Considering Social Subsystem Costs and Benefits in Information Technology Investment Decisions: A View from the Field on Anticipated Payoffs

Abstract

:Information technology (IT) investment decisions have traditionally focused on financial or technological issues. Responding to what appears to be a lack of payoff in IT investments, researchers as well as practitioners recently have suggested that traditional valuation analyses are incomplete and have called for additional work to identify “hidden” or seldom-considered costs and benefits. The present paper attempts to improve understanding of a chief source of these hidden costs and benefits: those changes in the social subsystem brought about by a new IT.Fifty IT decision-makers in a broad variety of industries were interviewed to gain insight into what, when, and how often social subsystem considerations are included in IT investment-decision processes. Data from the interviews show that in practice some of those issues are often minimized, excluded, or put off until the IT is implemented—thus affecting optimality of investment choices and IT payoff. The paper extends existing theory by describing systematic patterns of inclusion and exclusion of these costs and benefits. In addition, a decision aid is provided to help IT executives begin thinking about which social subsystem costs and benefits they should incorporate in various decisions. Suggestions are also made on how data regarding social subsystem costs and benefits might be gathered. By incorporating social subsystem costs and benefits in the IT investment process, decision-makers gain a greater appreciation for hidden costs and benefits, and thus clarify anticipated IT payoff.