Maximising Business Performance – Leave room for the Intangible!!

8 Feb

 

“Information technology is best described not as a traditional capital investment, but as a “…general purpose training” (Bresnahan and Trajtenberg, 1995). In most cases, the economic contributions of general purpose technologies are substantially larger than would be predicted by multiplying the quantity of capital investment devoted to them by a normal rate of return. Instead such technologies are economically beneficial mostly because they facilitate complementary innovations.” (Brynjolfsson, 2000) 

 

In the current landscape, there is an extremely high volume of literature on the topic of business performance in relation to measuring it. There is little agreement as to how to go about measuring business performance especially as regards the ways of measuring the intangible aspects of the business. For example, how does one accurately gauge the contribution that Information Systems make towards the overall business health? In extensive studies on the subject, it can be argued that in essence, no real conclusion has been reached. And therein lays the problem for the whole field of research. If an information system can improve dealings and efficiency for the user and clients, but has no financial impact or rewards, is it worth implementing? As Erik Brynjolfsson pointed out in “The Productivity Paradox of Information Technology” from all research and case studies on the topic, it is true that many IS projects don’t reveal financial rewards in the short term (and often not even the long term), but from the same surveys, it was regularly claimed that the IS improvements did increase efficiency and ease of use. Looking at these findings from a business performance angle and not strictly a financial standpoint, it is hard to deny the fact that these so-called “intangibles” are of worth to the business.

In agreement with this view, Jack Keen wrote on cio.com of the value and increasing importance of intangible benefits to a business. This is strong evidence that at an executive level the emphasis is not solely relying on financial measures of success.

“One reason that intangibles deserve more respect is that they are now a significant part of a business’s worth. More than 25 percent of the value of enterprises is now based on intangible assets, such as brand image and market share, according to economists.” 

This reflects the changing opinions and the realisation that businesses are finally thinking outside the box when it comes to maximising performance and optimizing efficiency.

einsteiny

Sources:

1. Business Performance Measurement, Andy Neely. Cambridge University Press 2002. http://books.google.ie/books?hl=en&lr=&id=1KIEoQYx5ewC&oi=fnd&pg=PR9&dq=business+performance&ots=fBdPTbV4oq&sig=HPXre4SFXwK9kZ7ssKu7ZRRRS50&redir_esc=y#v=onepage&q=bresnahan&f=false

2. Beyond Computation. Brynjofsson, E; Hitt, L, M. The Journal of Economic Perspectives. American Economic Association. Vol. 14, No. 4. Autumn 2000. http://www.jstor.org/stable/2647074?seq=2

3. The Productivity Paradox of Information Technology. Brynjofsson, E. https://blackboard.ucc.ie/bbcswebdav/pid-976635-dt-content-rid-636855_1/courses/2013-IS6118/Course%20Documents/Course%20Reading%20Material%20Productivity%20Paradox%20The%20Productivity%20Paradox/Productivity_Paradox_CACM.pdf

4. “Intangible Benefits Can Play Key Role In Business Case”. Keen, J. 2003. http://www.cio.com/article/29660/Intangible_Benefits_Can_Play_Key_Role_in_Business_Case?page=2&taxonomyId=3154

 

 

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