Unlocking sustained business value from IT investment

California Management Review

Volumn 48, Issue 1, 2005, Pages

  Peppard, Joe ^a,b   Ward, John ^b  

^a Department of Information System ^*  (United Kingdom)

^b CRANFIELD UNIVERSITY   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 29144473661     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (56)

1. This business model is the business logic that is embedded in the software.
2. Over the years there have been a number of high-profile cases involving organizations claiming that their ES severely impacted their business. On occasions, the impact was so detrimental that a number of organizations even filed for bankruptcy. For example, FoxMeyer Drug, a $5 billion wholesale drug company filed for Chapter 11, at least in part because of problems with its ERP implementation. Avis Europe took an exceptional charge of ££40-45 million related to its decision to scrap its deployment of a new ERP system due to cost overruns and delays. See J. Scott, "The FoxMeyer Drugs' Bankruptcy: Is It a Failure of ERP?" in Proceedings of the Association of Information Systems Fifth Americas Conference on Information Systems, Milwaukee, WI, August 1999;
3. "Avis Europe Is Latest to Get Stung by IT," Computer Weekly, October 25, 2004.
4. See L. Markus, "Technochange Management: Using IT to Drive Organizational Change," Journal of Information Technology, 19/1 (2004): 4-20;
5. R. Kohli and S. Devaraj, "Realizing the Business Value of Information Technology Investments: An Organizational Process," MIS Quarterly Executive, 3/1 (2004): 53-68.
6. Davenport noted that "successful implementation of ES does involve probably the greatest technological change most organizations have ever undergone....Even more difficult and important, however, are the major changes in business that come with an ES project" (pp. 5-6). See T.H. Davenport, Mission Critical: Realizing the Promise of Enterprise Systems (Boston, MA: Harvard Business School Press, 2000).
7. In relation to Nestlé USA's experience with ES, Chief Information Officer Jeri Dunn was recently quoted as saying "no major software implementation is really about software," CIO Magazine, 15 (May 2002).
8. See, for example, B.B. Jackson, "Build Customer Relationships that Last," Harvard Business Review, 63/6 (November/December 1985): 120-128;
9. E. Gummesson, "The New Marketing -Developing Long Term Interactive Relationships," Long Range Planning, 20/4 (August 1987): 10-20;
10. M.G. Christopher, A.F. Payne, and D. Ballantyne, Relationship Marketing: Bringing Quality, Customer Service and Marketing Together (Oxford: Butterworth-Heinemann, 1991).
11. M. McDonald and I. Dunbar, Market Segmentation: How to Do It, How to Profit From It, 2nd Edition (Houndmills: Macmillan, 1998).
12. B.J. Pine, Mass Customization: The New Frontier in Business Competition (Boston, MA: Harvard Business School Press, 1993).
13. See S. Knox, S. Maklan, A. Payne, J. Peppard, and L. Ryals, Customer Relationship Management: Perspectives from the Marketplace (Oxford: Butterworth-Heinemann, 2003);
14. A. Agarwal, D.P. Harding, and J.R. Schumacher, "Organizing for CRM," McKinsey Quarterly, 3 (2004): 80-91.
15. O.K. Rigby, F.F. Reichheld, and P. Schefter, "Avoid the Four Perils of CRM," Harvard Business Review, 80/2 (February 2002): 101-109;
16. N. Woodcock and M. Starky, "I Wouldn't Start from Here: Finding a Way to CRM Projects," Journal of Database Marketing, 9/1 (2001): 61-74;
17. D.L. Goodhue, B.H. Wixom, and H.J. Watson, "Realizing Business Benefits through CRM: Hitting the Right Target in the Right Way," MIS Quarterly Executive, 112 (2002): 79-94.
18. V. Zeithaml, A. Parasuraman, and L.L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York, NY: The Free Press, 1990);
19. J.L. Heskett, W.E. Sasser, and L.A. Schlesinger, The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value (New York, NY: The Free Press, 1997).
20. Christopher et al., The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value, 1997, op. cit.
21. This observation has also been made by others. See T.H. Davenport, J.G. Harris, D.W. Delong, and A.L. Jacobson, "Data to Knowledge to Results: Building an Analytic Capability," California Management Review, 43/2 (Winter 2001): 117-138;
22. D.A. Marchand, W. Kettinger, and J.D. Rollins, "Information Orientation: People, Technology and Bottom Line," Sloan Management Review, 41/4 (Summer 2000): 69-80.
23. S. Devaraj and R. Kohli, "Performance Impacts of Information Technology: Is Actual Usage the Missing Link?" Management Science, 49/3 (March 2003): 273-289.
24. It is for this very reason that a number of scholars have been proposing "real options" as providing an approach to justifying investments in information technology. An option is a right but not an obligation to do something in the future. See Y.J. Kim and G.L. Sanders, "Strategic Actions in Information Technology Investment Based on Real Option Theory," Decision Support Systems, 33/1 (May 2002): 1-11;
25. A. Taudes, "Software Growth Options," Journal of Management Information Systems, 15/1 (Summer 1998): 165-185;
26. M. Benaroch and R.J. Kauffman, "A Case for Using Real Option Pricing Analysis to Evaluate Information Technology Project Investments," Information Systems Research, 10/1 (March 1999): 70-86;
27. A. Kambil, J.C. Henderson, and H. Mohsenzadeh, "Strategic Management of Information Technology: An Options Perspective," in R.D. Banker, R.J. Kauffman, and M.A. Mahmood, eds., Strategic Information Technology Management: Perspectives on Organizational Growth and Competitive Advantage (Harrisburg, PA: Idea Group Publishing, 1993).
28. Heskett et al., op. cit.
29. J. Peppard and P. Rowland, The Essence of Business Process Re-engineering (Hertfordshire: Prentice-Hall, 1995).
30. "Achieving the Benefits From Software Package Enabled Business Improvement Programmes: Best Practice Guidelines," The IMPACT Programme Ltd., London, 1998.
31. E.J. Umble, R.R. Haft, and M.M. Umble, "Enterprise Resource Planning: Implementation Procedures and Critical Success Factors," European Journal of Operational Research, 146/2 (2003): 241-257;
32. C. Francalanci, "Predicting the Implementation Effort of ERP Projects: Empirical Evidence on SAP/R3," Journal of Information Technology, 16/1 (March 2001): 33-48;
33. M. Sumner, "Risk Factors in Enterprise-Wide/ERP Projects," Journal of Information Technology, 15/4 (December 2000): 317-327.
34. "ERP's Second Wave: Maximizing The Value of ERP Processes," Deloitte Consulting, London, 1998;
35. M.L. Markus, S. Axline, D. Petrie, and C. Tanis, "Learning from Adopters' Experiences with ERP:Problems Encountered and Success Achieved," Journal of Information Technology, 15/4 (December 2000): 245-265;
36. The IMPACT Programme Ltd., M.L. Markus, S. Axline, D. Petrie, and C. Tanis, "Learning from Adopters' Experiences with ERP:Problems Encountered and Success Achieved," Journal of Information Technology, 15/4, 2000, 245-265, op. cit.
37. J.W. Ross and M.R. Vitale, "The ERP Revolution: Surviving vs. Thriving," Information Systems Frontiers, 2/2 (August 2002): 233-241;
38. Markus et al., "The ERP Revolution: Surviving vs. Thriving," Information Systems Frontiers, 2/2, 2002, 233-241, op. cit.;
39. The IMPACT Programme Ltd., op. cit., arkus et al., "The ERP Revolution: Surviving vs. Thriving," Information Systems Frontiers, 2/2, 2002, 233-241
40. This has been referred to as "technochange.quot; See Markus, op. cit., uot;The ERP Revolution: Surviving vs. Thriving," Information Systems Frontiers, 2/2, 2002, 233-241
41. N.H. Bancroft, H. Seip, and A. Sprengel, Implementing SAP R/3: How to Introduce a Large System into a Large Organization, 2nd Edition (Greenwich, CT: Manning Publications,).
42. Markus et al., Implementing SAP R/3: How to Introduce a Large System into a Large Organization, 2nd Edition, op.cit.
43. The concept of the "shakedown" phase has been coined by Markus et al., op. cit., mplementing SAP R/3: How to Introduce a Large System into a Large Organization, 2nd Edition
44. For a recent analysis of IT project risk see C.F. Gibson, "IT-Enabled Business Change: An Approach to Understanding and Managing Risk," MIS Quarterly Executive, 2/2 (September 2003);
45. "The Challenges of Complex IT Projects," The Royal Academy of Engineering, London, 2003.
46. A similar observation was made by Markus regarding the training and education of project managers. See Markus, op. cit., "The Challenges of Complex IT Projects,", 2003
47. This assessment is based on the work of Kumar et al. While the literature identified two extreme modes of behavior, rationalism and segmented institutionalism, they identified relationships and trust. This accepts that different stakeholders will have different interests but some existing relationships of mutual trust among stakeholders enables some agreement to be reached within a rational overall approach.
48. See K. Kumar, H.G. van Dissel, and P. Bielli, "The Merchant of Prato - Revisited: Toward a Third Rationality of Information Systems," MIS Quarterly, 22/2 (June 1998): 199-226.
49. It is not the intention of this article to discuss risk analysis. In a recent paper, Gibson identified three factors determining business change risk: leadership of the change; employees' perspectives on the change; and scope and urgency of the change. See Gibson, op. cit., MIS Quarterly, 22/2, 199-226, 1998
50. Research suggests that intra-organizational coordination after system implementation is imperative for value-flows.
51. See A. Barua, C.H.S. Lee, and A.B. Whinston, "The Calculus of Reengineering," Information Systems Research, 7/4 (December 1996): 409-428;
52. B.J. Bashein, M.L. Markus, and P. Riley, "Preconditions for BPR Success, and How to Prevent Failures," Information Systems Management, 11/ 2 (Spring 1994): 7-13.
53. This has been referred to as the IT value latency problem. See K.H. Goh and R.J. Kauffman, "Towards a Theory of Value Latency for IT Investments," paper presented at the 38th Hawaii International Conference on Systems Science, January 2005.
54. "Moving from Disillusionment to Real Value: An Introduction to the Eight Building Blocks of CRM," Gartner Group CRM Conference, Paris, May 2002.
55. A fuller treatment of the Britannia Building Society can be found in Knox et al., op. cit.
56. For an approach to benefits realization planning, see J. Ward and E. Daniel, Benefits Management: Delivering Value from IS and IT Investments (Chichester: John Wiley and Sons, 2005).