A model design of information technology investment for the government sector (Case study: Government institutions in Indonesia)

Abstract

Information Technology (IT) has prominent role in government sector as an important factor which is able to improve government performance. In order to improve their performance, organizations are investing an ever-increasing amount of money in information technology. IT investments consume 20–40% of organizations 'overall IT expenditures. According to the research conducted by IDC in 2009, IT spending growth in Indonesia is around 7.9% per year until 2013. However, despite the rising of the government ICT spending every year, the performance of e-government in Indonesia has not been satisfactory. The impact and risk of IT project failure in government institutions becomes higher because it also involves the citizen in Indonesia, who are the stakeholders of these institutions. Therefore, IT investment decisions should be carefully calculated based on precise analysis due to the limited resources in coping with the highly demand of IT. Therefore, this study, proposed a model design of IT Investment for government sector in order to be used as a reference for IT investment decision in government sector especially to be implemented in Indonesia. This study used SEM PLS for testing the model. The result of model testing revealed that financial variable (36,9%) and human resources variable (24,4%) were influencing IT investment significantly. whereas technological variable insignificantly influencing the IT investment. Moreover, significantly IT investment influences in generating financial value, organizational value, strategic value and service value. The variables of IT investment model especially for government sector are expected to be developed in order to deliver more detailed description of IT investment and useful for avoiding IT Government Investment Failure.