As the vagaries of stock markets attest, an important factor in the success of any business is the psychological confidence of its stockholders. Similarly, within a business, success often relies on the confidence top management places in its own strategic goals and in its efforts to attain those goals. In our rapidly evolving information society, information technologies (IT) from intranets to sales tracking software have become high-stakes elements of potential success for forward-thinking companies. But skyrocketing costs for implementing IT and the lack of prior scientific evidence that IT improves a company's success, have made some executives question the value of their IT investments.

The jointly funded NSF/Private Sector Initiative's Center for Research on Information Technology and Organizations (CRITO) is a cooperative business and scientific effort to understand the major changes occurring in today's organizations (and ultimately, in society at large) which result from the use of information technologies. Motivated by increasingly intense global competition, business executives view information technologies as a way to enhance business value and to redesign and transform business processes.

Working with faculty and students from University of California, Irvine's School of Management, the Department of Information and Computer Science, and the School of Social Sciences, the CRITO consortium of academics and corporate executives is involved in research on organizational and management implications of IT in organizations.

In one example of CRITO research, led by Dr. Kenneth Kraemer, Dr. Vijay Gurbaxani and Paul Tallon of the University of California, Irvine, scientists culled "perceptual data" from top executives at Fortune 500 companies. Previous research correctly but narrowly defines IT business value as its contribution to a firm's economic performance. However, it is extraordinarily difficult to measure this contribution. Numerous factors make this task challenging: isolating the impact of IT from other changes in an organization; understanding from overall economic performance what organizational processes most benefit from the application of IT; discovering how factors such as customer loyalty and satisfaction that improve future economic performance are influenced by IT systems but not captured in current economic performance. These factors lead to the current understanding of the business value of IT as more than "just" productivity data. What IT contributes to an organization's overall performance is a multidimensional phenomenon, often largely assessed by whether top executives believe that their IT investments are worthwhile. Not only are top execs distinctly informed about their own business information systems, but they are constantly exposed to the opinions of employees and fellow executives.

The Fortune 500 executives -- 142 senior executives across 42 corporations -- were asked to rate the extent to which they believed IT actually contributed to overall business performance. The research model divides a company into distinct but interdependent processes needed for engaging in business activities. These are the areas where business leaders were likely to invest IT resources to enhance the overall value of their operations:

1. Process Planning & Support. Improving organizational communication, integrating entire enterprise, enhancing flexibility.
2. Supplier Relations. Developing better delivery techniques by linking internal information systems with outside suppliers and partners; managing inventory to competitive advantage.
3. Production & Operations. Implementing computer-aided design; more efficient products & services.
4. Product & Service Enhancement. Developing IT-enhanced product development, uniquely designed.
5. Sales & Marketing Support. Identifying & servicing new market segments; data tracking and market trends.
6. Customer Relations. Improving relationships with customers, improving transactions and support services, creating greater customer loyalty.
7. Competitive Dynamics. At best, altering the competitive dynamics of an industry (as in a new breakthrough in online personalization technology). At least, making competitive analyses easier.

After analyzing the data through a series of sophisticated statistical methods, models, and software, the results suggested that executives found the multidimensional payoffs from IT investment to be better than average in perceived value. The analyses further revealed that among the seven primary elements of IT business value, the most important to top executives is customer relations, especially customer benefits like quality, flexibility, timeliness and service. These results enhance earlier studies that identify customer-oriented business strategies as one of the top reasons that executives invest in IT. CRITO research suggests that while IT can enhance the value of many distinct parts of an organization, its key value is in integrating isolated pockets of activity to improve the overall execution of strategic business goals. Dr. Kraemer, who with others is now looking at how financial performance relates to these findings says, "the executives' perceptions of IT value correlate highly with the numbers. If you look at successful businesses like Dell, Amazon and others that value IT, you also see high ratings in consumer relations."

Other on-going areas of study at CRITO include research on:

• computers in the home: avenkate@uci.edu
  
• computers in schools: hjbecker@uci.edu
  
• knowledge management: wfwright@uci.edu, ackerman@ics.uci.edu
  
• groupware: grudin@ics.uci.edu
  
• the globalization of the computer industry: jdedrick@uci.edu, kkraemer@uci.edu
  
• sourcing strategies for IS services: vgurbaxa@uci.edu
  
• advanced logistics information systems: jlking@uci.edu, chscott@uci.edu
  
• democracy and information technology: danziger@uci.edu, kkraemer@uci.edu jlking@uci.edu
  
• implementation of enterprise systems: wfwright@uci.edu

Please use the email links above if you would like to contact the researchers for more information.

Also of interest, an important new center called The Industry-University Cooperative Research Center (I/UCRC) has opened recently within CRITO. Funded by NSF, the new Center focuses on the interrelations between information, technology, organizations and society. Here well-known names in the corporate world including ATL Products, Boeing, Canon, IBM, Nortel, Rockwell, Seagate, Systems Management Specialists and Sun Microsystems will work together with University researchers to determine how to more effectively use information and technology to increase the payoffs for society and user organizations.

This cooperative research is elucidating for all types of businesses, from multinationals to home-based, for universities and other educational institutions, for government organizations, and any private enterprise or future-forward individual. The information is helping CRITO participants determine how organizations can use new information and design technologies more effectively, and how they can use IT technologies to enhance not only individual organizations, but our entire information-based society.

The CRITO web site at: http://www.crito.uci.edu/

The NSF Center at CRITO: http://www.crito.uci.edu/nsfcenter/index.html

Sanjeev Dewan and Kenneth L. Kraemer, "International Dimensions of the Productivity Paradox," Communications of the ACM, 41(8), August 1998: 56-62.

Jason Dedrick and Kenneth L.Kraemer, Asia's Computer Challenge: Threat or Opportunity for the United States and the World, New York: Oxford University Press, 1998.
A synopsis and ordering information may be found at: http://www.crito.uci.edu/publications/html/git-asiachallenge.html