Value Creation from IT Systems Integration: A Benefits, Openness and Price Model Perspective
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
This thesis is aimed at finding out how integration of IT systems creates value for companies and is conducted as a qualitative case study, where six companies are interviewed about their integration solutions. The interviewees were five CIOs and one Managing Director. Four of the companies interviewed have genuine Application Integration solutions, where a middleware platform is the hub of the integration system, while the remaining two used solutions based around a system of point-to-point integrations.
The value of an integration solution will be considered a combination of the benefits an integration solution provides, openness aspects, and the price models used to pay for the system. Value is defined as what the company gains, in monetary terms, in exchange for what it pays for an offering (Anderson, Kumar, & Narus, 2007). This definition further defines the attractiveness of an offering as the value minus the price. When discussing the value of an IT system, it is important to consider the difference between the potential value, which is the maximum the system can deliver with an ideal environment and usage, and the realised value, which is some fraction of the potential value that a company actually gains, of the system (Davern & Kauffman, 2000; Smith & Nagle, 2005). Affecting the realisation of potential value are certain factors, called conversion contingencies, which are things like preparation of implementation projects or efforts at using all aspects of a system.
Benefits are analysed according to a framework that divides IT systems benefits into five categories: operational, managerial, strategic, IT infrastructure, and organisational benefits (Shang & Seddon, 2000). These categories are focused around, respectively, productivity gains, enhanced planning capabilities, new strategic capabilities, better IT administration, and process improvements. We conclude that most companies gain several large benefits in the operational and managerial types, while the other three types have fewer reported benefits. We conclude that there seems to be quite a lot of unrealised potential value in the integration solutions, if the view of the potential of integration from the technological side is used. We also conclude that companies in certain environments and with more complex organisational structures seem to have a larger value potential than others, meaning they have more to potentially gain from an integration solution.
For openness, five aspects of open source software are studied: lock-in, cost, security, flexibility/modifiability, and community. These aspects are mainly derived from literature on open source. The first conclusion we make regarding openness is that most of the CIOs seems not to be fully aware of what the term truly entails. Companies’ opinions regarding open source can be seen on a range between two extremes: those who want to modify or develop software and those who only want to use standard systems. The former category has more to gain from the aspects of cost and modifiability than the latter, but both categories can gain from the lock-in, security, and community aspects.
The combination of factors that creates the price of an offering can be described as a price model. To study the value of price models of integration solutions, the SBIFT model (Iveroth, et al., 2013) is used, where the price model is divided into five dimensions, scope, base, influence, formula and temporal rights. None of the interviewed companies were satisfied with the alternatives for price models currently on the market. It was concluded that the dissatisfaction mostly stemmed from the facts that the companies had little opportunity to affect the price model, meaning they could not adapt it to better fit their internal conditions, the complexity of the license agreements, and that it was hard to get vendors to cite a price for a system. Price models that would be more attractive are e.g. models with a larger variable part, like transaction-based ones, or models that affect the time scale of the contract, even though no single model seemed more attractive to all companies.
Place, publisher, year, edition, pages
2014. , 95 p.
Application Integration, Open Source, Price Models, Software Pricing, IT in Retail, Value of IT, Value Creation, Customer Value
IdentifiersURN: urn:nbn:se:liu:diva-111121ISRN: LIU-IEI-TEK-A--14/02086--SEOAI: oai:DiVA.org:liu-111121DiVA: diva2:753893
Subject / course
2014-09-25, 2A:841, Linköpings Universitet, Linköping, 10:30 (English)
Radits, Markus, Doktorand
Westelius, Alf, Professor