New research from MIT Center for Information Systems Research, and other shows that successful companies have decided to revolutionize the IT investments. Investments are no longer profitable justified only on the basis of the production of a functional silo. Today, the strategic needs of the whole society come first. In the last 15 years, Jeanne Ross professors write the MIT Sloan School of Management and Cynthia Beath, University of Texas, a tidal wave of IT-based initiatives ha … Read more »

New research from MIT Center for Information Systems Research, and other shows that successful companies have decided to revolutionize the IT investments. Investments are no longer profitable justified only on the basis of the production of a functional silo. Today, the strategic needs of the whole society come first. In the last 15 years, Jeanne Ross professors write the MIT Sloan School of Management and Cynthia Beath, University of Texas, a tidal wave of IT-based initiatives has increased the importance of investing strategically. The internet alone has created numerous options: re-engineering processes to introduce online products and services, approach new customer segments and redo business models. The possibilities seem limitless, but the necessary resources – capital, IT skills, management focus and capacity for change – are not. How to choose? Traditionally, companies justified a particular project by a strong business case. But with its growing strategic importance, companies must now weigh individual ROIs against demands for enterprise-wide capabilities – and have to use ways to assess and improve existing systems and infrastructure, new skills and test new business models. The authors recommend a new investment approach on a framework it after studying e-business initiatives and support of IT investments, 30 enterprises were developed. The framework supports the simultaneous investment in four types of IT initiative. Transformation investments are necessary if a company’s core infrastructure limits their ability to develop applications critical to the long-term success. Renewal of infrastructure investments to keep the functionality and efficiency. Process improvements enable business applications to leverage the infrastructure through the provision of short-term profitability. Experiments allow learning about opportunities and testing the capabilities of the new technologies.
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Jeanne W. Ross,
Cynthia M. Beath
Source: MIT Sloan Management Review
11 pages.
Release date: 01 December, 2002. Prod #: SMR075-PDF-ENG
Beyond the Business Case: New Approaches to IT Investment HBR case solution

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