Hannu Kivijärvi

Investment in information systems and the financial performance of the firm

Abstract The results of this study show that investment in information systems is not necessarily related to superior financial performance of the firm in the short term. However, investment in information systems is associated with the maturity of information systems, which in turn is related to improved performance. This indicates that investment in information systems pays off but only in the long term, because of the long learning and development period necessary to take full advantage of them. This finding is supported by the fact that experienced and advanced users of information systems are able to produce better applications and services with a high impact on organizational processes. On the other hand, investment in information systems will depend on the size and type of the firm and its financial strategies. It is therefore dangerous to oversimplify the problem and give general guidelines concerning the level of investment required in information systems. Heavy investment in information systems does not guarantee profitability. However, if wisely used to support the firm in its strategies they can import a sustainable competitive edge.

An Integrated Framework for IT Governance and the Development and Validation of an Assessment Instrument

Our paper presents a new IT governance framework and introduces an assessment tool designed to measure its effectiveness. The framework builds on the integration between the structural and processes perspectives of IT governance, business-IT alignment, and senior executives’ needs. The framework is aimed to help board members, general managers, business line and IT executives to understand, measure, and manage IT governance in their respective organizations as a part of corporate governance. In the paper, special attention is paid to the conceptual validation of the framework and respective assessment instrument.

Evaluating strategic IT investments: an assessment of investment alternatives for a web content management system

As widely recognized in the literature, information technology (IT) investments have several special characteristics that make assessing their costs and benefits complicated. Here, we address the problem of evaluating a web content management system for both internal and external use. The investment is presently undergoing an evaluation process in a multinational company. We aim at making explicit the desired benefits and expected risks of the system investment. An evaluation hierarchy at general level is constructed After this, a more detailed hierarchy is constructed to take into account the contextual issues. To catch the contextual issues key company representatives were interviewed. The investment alternatives are compared applying the principles of the Analytic Hierarchy Process (AHP). Due to the subjective and uncertain characteristics of the strategic IT investments a wide range of sensitivity analyses is performed.

SUPPORTING IT IMPLEMENTATION DECISIONS WITH ANP — SUPPLIER SCHEDULING FOR e-INVOICING

Companies aim to make their supply chains more efficient by using modern information technology (IT). Owing to limited resources there is a need to prioritize IT projects and those generating the highest business value should be implemented first. In this paper, we first develop the theoretical foundations for the prioritization decision and then implement the theoretical principles by applying the ANP (analytic network process) approach. A model is developed to aid a buyer company in selecting prioritized suppliers for adopting electronic invoicing. The case company is a leading Finnish textile and clothing design company. The ANP approach is considered suitable for this type of decision problem with many interconnected decision-making criteria. As the result of the analysis, the prioritized suppliers, representing different supplier types in the case company, are determined. The results can be applied to schedule e-invoicing implementation projects among the supplier companies. Based on the case study it can be concluded that the theoretical principles and the ANP approach can also be applied to other IT implementation decisions concerning supply chain efficiency.

Operations research and its practice in Finland — An update

Abstract This paper provides an update on the state-of-the-art of Operations Research and its practice in Finland. We cover academic Operations Research and applications. Furthermore, we discuss, as an example, the careers of Helsinki School of Economics OR/MS-graduates and their views on the usefulness of OR-education in Finland.

Logistics management: a method for evaluation of production-distribution investments

Abstract Logistics management affects all major functions or departments within the firm beginning from the raw material deliveries and ending with the deliveries of finished goods. One of the key problems with the logistics management is the issue of investment decisions. The first key idea of this study is that traditional techniques of investment analyses are not comprehensive enough but every stage in the investment process needs to be supported by appropriate computerized methods. The second major aspect is that a firm has several strategies for arranging its logistic operations and that the effects of these strategies need to be evaluated using multiple, diversified criteria - not just cost minimization. In this study, the authors discuss the logic of integrated investment analysis and its implementation with a computerized tool. Each step of the proposed procedure is described in detail with an example to assist logistics management in selecting the most efficient logistic system for the whole corporation.

Computer based intelligence, design, choice, implementation, and control of intangible investments projects

In this paper we show by means of an actual project how a computer based system can support whole process of management of the intangible investments-intelligence, design, implementation, and control-in an manner. For the planning of intangible investment projects we have developed a set of tools where several decision aids are integrated to support the different phases of the investment planning process.

A Decision Support System for Semistructured Strategic Decisions: A Multi—Tool Method for Evaluating Intangible Investments

ABSTRACT Decision Support Systems are information systems designed to support decision makers to solve problems mainly in semistructured problem situations. Semistructured problem situations are those where pure managerial judgment alone is not adequate, and which are not understood well enough to permit a complete, usually analytical, solution. Strategic planning is a managerial area where semistructured problems frequently exist. One of the key problems faced in strategic management is the issue of investment decisions. Investments in information systems, logistic systems, flexible production systems, corporate image, etc., are examples of complex investment problems that are difficult to quantify and analyze with traditional techniques. Logistics systems, for example, are related to most functions within the firm, beginning from the materials management and ending with deliveries to markets. In such a case, the complex, direct and indirect relationships imply that the straightforward, traditional techn...

Investment and harvest strategies of the Finnish forest sector under different forest-tax policies: A differential game approach with computer-based decision aid

Abstract This study deals with the simultaneous solution of the investment, harvest, and taxation problems of the Finnish forest sector. These strategic questions involve competitive and contradictory interests among forestry, the forest industry, and society. We build a computer-based decision aid to support a decision maker who wants to analyze the consequences of different forest-tax policies. It is essential to this computational approach that only minor mathematical manipulations are needed to produce equilibrium open-loop Nash harvest and investment strategies. Moreover, as a differential-game approach it allows us to study the tax incidence. We solve our model under three alternative tax policies: lump-sum, unit, and yield taxes.

Computer supported complex strategy process: a dynamic and multicriteria group support system

We establish a versatile framework for building a strategic decision support system that integrates advances in a corporate-wide simulation, group support system, and hierarchical evaluation procedure. The ideas of the management team about organizational goals, objectives or strategies can be captured by the group support system. During the GSS sessions the mental models of the participants are shared among team members. The corporate-wide simulation model encourages the participants to establish long-term views of policy and strategic issues, to integrate the different functions of the company and to look at the company holistically. Perhaps the most important advantage of the approach is that the system provides the strategic management with new opportunities for learning through conceptualization, discussion, and experimentation. The group support system supports the integration of the diverse knowledge, opinions, values, and judgments of the participants. Through the methodological integration the hierarchical evaluation procedure helps to find the effective solution in simulation context. The contemporary views of organizational goals and objectives are balanced by a hierarchical evaluation procedure.