Considering Social Subsystem Costs and Benefits in Information Technology Investment Decisions: A View from the Field on Anticipated Payoffs

Abstract:

Information technology (IT) investment decisions have traditionally focused on financial or technological issues. Responding to what appears to be a lack of payoff in IT investments, researchers as well as practitioners recently have suggested that traditional valuation analyses are incomplete and have called for additional work to identify “hidden” or seldom-considered costs and benefits. The present paper attempts to improve understanding of a chief source of these hidden costs and benefits: those changes in the social subsystem brought about by a new IT.

Fifty IT decision-makers in a broad variety of industries were interviewed to gain insight into what, when, and how often social subsystem considerations are included in IT investment-decision processes. Data from the interviews show that in practice some of those issues are often minimized, excluded, or put off until the IT is implemented—thus affecting optimality of investment choices and IT payoff. The paper extends existing theory by describing systematic patterns of inclusion and exclusion of these costs and benefits. In addition, a decision aid is provided to help IT executives begin thinking about which social subsystem costs and benefits they should incorporate in various decisions. Suggestions are also made on how data regarding social subsystem costs and benefits might be gathered. By incorporating social subsystem costs and benefits in the IT investment process, decision-makers gain a greater appreciation for hidden costs and benefits, and thus clarify anticipated IT payoff.

Key Words and Phrases:

• information technology investment
• decision-making processes
• sociotechnical systems

Additional information

Notes on contributors

Sherry D. Ryan

Sherry D. Ryan is an Assistant Professor of Business Computer Information Systems at the University of North Texas. She received her Ph.D. in information systems from the University of Texas at Arlington. Prior to pursuing her doctorate, she had eleven years of experience with IBM. Her current research interests include information technology investment decision processes, the human impacts of information technology, and IT training issues.

David A. Harrison

David A. Harrison is a Professor of Management at the University of Texas, Arlington. He received an M.S. in applied statistics and a Ph.D. in psychology from the University of Illinois at Urbana-Champaign. His research on work role adjustment (especially absenteeism and turnover), time, executive decision-making, and organizational measurement has appeared in Academy of Management Journal, Human Resource Management Review; Information Systems Research, Journal of Applied Psychology, Journal of Management, Personnel Psychology, Organizational behavior and Human Decision Processes, Strategic Management Journal, and elsewhere. He has served on the editorial board of the Journal of Management and currently serves on boards of the Academy of Management Journal (for which he is a guest editor for the Year 2000 issue), Organizational Research Methods, and Personnel Psychology.