Benefits Of Information Technology Investments Research Articles

Financial Analysis of Information Technology Investments: “Assessing Benefits through Cost-Benefit Analysis and Ranti's Generic IS/IT Business Value Approach"

Technology drives economic growth and increases industrial competitiveness and has long been recognized for its dominance of industrial productivity. PT XYZ is a company engaged in the transportation services sector in Indonesia; from 2012 to 2017, PT XYZ carried out a massive digital transformation process by investing in information technology to improve its quality. This investment includes ERP, SAP implementation and improvement, RTS implementation and improvement, web-based information technology platforms, and mobile applications. This study aims to analyze the benefits of information technology investment made in PT XYZ using secondary data from the Company's annual financial statements accessed through the Company's website. The results of this study were conducted by analyzing financial statements from 2012 to 2020 using the Cost Benefit Analysis method and Ranti's Generic IS / IT Business Value method. Based on the Analysis, investment in information technology benefits the Company without distinguishing between tangible and intangible benefits identified in the form of 8 sub-categories in 5 categories based on Ranti's Generic IS/IT Business Value.

Small Indonesian Holding Company Of SME’s : Study on The Value on IT Investment : PT.XYZ Core

This paper explains that in PT.XYZ as SMEs do not have the IT integrated . IT managers perform checks on the company and find the condition that it is true in the enterprise IT integrated yet. In this paper further research requires a comparison with conducting surveys and studies in several large holding company. This is what causes the difficulty to estimate the cost and benefits of information technology investment Compared to investment value. (Money et al., 1995) share the benefits the use of information technology into two kinds, tangible and intangible . This has the caused many organization have difficulty how to calculate the cost and benefit of the investment associated with the resulting benefits and using Val IT one of the solution to study on the value on IT investments in SMEs at PT.XYZ . Val IT is now, the realization of business value of a clear investment, measured monitoring, to provide a means to optimize, and add the best practices for the end.

AN EMPIRICAL INVESTIGATION OF INFORMATION TECHNOLOGY INVESTMENT AND BUSINESS PERFORMANCE AT FIRM LEVEL AND INDUSTRY LEVEL

ABSTRACT Since the popular of the term IT in the mid-1980s, the literature has attempted to investigate the benefits of IT investment, due to the enormous potential of IT investment to achieve competitive advantage and better firm performance. It can be indicated from previous literatures that national economic growth and firm performance are influenced by IT investment. However, limited number of studies are performed at industry level. This section shows significant line of thought to investigate the impact of IT investment on economic growth and industry performance. The main contribution of this study is to add the relationship between IT investment and business performance at industry level. The results indicated that the total amount of IT investment had significant positive association with business performance at both economic and industry levels for almost all the industries covered in the study. Keywords Information Technology (IT), Investment, business performance, economic growth, labor productivity

Information technology (IT) productivity paradox in the 21st century

Purpose – Since the 1970s productivity growth in most economies slowed, while information and communication technology expenditures increased: the “information technology (IT) productivity paradox.” Some researchers reported an end to the paradox, but this is most likely due to IT industry growth approaching the Year 2000 phenomenon. The purpose of this paper is to update IT productivity paradox research. Design/methodology/approach – For comparability this research replicates methods employed by previous studies but employs a two-level approach: first macroeconomic indicators; second labor and multi-factor productivity. Findings – Findings suggest IT investment has high positive correlation with gross domestic product growth, but not labor or multi-factor productivity. This ambiguity suggests the paradox is still poorly understood. Research limitations/implications – The findings are not conclusive; the authors cannot confirm or reject the existence of the productivity paradox. The global recession and banking crisis makes it prudent to wait until recovery before analyzing data from that period. Practical implications – Lack of convincing evidence supporting positive effects from IT investment suggests some firms benefit from IT investment, but not others, and that IT investment has questionable returns. Social implications – Firm level studies might find IT investment benefits some firms, but lack of convincing macroeconomic level evidence of positive effects of IT investment suggests the paradox still exists. Originality/value – This research updates the IT productivity paradox demonstrating the phenomenon is still poorly understood and thus worthy of further study, questioning the benefits of IT investment for industry and national economies.

Determinants of end-user acceptance of biometrics: Integrating the “Big 3” of technology acceptance with privacy context

The information systems (IS) literature has long emphasized the importance of user acceptance of computer-based IS. Evaluating the determinants of acceptance of information technology (IT) is vital to address the problem of underutilization and leverage the benefits of IT investments, especially for more radical technologies. This study examines individual acceptance of biometric identification techniques in a voluntary environment, measuring the intention to accept and further recommend the technology resulting from a carefully selected set of variables. Drawing on elements of technology acceptance model (TAM), diffusion of innovations (DOI) and unified theory of acceptance and use of technology (UTAUT) along with the trust-privacy research field, we propose an integrated approach that is both theoretically and empirically grounded. By testing some of the most relevant and well-tested elements from previous models along with new antecedents to biometric system adoption, this study produces results which are both sturdy and innovative. We first confirm the influence of renowned technology acceptance variables such as compatibility, perceived usefulness, facilitating conditions on biometrics systems acceptance and further recommendation. Second, prior factors such as concern for privacy, trust in the technology, and innovativeness also prove to have an influence. Third, unless innovativeness, the most important drivers to explain biometrics acceptance and recommendation are not from the traditional adoption models (TAM, DOI, and UTAUT) but from the trust and privacy literature (trust in technology and perceived risk).

Examining the Factors Affecting the Evaluation and Adoption of IT Investments in Pharmaceutical Organizations

Information technology (IT) holds potential for transforming business practices in important ways. For example, it can assist in setting up an infrastructure which supports complex, multiparty trading and transactions among pharmaceutical manufacturers, wholesalers, hospitals, pharmacies, medical supply importers and exporters, and other players in the healthcare system. Effective use of IT can also help these healthcare organizations to reduce costs in supplying and distributing medicines and other medical-related products to the general public. However, despite high expectations for realizing the benefits of IT investments in pharmaceutical supply chain, issues surrounding its evaluation and adoption remain poorly understood and relatively under-researched. This paper presents case study findings on key evaluation and management issues in adopting and utilizing IT investments on seven Australian pharmaceutical organizations. The main objectives of this study are to: (1) examine the IT investment evaluation and benefits realization practices and processes in the pharmaceutical organizations; and (2) identify key IT investment evaluation and adoption issues and challenges within the pharmaceutical supply chain. A key contribution of this paper is the identification and examination of key issues and challenges faced by the pharmaceutical organizations undertaking IT and supply chain systems.

The Effects of Investments in Information Technology on Firm Performance

Analyzing the beneficial effects of investments in information technology (IT) is an area of research that interests investors and academics. A number of studies have examined whether investments in IT have a positive effect on some measure of earnings or other form of financial return. Results from these studies have been mixed. This paper extends the literature by adopting an investor’s perspective on firm performance when IT investments are made, using the preservation of capital as a performance measure. The authors examine companies that made public announcements of their investments in technology to see if they were able to mitigate losses to investors by reducing their downside risk to investors. This study further discusses whether different types of IT investments have different impacts on firm risk from an investor’s viewpoint. Findings suggest that IT investments impact a firm’s downside risk, and the authors offer an alternative perspective on the benefits of IT investments, particularly where no positive incremental financial results are evident.

IT GOVERNANCE: A STRATEGIC ALIGNMENT FOR INFORMATION TECHNOLOGY/BUSINESS

Information technology (IT) is a critical asset for effectiveness organizational governance. Therefore, the organization’s and IT’s and business’s expertise need a good IT governance. IT governance as a tool for aligning IT with business, is required to explain the new role of IT organizations, measuring the contribution of each organization’s components, helping identify the impact and benefits of IT investment which has been done, decision making, and make a better project. Conversely, the IT governance which ineffective can lead to losses of business, impairment of reputation, weaken the ability of competitiveness, lack of precision project, inefficient, quality of production is not in line with expectations, and inability to fulfill the innovation and benefits that were promised. Meanwhile, strategic alignment (in the IT business) which can either creating new opportunities and increased competitive advantage for companies well. Thus, it is necessary to create strategic alignment IT-business and ensure IT governance goes according to planned. This article intends to discusse and provide information about strategic IT-business alignment as one component of good IT governance. Once understood, the directors and CEO can identify opportunities and develop a good strategic alignment to increase IT business alignment in order to ensure companies continuity.

Analisis Sistem Informasi yang Sedang Berjalan dan Rencana Proyek E-Procurement dengan Pendekatan Metode New Information Economics

PT PLN (Persero) is a state owned which manages the biggest electricity businesses that cover the entire territory of Indonesia. His position is very potential for the Indonesian public life requires that PLN is able to manage the investment means the supply of electricity to customers. This is done with the information systems that support business processes in the body of PLN. PT PLN (Persero) has some application systems, infrastructure, service, and management used to increase the ability of the company. In PLN, there is an application that is capable of supporting PLN to conduct the procurement process is procurement information system (e-procurement). PSI Sub-party service providers as e-procurement to see investment information system (SI) and Information Technology (IT) which is proportional to the amount issued benefits and bottom-line impact for companies and can find out the level of funds / investment budgets and alignment of Information Technology there is a project in accordance with company requirements. Those needs based on business needs and applications currently running in the intersection so as to project better. Based on this, the author proposes to analyze the benefits of information technology investments by using the method of New Information Economics (NIE) that combines the two approaches both financial and non-financial. In the method NIE (New Information Economics) will be used four of the five practices that NIE Strategic Demand / Supply Planning, Innovation, Prioritization, and Alignment. The results are expected to help the company to allocate investments SI / IT is more appropriate and supports the company's performance, especially in providing added value to the parties concerned.

The Effect of Enterprise Systems Implementations on the Firm Information Environment

Proponents of Enterprise Systems argue that these systems improve the information environment of the firm. However, evidence on these benefits is largely anecdotal and survey-based. In this paper, we use an archival research design to assess the impact of enterprise systems on a firm’s internal information environment as reflected in the production of management earnings forecasts. Specifically, we hypothesize that if enterprise systems improve management’s access to decision relevant internal information, management should be able to produce higher quality earnings forecasts. Consistent with disclosure theory and the purported technical characteristics of enterprise systems, we find evidence that enterprise system implementations are subsequently associated with significant increases in the likelihood of management forecast issuance and the accuracy of the forecasts. Additional robustness tests support the argument that improvements in management forecasts are due to improvements in the firm’s internal information environment rather than enhancements in management’s ability to manage earnings. Prior literature and professional guidance points to the common challenges and importance of measuring the benefits of information technology investments. Our study responds to these challenges by providing an initial basis for considering management forecast qualities as a measurable proxy for improvements in the firm’s internal information environment that result from information technology investments.

The Valuation of Information Technology Investments by Real Options Analysis

This study establishes a dynamic model under real options analysis to analyze the optimal timing decision of information technology (IT) investments when the output price for firms is stochastic and benefits of IT investments are arisen from the increasing output price, increasing sale, and cost savings. We derive the closed form expression of the timing of IT investments and furthermore prove that IT investments rise at an increasing rate in economic booms and fall in economic busts. This study finds that increasing (decreasing) price volatility will delay (advance) the timing of IT investments. Increasing IT investments, however, may not delay the timing of IT investments. In addition, the decreasing (increasing) efficiency and increasing (decreasing) depreciation of IT investments will delay (advance) the timing of IT investments.

Information Technology And Business Value in Developing Economies: A Study of Intangible Benefits of Information Technology Investments in Fiji

AbstractUnderstanding how IT investments contribute to business value is an important issue, and this assists in the efficient use of technology resources in businesses. While there is an agreement that IT contributes to business value, we are unsure of how IT contributes to business value in the wider context, including developing countries. With the view that understanding the interaction between IT resources and the users may provide better insights on the potential of IT investments, this study investigates the businesses’ perception of the intangible benefits of their IT investments. The results indicate that businesses in developing countries perceive that their IT investments provide intangible benefits, especially at the process level, and this contributes to business value.

The financial performance effects of IT-based supply chain management systems in manufacturing firms

This paper examines the financial benefits of information technology investments around newly adopted IT-based supply chain management (SCM) systems by 123 manufacturing firms over the period 1994–2000. We form hypotheses using the value chain to specify the expected financial impact of SCM systems. By examining the change in financial performance pre- and post-adoption controlling for industry median changes in performance, we find that SCM systems increase gross margin, inventory turnover, market share, return on sales, and reduce selling, general, and administrative expenses. We also provide a model showing how process improvements around supply chain initiatives combine to improve overall performance. Finally, we show that contextual effects such as firms in the high-tech industry and the scope of the supply chain implementation have dramatic effects on the overall financial performance resulting from supply chain implementations.

A hedonic wage model‐based methodology for evaluating the benefits of IT investments in public‐sector organisations

The economic justification of investments in information technology (IT) is a basic issue for IT management in private and in public‐sector organisations. Usually, the expenses made for any investment are compared to the cost saved. While the costs for implementing a new system are uncertain, only a small percentage of the benefits accrues as cost savings given the type of IT systems used today and the particularities of the public‐sector. In this paper, we present a methodology for the monetary quantification of the benefits resulting from the introduction of a modern IT application and demonstrate its use on the basis of a case of prison administration.

Research Report: A Reexamination of IT Investment and the Market Value of the Firm—An Event Study Methodology

Evaluating the effectiveness of Information Technology (IT) investments has always been an elusive but important goal of IS researchers. This study builds on a prior study that examined changes in the market value of the firm as reflected by the stock price in response to IT investment announcements. Data on stock prices were analyzed for 238 publicly traded companies. In addition to the stock price analysis, reaction of trading volume to the announcements was also examined to identify whether IT investment announcements affect investors' beliefs about IT value. Potentially confounding factors such as industry, size, and time lag effects were also analyzed. Size and time lag effects were found for all IT investment announcements. Reactions of price and volume were negatively related to firm size and became more positive over time. The positive excess return for smaller firms shows that smaller firms can leverage the lower price/performance ratio of new IT and reap greater rewards from IT investments than larger firms. Also, the result of time lag effect demonstrates that the stock market has recently begun to identify both tangible and intangible benefits of IT investments. For recent IT investment announcements, industry classification and firm size also affected the reactions of stock price to the announcements. This study provides optimism on the stock market reaction to IT investment announcements as well as further insight into the study of IT impacts on organizational performance.

Effect of information technology on marketing performance of Korean service firms

A study of Korean service firms found that the level of information technology use is significantly related to the performance of the marketing function. Support was lacking only for the categories of “use of outside database” and “networking between mainframe computer and PCs.” In addition, the form of information technology use is significant in its contribution to the performance of the marketing function. This study supports the argument that benefits of information technology investment can be identified. Furthermore, there is evidence of a time lag in the payoffs from information technology, because the benefits of connectivity have not yet been realized.

The great IT benefit hunt

Too narrow a focus on overcoming organisational obstacles such as financial hurdle rates can often obstruct effective evaluation of investment in information technology (IT). To clear the hurdle rates with a minimum amount of organisational disturbance, evaluation procedures are often distorted. This may mean that ‘difficult to handle’ benefits are deliberately excluded from consideration, with many adverse effects. In this paper, Barbara Farbey, David Targett and Frank Land focus on the need for a comprehensive search for benefits of IT investment and the placing of all those benefits firmly on the management agenda. Doing so makes it more likely that the benefits will be achieved and also brings several other advantages to the organisation. They present three models of frameworks as a basis for the search. The first is strategic, the second organisational and the third technological. In each case they have filled the frameworks with benefits of IT investment which they have recorded over several years of research, in different projects. They do not see the filled frameworks as definitive. Instead they see them as pointers to places where benefits might reasonably be looked for and a starting point for a pragmatic dialogue.