Taking Shape: Building the complete framework

8 Feb

Previously I have discussed three distinct frameworks as a means of supporting management teams to assess the impact of IS investments on business performance. Frameworks discussed were the ‘OBRiM’ framework [1], ‘Cresswell’s ROI analysis guide’ [2], and a ‘process-oriented framework’ [3]. In this blog entry I will summarise the strengths and weaknesses of these frameworks as part of an effort to develop a new construct to aide evaluation of IS investments.

The OBRiM framework was primarily preoccupied with minimising risk in information technology decisions. As a result flexibility is intentionally built into this framework – allowing management to identify real options available (i.e. abandonment, trialling, deferral etc.) to minimise risk with the IS investment. Once all the risks are mapped out (using real options), management can then alter the nature of their investment in order to obtain the greatest business performance outcome. Nevertheless this framework does have a big weakness – that being all types of risks cannot be anticipated.

Therefore in relation to a new construct it is important to build-in an element of risk management – however a framework preoccupied with minimising risk, such as OBRiM, would not be ideal given the likelihood of an unanticipated risk. On top of that there is also an argument that complete risk management does not necessarily correlate with maximising value. In the case of OBRiM the emphasis is placed upon the negatives an IS investment may throw up rather than the positives. A new construct should aim to achieve more of a balance.

Perhaps the most complete framework discussed was Cresswell’s Guide to ROI Analysis. The author, Anthony Cresswell, outlines a framework which emphasises the need to ask four types of key questions of an IS investment.  The key questions are labelled under the headings of financial, effectiveness, efficiency and impact. A risk analysis is also built into this framework but – rather than real options – this analysis is based upon available real data. On the whole this framework is more balanced than the OBRiM framework however it is far more rigid in structure and data obsessed. A new construct could do with the balanced approach of Cresswell’s guide to ROI Analysis – however there should be a built in element which permits management to ‘go on gut’ (make a decision based on feeling rather than fact).

The final framework discussed was a process-oriented construct. The authors of this framework maintain that the effect of an IS investment can be best assessed by capturing interactions in a business process where a proposed IS project will be implemented. This assessment is made based upon computational representations of physical and information flows. Overall this framework is more focused on a singular element than the other two – that element being process. This process-based approach could prove useful as an addition to a new construct – however it may be unwise to base a whole framework upon process only. The authors themselves admit that a process oriented approach may be more useful as a complement to a more extensive framework. Alongside this, a large amount of expertise is required to build a process oriented model – making it more suited perhaps to larger organisations.

In summation there are elements from all three frameworks that could be valuable in a new construct which helps management teams determine the contribution of their IS investments to business performance. While the ideal of a perfect archetypal framework may never be achieved, combining elements of these three models in a new construct may at least prove to be a worthy reference point in the academic pursuit of such a goal.

References:

[1] Benaroch, M., Jeffery, M., Kauffman, R., & Shah, S. (2007), “Option-based Risk management: A field study of sequential IT investment decisions”, Journal of Management Information Systems, 24, 2, Autumn 2007. http://myweb.whitman.syr.edu/mbenaroc/PAPERS/OBRiM-EDW/OBRiM-EDW.pdf

[2] Cresswell, A. (2004), “Return on Investment in Information Technology: A Guide for Managers”, Center for Technology in Government, Albany, New York. http://www.ctg.albany.edu/publications/guides/roi/roi.pdf

[3] Dutta, A., & Roy, R. (2004) “A Process-Oriented Framework for Justifying Information Technology Projects in e-Business Environments”, International Journal of Electronic Commerce, Vol. 9, No. 1, pp. 49-68. http://0-www.jstor.org.library.ucc.ie/stable/pdfplus/27751131.pdf

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  1. IT Governance : A Pocket Book - February 11, 2013

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