Ram L. Kumar

Managing risks in IT projects: an options perspective

Organizations are making large investments in information technology (IT) projects. However, many are risky and are often considered runaway, because they do not meet original expectations of cost, time, or benefits. Effective management of risks in IT projects is therefore extremely important. This paper emphasizes the need to differentiate between risks that can be resolved by action and risks that require hedging. It presents a framework for understanding and hedging risks in IT projects based on the finance literature on real options. This framework can be used to understand and justify project management decisions. The insight provided by this framework is consistent with practical managerial decisions in IT project management.

Electronic data interchange: a multi-industry investigation using grounded theory

Interorganizational systems (IOS) based on electronic data interchange (EDI) are being increasingly used. However, trading partners in EDI-based IOS vary in terms of their extent of EDI use. This paper presents a grounded-theory based study of EDI use in four organizations in different industries. The methodology allows the study of EDI use from perspectives of causal conditions, types of EDI use, strategies for encouraging EDI use, consequences of EDI use, and contextual factors. Such a qualitative study facilitates an understanding of how and why different factors impact EDI use. Under-researched issues, such as internal use of EDI, impact of EDI on different types of employees, and use of EDI for collective benefit of multiple organizations are discussed.

A Framework for Assessing the Business Value of Information Technology Infrastructures

Information technology (IT) infrastructure investments are an extremely important part of e-business and constitute a major portion of IT investments in many organizations. IT infrastructure investments include investments in connectivity, systems integration, and data storage that may be used by multiple applications. Prior research has recognized the importance of a flexible IT infrastructure as a source of competitive advantage. Evidence regarding the value of IT infrastructures is anecdotal, and there is a realization that large investments in IT infrastructures are often difficult to justify. This paper expands on the idea that the value of an IT infrastructure depends on its use in an organizational context, and presents a relatively simple approach to understanding and assessing the value of IT infrastructure investments. This approach is based on the asset valuation literature in finance. An example is provided to illustrate the proposed approach, and managerial implications are discussed.

A note on project risk and option values of investments in information technologies

Justification of investments in information technologies is an important research topic in the information systems area. Several approaches have been proposed. One of these highlights the deficiencies of traditional economic justification based on net present value, and proposes the use of techniques based on financial option pricing theory. This paper examines the relationship between project risk and option values of investments in new information technologies and illustrates how this relationship is significantly different from well-known results in the case of financial option pricing. Conditions for determining the desirability of risky projects are derived.

An integrative framework for IS quality management

T he importance of information technologies and the information systems function is no longer of debate among business people. The question, rather, is how an organization can take best advantage of IT in order to support its operations, add value to its products and services, and gain a competitive edge in the marketplace. To be able to perform up to such high expectations, the IS function must develop an intimate understanding of the expectations of its varied clientele. As organizations embark on their journey to be more responsive to their customers and to continuously improve the quality of their products and services, IS must do the same. Unfortunately, it seems that despite the importance of IT to the success of most organizations, the function is not proactive when it comes to actively pursuing and implementing quality principles. Surveys of IS managers [5] found that a minority of IS managers (41%) understood the basic principles of Total Quality Management (TQM), and thought they would be useful to the IS function. Even in the cases where TQM principles were understood, they often were not implemented in the IS function. Previous research in this area is at best fragmented, with focus on only subsets of IS quality (software and data quality), and is centered around front-line (core) processes (for example, systems development). This article takes a holistic view of quality in the IS function from the perspective of an IS manager and considers issues relating to multiple stakeholder groups, product, service, and process quality. This framework represents a contribution to both the practice as well as the research of how the IS function should be managed. From the practical perspective, the framework along with the discussion of many issues relating to the implementation and management of an IS quality system can be used to introduce and pursue a philosophy of total IS quality. From the research perspective, the framework integrates and fills in gaps in the existing literature, and it proposes new research questions. Total IS quality is a multidimensional Considering issues relating to multiple stakeholder groups, product, service, and process quality is important for managing IS quality. ■ Antonis C. Stylianou and Ram L. Kumar

Understanding the Value of Countermeasure Portfolios in Information Systems Security

Organizations are faced with a variety of information security threats and implement several information system security countermeasures (ISSCs) to mitigate possible damage due to security attacks. These security countermeasures vary in their ability to deal with different types of security attacks and, hence, are implemented as a portfolio of ISSCs. A key challenge for organizations is to understand the economic consequences of security attacks relative to the ISSC portfolio implemented. This paper combines the risk analysis and disaster recovery perspectives to build an integrated simulation model of ISSC portfolio value. The model incorporates the characteristics of an ISSC portfolio relative to the threat and business environments and includes the type of attack, frequency of attacks, possible damage, and the extent and time of recovery from damage. The simulation experiments provide interesting insights into the interactions between ISSC portfolio components and characteristics of business and threat environments in determining portfolio value.

User interface features influencing overall ease of use and personalization

This study examines user perceptions of gathering information on, locating, and buying compact discs through Web-based interfaces. A group of part-time MBA students in Hong Kong performed a specific set of tasks using the Web sites of two vendors of compact discs. The tasks were selected to be general enough to apply to a variety of on-line shopping situations. As they performed tasks, they answered questions regarding their perceptions of several user interface features as well as their perceptions of overall ease of use. User interface features associated with a perception of overall ease of use were identified, as were differences based on personal characteristics of respondents. Also, differences in perceptions of interface features that might be due to personal characteristics, such as age and sex, were identified. The methodology and results help identify user interface features that a designer should emphasize and features for which personalization is likely to be beneficial.

A multi-disciplinary framework for the management of interorganizational systems

Interorganizational information systems (IOS) are information technology (IT)-based systems that link multiple organizations. Management of these systems could be significantly more complex than managing IT within individual organizations. We explore the complexities of managing IOS using case studies and propose a multidisciplinary framework that includes collaboration, organization, and technology issues for the design and management of such organizations. Multiple case studies are presented to illustrate the proposed framework. Managerial and research implications are also discussed.

Information Technology Portfolio Management: Literature Review, Framework, and Research Issues

There is significant interest in managing IT resources as a portfolio of assets. The concept of IT portfolio management ITPM is relatively new, compared to portfolio management in the context of finance, new product development NPD, and research and development R&D. This article compares ITPM with other types of portfolio management, and develops an improved understanding of IT assets and their characteristics. It presents a process-oriented framework for identifying critical ITPM decision stages. The proposed framework can be used by managers as well as researchers.

Pricing on the Internet and in Conventional Retail Channels: A Study of Over-the-Counter Pharmaceutical Products

Business-to-consumer (B2C) electronic commerce survived the near-disastrous dot.com market crash in March of 2000 and has emerged as an integral component of doing business. Studies conducted before 2000, when companies had little experience with e-commerce, found that there were differences in pricing strategies and search and menu costs between the Internet and the conventional (brick-and-mortar) channel of distribution. The present study examines pricing data collected during a more mature period when companies routinely used both channels to sell products. The study utilizes data from the Internet and from conventional retailers for a bundle of over-the-counter pharmaceutical products. It finds that prices but not total cost are lower on the Internet, and therefore that shopping for such products on the Internet is likely to be a convenience issue. It also finds, contrary to expectations, that price changes are not more frequent or smaller on the Internet than on the conventional channel, whereas cost and price dispersion are greater. Finally, it discusses the pricing strategies of stores that have both Internet and conventional channels.