Considering social subsystem costs and benefits in information technology investment decisions: A view from the field on anticipated payoffs

Information technology (IT) investment decisions have traditionally focused on financial or technological issues. Responding to what appears to be a l ack of payoff in IT investments, researchers as well as practitioners recen tly have suggested that traditional valuation analyses are incomplete and h ave called for additional work to identify "hidden" or seldom-considered co sts and benefits. The present paper attempts to improve understanding of a chief source of these hidden costs and benefits: those changes in the socia l subsystem brought about by a new IT. Fifty IT decision-makers in a broad variety of industries were interviewed to gain insight into what, when, and how often social subsystem considerati ons are included in IT investment-decision processes. Data from the intervi ews show that in practice some of those issues are often minimized, exclude d, or put off until the IT is implemented-thus affecting optimality of inve stment choices and IT payoff. The paper extends existing theory by describi ng systematic patterns of inclusion and exclusion of these costs and benefi ts. In addition, a decision aid is provided to help IT executives begin thi nking about which social subsystem costs and benefits they should incorpora te in various decisions. Suggestions are also made on how data regarding so cial subsystem costs and benefits might be gathered. By incorporating socia l subsystem costs and benefits in the IT investment process, decision-maker s gain a greater appreciation for hidden costs and benefits, and thus clari fy anticipated IT payoff.