chapter  4
24 Pages

Aligning IT to Or ganizational Strategy

In the late 1980s, the deficiency in measuring IT using purely financial measures was addressed by Parker, Benson, and Trainor (1988) in their book on information economics.

Information economics assigns numerical scores to value and risk categories by a joint committee of end users and IT staff. For example, a value category of “0” would signify “no positive contribution” while a “5” would indicate a “large positive contribution.” In the same vein, in the risk category, a “0” would mean no risk and a “5” would indicate a “large risk.” Each of the categories is assigned a weight. By summing the weighted scores of the value categories and subtracting the weighted

scores of the risk categories, one can calculate the total score of each project. Value linking incorporates the benefits and cost in other functional areas, while value restructuring refers to the efficiency and effectiveness of employees (e.g., does the new system free up employee time so that they can do their own jobs more effectively?). The balanced scorecard (BSC) extends the information economics theory into a set of constructs understandable and immediately usable throughout the organization.