a means and an end.
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Introduction

A successful organisation continually initiates and implements radical innovations. The innovation must not only be new. A radical innovation has a significant impact on how the organisation undertakes its business process. Impacting is different from affecting. The former has a more substantial effect on the organisation. This is precisely why new enterprise information systems represent a radical innovation. To be successful, the organisation undertakes an innovation-decision process to align itself, as much as possible, with the ever-changing external realities. The innovation-decision process dictates selling an idea (the business case) that the new enterprise information systems possess economic value to upper management.

This paper depicts a bird’s-eye view of how innovation, in this case, the new enterprise information systems, diffuses (episteme) via business case development (techne) in the innovation-decision process. As shown in Figure 1, the adoption and implementation of new enterprise information systems constitute a radical change (prerequisite F). New enterprise information systems represent radical innovation. An innovation-decision process starts with an initiation phase through which the individuals or decision-making units move from identifying and knowing the new enterprise information systems, to the forming of an attitude toward the different competing software packages, and subsequently to deciding whether to adopt or reject the implementation and use of the new idea. A business case is a formally written document that argues about the adoption to a certain course of action. It contains a point-by-point analysis to making a decision for a set of alternative courses of action to accomplish a specific goal. A business case process walks through the initiation phase of the innovation-decision process and talks about the project plans that concern the implementation phase, which follows the initiation phase. The business case document justifies, in detail, the innovation-decision process: what has transpired in the initiation phase and what will transpire in the implementation phase. It takes into account the innovation-decision process. In short, a business case process develops a detailed business case document of the innovation-decision process. Thus, a business case is both a means and an end.

Figure 1.

Conflict between radical change and stability

An innovation-decision process is required to foster long-term success (Figure 1; Burrell & Morgan, 2005; Dettmer, 2003; Trompenaars & Prud’homme, 2004). Stability is another factor, that enhances short-term success. The crucial component of stability is the cash flow, the lifeblood of the organisation. Profitability is vital in generating the cash flow. Profitability is a crucial issue to stability, while uncertainty, risk management, and governance are crucial issues to radical innovation. The organisation cannot exploit the radical innovation effectively unless it manages uncertainty, mitigates the risk related to the uncertainty, and governs the innovation-decision process appropriately. Because the innovation-decision process disrupts stability, radical innovation and stability are in conflict with each other.

Key Terms in this Chapter

Implementation Phase: Proceeding after the initiation phase, the implementation phase of enterprise information systems consists of pre-production, production, and post-production (also known as upgrade and maintenance). Refer to innovation-decision process.

Diffusion of Innovations: Theory concerns the how, why, and at what rate the new idea (commonly referred to as innovation) diffuses.

Innovation-Decision Process: Starts with an initiation phase through which the individuals or decision-making units move from knowing (understanding/identifying) the new idea (the innovation), to forming of an attitude toward the innovation, and subsequently, to deciding whether to adopt or reject the implementation and use of the new idea. The awareness stage is the agenda setting stage. The attitude formation stage is the matching stage. In addition, the decision stage to adopt or reject the innovation terminates the initiation phase. An adoption decision continues the process toward the implementation phase , which consists of the pre-production, production, post-production, and confirmation stages.

Completed Business Case Document: A formal written document that argues a course of action. It contains a point-by-point analysis to making a decision for a set of alternative courses of action to accomplish a specific goal.

Business Case: Completed business case document. Business case process.

Initiation Phase: Consists of awareness stage, matching stage, and lastly, the decision stage. It is the first phase of the innovation-decision process. The second phase is the implementation phase. Refer to innovation-decision process.

Diffusion: Communicating the new idea within a social system, such as an organisation. It culminates in the adoption of the idea, which is the intention of diffusion.

Business Case Process: Walks through the initiation phase of the innovation-decision process and talks about the project plans that concerned the implementation phase.

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