A Model to Measure the Business Value of Information Technology: The Case of Project and Information Work

The impact of information technology (IT) on improving the productivity of information work has been mixed. While some firms have realized gains, many others have found the benefits to be elusive. Prior research has primarily focused on the impact of IT spending on firm-level performance. To further this line of research, it is necessary to understand the operational and process-level changes and isolate the impact of specific types of IT applications on organizational dynamic capabilities which mediate the impact of IT on firm performance. We measure the impact of different types of enterprise information technologies on firm performance based on two types of outcomes: (a) business process-level measures such as project/program quality, cycle times, cost, and completion rates, and (b) firm-level financial performance measures such as gross margin, return on assets, and return on equity. The central research contribution is the development of a research framework to improve our understanding of the operational impact of information work on the development of dynamic organizational capabilities which explains differences in processand firm-level performance across a cross-section of companies.