The IT Payoff

The IT Payoff - Measuring the Business Value of Information Technology Investments

by Sarv Devaraj amd Rajiv Kohli

Published by Prentice-Hall, Inc.

Pearson Education Ltd.

ISBN-13: 0-13-065074-9 (cloth)


IEC 61850 is a revolutionary technology for the protection, automation and control of the electric power industry that allows the digitalization of the interfaces with the process and the computerization of the engineering, operations and maintenance. It brings communications and information technology to the core of the energy business. However, like any new technology, it requires significant initial investment that needs to be justified.

So far there are no books published that analyze specifically the business case for IEC 61850. That is why we need to look at more generic sources discussing the impact of investments in Information Technology.
The authors of “The IT Payoff - Measuring the Business Value of Information Technology Investments” have significant teaching and consulting experience in the field of decision support and technology return of investment.

Sarv Devaraj is a faculty member in the Management Department at the Mendoza College of Business, Notre Dame. He specializes in technology management, quality and productivity management and manufacturing strategy.

Rajiv Kohli is a faculty member in the College of Business and Economics at Lehigh University, specializing in strategic information systems, enhanced decision support systems and the role of information technology in enabling competitive advantage.

The material in the book is presented in twelve chapters, starting with a brief introduction to information technology and the reasons for the need for analysis of payoff measurements in order to evaluate its impact. The existing methods of using profitability, productivity and customer value are described. The next chapter analyzes the so called “IT productivity paradox”. Issues such as the isolation of the effect of IT, the levels and aggregation of analysis and complementary factors are included.

The third chapter discusses the important role of developing a strategy for the use of information technology and the criteria and methods for its development. This is followed by failure analysis in chapter 4 which analyzes the importance of timing, how realistic are the expectations and what the level of management support is.

The following two chapters describe the variance and process approaches to the evaluation of the IT payoff, as well as the technology payoff metrics from different perspectives - customer, internal, innovation and learning, and financial.

Chapter 7 and 8 focus on the analysis of the technology curve and the existing types of curves. The S-curve is selected by the authors for further analysis with special attention on the dependence of the payoff on the position on the technology curve. Discussions on disruptive and future technologies are also included, followed by technology justification models.

Chapter 9 describes the four phases of implementation of IT payoff initiatives - exploration, involvement, analysis and communication. This is demonstrated later in Chapter 11 based on a case study presenting the specific steps for each of the phases.
The last chapter summarizes the discussions and presents an action plan and some recommendations for building an infrastructure for IT payoff analysis and the integration of the results in strategic planning 

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