Consultancies and capabilities in innovating with IT

When firms innovate with information technology (IT), they frequently retain consultants, who presumably bring certain capabilities to the process. But what capabilities are these and why do they seem to be so needed? In this essay, I consider several different consultancy specializations – business strategy, technology assessment, business process improvement, systems integration, business support services – and how they facilitate an IT innovation process both within and across firms. For each specialization, I examine the consultancy’s capabilities and contributions both to the client (within an engagement) and to the broader support of the innovation (across and beyond engagements). The analysis suggests a number of conjectures as to the influence of consultancies on an IT innovation’s adoption, diffusion and eventual institutionalization.     

The impact of industry contextual factors on IT focus and the use of IT for competitive advantage

Only limited empirical evidence has confirmed the effectiveness of strategic information systems planning (SISP) and there is no evidence that investment in mission-critical systems leads to improved performance under conditions of environmental uncertainty and information intensity. This study tests the extent to which such contextual factors impact business dependence on IT and two SISP practices: IT participation in business planning and the alignment between the IT and the business plans. It also examines the influence of IT dependence and SISP on the use of IT for competitive advantage. Using structural equation modeling on postal survey data from 161 firms, it found a positive and significant impact of the contextual factors on business dependence on IT and the two SISP practices and between these factors and the use of IT for competitive advantage. Data also revealed significant differences between industry types and environmental uncertainty but not information intensity. Implications are discussed.     

How interfirm collaboration benefits IT innovation

Many studies have observed that close interfirm collaborations have positive effects on a firm's innovation. Yet, they have not shown how the collaboration contributes to this process. Higher innovation rates could be a result of revolutionary improvements, evolutionary improvements, or both. We investigated changes in the innovation process. Longitudinal data from 23 top IT firms across 9 years were collected and analyzed. Results suggested that close interfirm collaborations were associated with evolutionary but not revolutionary improvement. Results also suggested that the longer the IT firms had engaged in close interfirm collaboration, the larger the effect on IT innovations.     

An Empirical Analysis of the Relationship Between IT Training Sources and IT Value

Information technology (IT) training has been identified as a key factor for the success of IT applications and the most frequently applied coping mechanism to handle changing IT. However, there is a question as to how IT training has to be conducted to obtain desired outcomes (higher levels of IT value). This paper analyses the presence of IT training sources used by firms and examines the influence on IT business value. Here, IT training is studied according to three IT training sources: in-house IT training, outside IT training, and self IT training by employees. In addition, differences in IT training sources are analysed according to two contingency factors: business size and business industry. Results show a positive relationship between IT training sources (outside and self IT training) and IT business value and confirm that IT training sources are positively related to business size and differ moderately by business industry.     

IT education: more specialized in 2010

IT education is about as agile as a barge when it comes to reacting to changes in the IT industry. It takes a while but eventually the educational institutions do align their programs with advances in the technical and business requirements of IT hiring needs and corporate research agendas. Because of institutional inertia, however, program changes are usually years behind changes in industry fundamentals. IT education in 2010 changed in the following ways: 1) specialized educational programs fully reflect changes in the global IT community; 2) universities incorporate product commoditization into their curriculums; 3) remote learning technologies become sophisticated and highly used; 4) and IT education increases its focus on business and communication skills.     

Closing the loop: Empirical evidence for a positive feedback model of IT business value creation

Researchers have established that information technology (IT) can improve firms’ productivity. Whether improved productivity leads to additional investment in IT, however, remains largely uninvestigated. In this paper, we consider whether the relationship between productivity and subsequent IT investment might be positive, negative, or ad hoc, and hypothesize that this relationship is positive. We analyze seven years of panel data from 1236 healthcare firms and present empirical evidence supporting our hypothesis. When our finding is combined with extant research, it becomes reasonable to propose that unidirectional causality does not fully describe the process of IT business value creation. Instead, we argue that existing static models of IT business value with unidirectional causality can be recast as dynamic models that explicitly incorporate multiple time periods and a positive feedback relationship to more accurately capture the complexity of this process. The creation of IT business value can thus be understood as a positive feedback model where IT investment in a given time period builds the stock of IT inputs, where those IT inputs then impact productivity, and where productivity leads to IT investment in a future time period, beginning the cycle anew.     

Does IT pay to focus? An analysis of IT business value under single and multi-focused business strategies

Previous research finds that firm performance is highest when firms maintain a singular strategic focus as opposed to a multi-focused strategy. Yet, from an IT perspective, there is still some debate as to whether IT business value or the contribution of IT to firm performance is also maximized when firms maintain a single-focused strategy. Using the notion of value disciplines to model strategic foci, we find in a matched survey of executives in 241 firms that IT business value is highest in firms with a multi-focused business strategy and lowest in those with a single focus. We also find a relationship between strategic foci and the primary locus of IT value within the value chain for all focus-types except those emphasizing operational excellence. If all firms are using IT to reduce operating expenses, operationally excellent firms may find it increasingly difficult to sustain a low-cost advantage over time through IT.     

Strategic context and patterns of IT infrastructure capability

The importance of a firm's information technology (IT) infrastructure capability is increasingly recognised as critical to firm competitiveness. Infrastructure is particularly important for firms in industries going through dynamic change, for firms reengineering their business processes and for those with multiple business units or extensive international or geographically dispersed operations. However, the notion of IT infrastructure is still evolving and there has been little empirically based research on the patterns of IT infrastructure capability across firms.We develop the concept of IT infrastructure capability through identification of IT infrastructure services and measurement of reach and range in large, multi-business unit firms. Using empirical case research, we examine the patterns of IT infrastructure capability in 26 firms with diverse strategic contexts, including different industry bases, level of marketplace volatility, extent of business unit synergies and the nature of firm strategy formation processes. Data collection was based on a combination of quantitative and qualitative methods with multiple participants.More extensive IT infrastructure capability is defined as a combination of more IT infrastructure services and more reach and range. More extensive IT infrastructure capability was found in firms where: (i) products changed quickly; (ii) attempts were made to identify and capture synergies across business units; (iii) there was greater integration of information and IT needs as part of planning processes; and (iv) there was greater emphasis on tracking the implementation of long term strategy. These findings have implications for both business and technology managers particularly in regard to how firms link strategy and IT infrastructure formation processes.     

Organisational champions of IT innovation

This paper reports on an investigation of the characteristics of 10 organisational champions of information technology (IT) innovation in The Netherlands. The institutions at which they work are in the financial, transport, government and software sectors. Much of the research in this area has focused considerable attention on the individual personality traits of champions. This research project was positioned to contribute to the literature by broadening the focus of attention beyond individual-level characteristics. Since IT innovations occur within an organisational context, there is also a need to explore the role of organisation-level characteristics. This study explored both the individual- and the organisation-level characteristics exhibited by those promoting IT innovations in their firms. The results of this study show that these organisational champions fall somewhere in between the classic IT champion and the project manager. While personal leadership characteristics are not as much in evidence, organisational characteristics are emphasised more. They use their political skills to obtain resources and organisational acceptance of the IT innovations as they are shepherding the innovation through the organisational bureaucracy. However, these champions seem to place as much emphasis on creativity as classic IT champions. When necessary, they break rules, give veiled threats and find ways to get around the organisational bureaucracy. They seek creative outlets for themselves and those they manage. These findings suggests that a promising way to reduce the rate of information system (IS) project failures is to learn not only from IS projects undertaken by IT champions but also from innovation undertaken by other champions — business champions and champions of other technologies.     

Identifying IT sustainability performance drivers: Instrument development and validation

IT firms vary in their performance to improve the environmental sustainability of their own operations and in their ability to provide products and solutions that enable and transform the environmental sustainability of other industries. In the parlance of the balanced scorecard, performance has two dimensions, that is, “drivers” and “outcomes”. The drivers, also known as leading performance indicators, refer to learning and innovation, processes, and customer value propositions. The outcomes, also known as lagging performance indicators, refer to financial results. This study has developed and validated an instrument to measure the environmentally sustainable IT performance (eSITP) drivers. We established the nomological network of the eSITP by drawing from several theoretical domains in the areas of innovation antecedents and values, balanced performance measurement and IT and eco-sustainability. Based on a survey of 133 IT firms, we developed and validated a four-dimension, 17 items eSITP instrument covering eco-learning, eco-process, eco-brand and eco-value governance. The instrument is validated by following a seven step rigorous process. The paper breaks new ground from both research and practice perspectives. The instrument makes it easier for other researchers who wish to explain the leading (drivers) and lagging (outcomes) of IT firms’ environmental sustainability and for IT business managers who want to improve their environmental sustainability performance.     

Exploring the relationships between IT competence,innovation capacity and organizational agility

Business environments today are characterized as being very dynamic and hyper competitive. Organizations in these environments have to be agile in order to adapt their strategies and actions to be successful. While it is recognized that information technology can enable firms to be agile, there is a limited understanding of the mechanisms through and the contexts in which Information Technology (IT) enhances agility. This study examines two key antecedents of organizational agility, namely the IT competence of a firm and its innovation capacity and, examine their independent and joint effects on agility. We test our model using data collected from large firms in the US. The results provide strong support for our model. We found that firms with superior IS capabilities coupled with an aggressive IT investment orientation create digital platforms that enable them to be agile. We also found that the innovation capacity of the firm has a positive relationship with organizational agility and that firms with higher innovation capacity are better able to leverage their digital platforms to enhance agility. Our results indicate that organizational agility has a strong positive impact of firm performance. We interpret and discuss these results and their theoretical and practical implications.     

Die Bedeutung des Alignment von IT und Fachressourcen in Finanzprozessen Eine empirische Untersuchung

Importance of the Alignment of IT and Business Resources in Financial Processes — An Empirical Study How do firms realize business value from deploying IT in business processes? Based on the Resource-based View and insights from recent literature on IT/business alignment, we argue that actual usage and the alignment of IT and business units are important prerequisites for a superior performance of IT-intensive business processes. In this paper, a causal model on the joint impact of IT usage, IT/business alignment and business resources on business process performance is proposed and empirically validated using data from Germany’s 1.000 largest banks. It turns out that the perceived performance of the focal business process, as predicted in the theoretical model, strongly depends on IT/business alignment. The empirical analysis also shows that business resources have a large impact and that even a superior IT cannot compensate business resource deficiencies. The results thereby provide support for important propositions of the literature on alignment from a process perspective and contribute to common knowledge that the business value of IT should not be assessed without evaluating and controlling for business resources as a complementary factor.     

The strategic value of IT insourcing: An IT-enabled business process perspective

Although research on the business impact of IT outsourcing abounds, little is known about the relative strategic value of IT outsourcing and IT insourcing. Drawing upon the knowledge-based view of the firm, this study postulates that, compared with IT outsourcing, IT insourcing is more effective for developing IT-enabled business processes (IEBP), which subsequently lead to superior firm performance. Our analysis of the data from InformationWeek and Compustat shows that IT insourcing is positively associated with IEBP, while the relationship between IT outsourcing and IEBP is not statistically significant. We also find that IEBP have a significant influence on firm performance. Finally, the effect of IT sourcing mechanisms on IEBP and the effect of IEBP on firm performance are both moderated by the type of innovation related to IEBP. The results suggest that in order to improve their performance firms should consider IT an integral part of their strategic core and should be proactively involved in the internal development of IT resources. We conclude with managerial implications and directions for future research.     

IT alignment in small firms

This study focused on the alignment of business strategy and IT strategy among 256 small UK manufacturing firms. An instrument was developed and used to measure IT alignment in small firms. Evidence was gained of high IT alignment in some firms. The study also indicated that IT alignment was related to the firm's level of IT maturity and the level of the CEO's software knowledge, but did not seem to be linked to the CEO's involvement or the firm's sources of external IT expertise.     

Mixed results in strategic IT alignment research: a synthesis and empirical study

The alignment of business strategy and IT has been a top managerial concern for decades. Yet despite much investigation, the effect of strategic IT alignment on organizational performance remains unclear, with mixed results reported in the literature. The purpose of this paper is to advance our understanding of mixed findings in IT alignment research. We first examine inconsistent findings reported in two streams of alignment research: the traditional firm-level IT alignment literature and the emerging literature into process-level IT alignment. We then empirically investigate whether firm- and process-level conceptualizations of IT alignment lead to different conclusions about the effect of alignment on performance. Using data from a survey of 120 firms, we show that firm-level IT alignment and process-level IT alignment yield different conclusions when testing the same theory under the same conditions. We also show that differences in firms’ strategic orientations can help explain these results. This research provides evidence that firm- and process-level conceptualizations of IT alignment are not interchangeable and that the choice of conceptualization can mean the difference between accepting and rejecting a theory.     

The dual role of IT capabilities in the development of digital products and services

Past research on the business value of information technologies (IT) has demonstrated the positive contribution of IT capabilities (IT-C) to product innovation performance. However, with the advent of digital technologies, a new kind of product innovations gained importance: digital product and service innovations (DPI). As a consequence of their idiosyncratic characteristics, the usefulness and validity of existing product innovation management concepts cannot be transferred to the context of DPI without further ado. Accordingly, this study reinvestigates the role of IT-C in the specific context of DPI. Therefore, we begin with a differentiation of DPI from traditional, non-digital product innovation. Then, we propose that IT-C affect the performance of DPI projects via two paths. First, based on the notion that DPI rely on the use of innovative IT, we assume that IT-C directly impact DPI performance. Second, following prior research that has argued that the performance contribution of IT-C is mediated by other organizational intermediaries, we assume that IT-C also indirectly contribute to DPI performance through their positive influence on other organizational capabilities. One such organizational capability that mediates the influence of IT-C on DPI performance is a firm’s DPI capabilities (DPI-C). DPI-C allow firms to deploy their digital resources for DPI purposes and, thus, are an important antecedent for DPI performance. To test our assumptions, we use partial least squares–structural equation modeling technique and analyze survey data collected from DPI projects across different industries in Germany, Austria, and Switzerland.     

IT capability and organizational performance: the roles of business process agility and environmental factors

The business value of information technology (IT) has been one of the top concerns of both practitioners and scholars for decades. Numerous studies have documented the positive effects of IT capability on organizational performance but our knowledge of the processes through which such gains are achieved remains limited due to a lack of focus on the business environment. Such a linkage therefore remains the subject of debate in the information systems literature. In this study, we fill this gap by investigating the mediating role of business process agility and the moderating roles of environmental factors. On the basis of matched survey data obtained from 214 IT and business executives from manufacturing firms in China, our analyses show that even though firm-wide IT capability presents the characteristics of rarity, appropriability, non-reproducibility, and non-substitutability, its impact on organizational performance is fully mediated by business process agility. Our results also show that the impact of the environment is multifaceted and nuanced. In particular, environmental hostility weakens the effect of IT capability on business process agility, while environmental complexity strengthens it. The theoretical and practical implications of this study, and its limitations, are also discussed.     

Analyzing IT business values – A Dominance based Rough Sets Approach perspective

The impact of information technology (IT) on the business value of a cooperation has been an active research area for more than two decades. Although it is widely agreed that IT has a positive impact on the business values of cooperations an in-depth understanding of the underlying structures is still missing. Especially due to the huge investments in IT, there is still a need to better understand how IT influences the performance of cooperations and business values. Generally, the data collected in IT business value research to be quantitative as well as of qualitative nature. While quantitative data can be examined by classic econometric methods the analysis of qualitative data requires special methods. In the case of ordinal data DRSA – Dominance based Rough Sets Approach has been proposed. DRSA can be applied to induce rules out of a decision table containing ordinal data. This method has already successfully applied to such diverse areas like customer relationship management and satisfaction analysis, or the technical diagnostic of a fleet of vehicles besides others. In this article we apply it for the first time to the analysis of IT business value. We use ordinal data of a survey on IT management strategies of Australian firms conducted by the Australian Department of Communications, Information Technology and the Arts. The induces rules are interpreted and provide important insights into the impact of information technology on the business values of cooperations. Furthermore our study shows the potential of DRSA for information systems research where questionnaire are a widely applied technique to collect ordinal data.     

Achieving novelty and efficiency in business model design: Striking a balance between IT exploration and exploitation

Digitalization is encouraging an increasing number of firms to design their business models based on information technology (IT) for exploring business opportunities. This study examines the effect of the balance (imbalance) between IT exploration and exploitation on novelty-centered business model design (NBMD) and efficiency-centered business model design (EBMD). Using matched data from the IT-related executive and chief executive officer of 183 firms, this study finds that IT exploration is positively related to NBMD and EBMD and that IT exploitation is positively related to only EBMD. NBMD and EBMD are significantly related to firm performance. Polynomial regression and response surface analysis reveal that NBMD and EBMD first decline and then rise with the increase in the level of balance between IT exploration and exploitation. NBMD declines but EBMD rises with the increase in the level of imbalance between IT exploration and exploitation. This study contributes to the understanding on leveraging IT capability to influence the business model design and firm performance.     

A process for post-implementation IT benchmarking

Post-implementation learning involves continuing improvements in how effectively information technology (IT) is utilized. This kind of IT learning is a core competency that may determine the competitiveness of firms in information intensive industries. While many chief information officers (CIOs) may have some experience with infrastructure, user satisfaction, or business process benchmarking, few firms benchmark how effectively IT is utilized or its impact on the user’s work.This paper proposes a web-enabled process for benchmarking IT outcomes (effective use and impacts) and diagnosing problems with the user’s learning. This process is based on an explicit causal model of how induced and autonomous learning factors drive IT usage and impacts. The proposed process enables internal versus “best-in-class” causal analysis. We discuss the common considerations and key issues involved in implementing this IT benchmarking process.