Assessing the value and cost implications of manufacturing information and data systems: an empirical study

Abstract

Although manufacturing information and data systems (MIDS) form an integral part of a manufacturing organization's infrastructure, the growth of corporate IT expenditure has left many companies questioning the value of their MIDS deployment. The use of traditional appraisal techniques to justify investments in MIDS typically relies on measures based on direct cost savings and incremental future cash flows. These techniques are considered no longer appropriate because of the largely intangible cost and benefit dimensions of many IT projects. This paper presents the results of a research study based on interviews in eighteen manufacturing companies, which investigated the methods used to assess the value and cost of MIDS investments. After showing that the concepts used to justify value vary significantly between respondents, the research indicates that intuition plays an important role in value prediction and assessment. A comparison between small and large companies indicates that the systems implementations are perceived in a better light in smaller companies. The results obtained are then compared with recent research.