Information Technology Value Engineering Model and Cost Efficiency in IT-Based Firms

Abstract

This paper aims to explore the improved business performance established on optimum costs. This structure rests on a proposed information technology (IT) value engineering model, which is an engineering process associated with IT inclusion in a business organization. Therefore, the methodology approach utilizes systems engineering to develop an engineering scheme procedure by stating the problem, creating alternate resolutions, deciding a resolution, specifying the scheme, and confirming the model. Additionally, this methodology works in cooperation with the resource-based view (RBV) and the partial adjustment valuation (PAV) theories. The RBV recommends that a firm worthy performance can rely on its own resources, whereas PAV reconstructs the input–output relationship of the system. The input consists of K = the regular capital, L = the labor expense, and I = the IT capital, whereas the output is y as the real output of a production process unit. Furthermore, three Indonesian Telco's firms (Telkom, Indosat, and XL) provided the model with data to experiment it. Furthermore, the results disclose the IT value engineering model has worked, and where the model has provided the firms with the improved performance at lower costs. In other words, this model has been effective numerically as well as logically.