Gaining benefits from IS/IT implementation: Interpretations from case studies
Introduction
Over the years organizations have been striving to realize benefits of information systems (IS) and information technology (IT) investments. Indeed a phenomenal amount of money is lost because of inability of the organizations to realize IS/IT benefits. Figures coming from the US suggest nearly $59 million being spent in cost overruns and some $81 million in cancelled IS/IT projects (Johnson, 1995). Losses of this magnitude have often been attributed to the inability of organizations to carry out adequate IS/IT-related benefits management (e.g., see Keil & Robey, 1999; Ward, Taylor, & Bond, 1996). Nearly two decades ago, the Index Systems poll of 240 senior IS executives found that although 90% did not know how to measure the benefits of IT, more than 50% believed that IT investments were enhancing their performance (as reported in Computerworld, 1988; Connolly, 1988). A survey of UK businesses by Ward et al. (1996) found 86% of the respondents as saying that it was not possible to anticipate benefits. The main reason that benefits are identified and quantified seems to be in order to gain project approval. The survey returns indicated that in 47% of the cases, project justification methods overstated the benefits to get expenditure approval. However, once this ‘hurdle’ has been overcome, little further attention is paid to benefits, and most effort is expended on technical implementation. The findings of the surveys reported above reflect a degree of complacency on part of IS/IT users. One UK building society manager, when asked how IT investments were justified, was quoted as saying, “In larger projects, we mostly go by gut feel. If the project is small, we try for a return-on-investment” (Financial Times, 13 June 1989). As Symons (1991) notes: “the greater the expense and strategic importance of an information system, the less likely it is to be evaluated using a formal methodology”. With respect to the use of formal methodologies, the Ward et al. (1996) survey found that only 50% of the organizations had a formal methodology (i.e., systems development, project management, or investment appraisal) and only 20% had implemented all three methodologies. Only a minority of organizations believed that these methodologies were effective in ensuring success.
Given the above background, this paper seeks to provide insight into some factors that will ensure the delivery of benefits from IS/IT investments. The paper argues that although the choice of an appropriate methodology is important in ensuring project success, it is not the only factor. It is equally, if not more, important to examine the organizational context that the information system is being developed for. The paper further suggests that organizations will have successful IS/IT applications only when the drivers for investing in IT, the expected benefit set and the organizational mode of working have been carefully considered. These three aspects need to be integrated into a benefits management approach. The argument of this paper is conducted by evaluating a hospital information system and a customer service information system.
Section snippets
Understanding benefits management
It is useful to have an understanding about the notion of ‘benefits management’ in the context of IS/IT. One means of doing this is to consider the ‘outcomes’, in that the benefits which are sought are the outcome of business changes, which have been brought about by the introduction and use of IT. The ‘benefits’ are then the difference between the desired outcome and the current situation. For instance, the outcome of an IT system implementation may be a staff reduction—the benefit is a cost
Case studies
This section presents two case studies. Case 1 focuses on a British hospital for people with learning disabilities where an IT system was being developed for supporting organizational processes. Case 2 relates to the implementation of a customer service information system in a computer manufacturing organization. The purpose of the case studies is to develop an understanding of deep-seated organizational issues related to IT benefits realization. As has been noted in Section 2, although there
Summary and discussion
This section presents a summary and discussion of the key emergent themes from the two case studies. First, the drivers for managing benefits are presented. Second, various planning issues related to kinds of benefits types are analyzed. Third, the importance of organizational context in the success of IT-based solutions is discussed. Finally, a list of key lessons from the case studies is presented.
Conclusion
This paper has examined the various contextual features that determine the success of a technology-based system. It highlights that a narrow technology-focused orientation in systems development is a limiting factor in realizing benefits. Real benefits reside not within the IT domain but instead in the changes in the organizational activities that the IT system has enabled. Furthermore, these changes can be identified and planned for using an approach that analyzes benefit drivers, benefit
Gurpreet Dhillon is a Professor of Information Systems in the School of Business, Virginia Commonwealth University, Richmond, USA. He holds a Ph.D. from the London School of Economics and Political Science, UK. His research interests include management of information security, ethical and legal implications of information technology. His research has been published in several journals including Information Systems Research, Information & Management, Communications of the ACM, Computers &
References (24)
- et al.
Risks in the use of information technology within organizations
International Journal of Information Management
(1996) - et al.
A framework for managing IT-enabled change
Sloan Management Review
(1993) - et al.
Re-engineering isn’t the only answer
Manufacturing Systems
(1994) - et al.
Beyond the productivity paradox
Communications of the ACM
(1998) - et al.
Effective management of information technology: Closing the strategic divide
- Canevet, S. (1996). The role of information systems evaluation across an extended system life cycle. Ph.D. thesis,...
- Computerworld (1988). Editorial-The perception. Computerworld December...
- Connolly, J. (1988). Study: spending up; Stress on strategy. Computerworld November...
- Dhillon, G. (1995). Complex managerial situations and the development of computer-based information systems. In: R....
- et al.
Strategic alignment: Leveraging information technology for transforming organizations
IBM Systems Journal
(1993)
Chaos: The dollar drain of IT project failures
Application Development Trends
Cited by (0)
Gurpreet Dhillon is a Professor of Information Systems in the School of Business, Virginia Commonwealth University, Richmond, USA. He holds a Ph.D. from the London School of Economics and Political Science, UK. His research interests include management of information security, ethical and legal implications of information technology. His research has been published in several journals including Information Systems Research, Information & Management, Communications of the ACM, Computers & Security, European Journal of Information Systems, Information Systems Journal, and International Journal of Information Management among others.