Beyond the Business Case:

New Approaches to IT Investment

As IT becomes more closely tied to business objectives, successful investment must consider two dimensions: technology scope and strategic objectives.
Jeanne W. Ross and Cynthia M. Beath

When senior managers at United Parcel Service (UPS) first decided more than 15 years ago that package tracking had become a competitive necessity in the package-delivery industry, they discovered that developing the capability was not as simple as writing or buying a package-tracking application. The company needed to develop networks, databases and processing capacity before it could even begin to offer tracking services.1 At about the same time, Delta Air Lines began focusing essentially all its information-technology spending on rebuilding its airport systems and infrastructure, in part to address Y2K concerns. But shortly after Jan. 1, 2000, in what the CIO described as a “land rush,” line managers submitted requests for IT investments that totaled almost three times what Delta could allocate. Each request presented a business case that promised significant positive returns on investment. But combined, they far exceeded the ability of the IT unit to deliver.2 Such experiences are not unusual. In the last 15 years, a tidal wave of ITenabled initiatives, from business-process reengineering to enterpriseresource planning, has elevated the importance of investing strategically in IT.

Jeanne W. Ross is principal research scientist at the Center for Information Systems Research at the MIT Sloan School of Management. Cynthia M. Beath is a professor of management systems and information systems at the University of Texas at Austin. Contact the authors at jross@mit.edu and cbeath@mail.utexas.edu.

Illustration: ©Shakirov/SIS

WINTER 2002

MIT SLOAN MANAGEMENT REVIEW

51

The Internet alone has created