A Categorization of Benefits From IS/IT Investments

Abstract: Information systems are used in many parts of modern organizations and large amounts of money are spent on these systems with expectations of enhanced value. From the business management point of view, investments in IS/IT are expected to bring benefits in the same dimensions as other investments, e.g. higher margins, improved customer satisfaction, improved efficiency, etc. From the technical point of view, the quality of information systems are rarely evaluated with respect to such business dimensions, but rather in terms of functionality and technical quality such as availability, performance, and security. One reason for this duality is that the dimensions of business benefits of IS/IT investments are highly diverse and heterogeneous; it is simply too difficult for IT decision-makers to know how to express business values of IS/IT. In this paper, a categorization of IS/IT-investments benefits is presented that is based on a literature review covering 80 references. After a thorough analysis, a total of 25 categories organized in three major groups were identified. Among those we find benefits relating to e.g.: the output of the business, such as enhanced products and/or services; the structure of the organization, such as increased flexibility; the resources used within the organization, such as increased information availability. This categorization serves the purpose of trying to increase the understanding between IT organization and business. With the categorization as an interface, IT organization can illustrate in what dimension IS/IT generate benefits while business can prioritize the importance of the benefits. This has been tested in practice at a large energy company and a train manufactory. In the first case, senior business management was asked to prioritize the benefits and in the second case the IT department and system users were asked to identify benefits that were supported by a specific information system. The two investigations were combined to assess the business value of the system. Keywords: Benefits, business value, IT/IS investment 1