Toward more effective management of information technology benefits

A critical issue facing senior executives is how to improve the return on their information technology (IT) investments. The results of numerous studies are inconclusive as they have failed to show conclusively that IT investments produce expected payoffs. The purpose of this paper is to offer an explanation for the perceived lack of IT payoff and show how managers can improve the return on their IT investments. We argue that IT can provide significant benefits, but in many cases these benefits are not captured by the firm that made the investment. Instead, a large portion of the benefits are reaped by a variety of participants or stakeholders. The implications of this for managers is that they need to view IT payoff as a portfolio of benefits across many stakeholders. They must also understand and manage the distribution of the benefits within the portfolio to assure that benefits are transferred to the bottom line. The paper offers a framework for analyzing the nature and distribution of IT benefits among various stakeholder groups and concludes with a set of guidelines for measuring and managing these benefits.