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  • 1.
    Thompson, Steve
    et al.
    University of Richmond, USA.
    Ekman, Peter
    Mälardalen University, School of Business, Society and Engineering, Industrial Economics and Organisation.
    Selby, Daniel
    University of Richmond, USA.
    Whitaker, Jonathan
    University of Richmond, USA.
    A model to support IT infrastructure planning and the allocation of IT governance authority2014In: Decision Support Systems, ISSN 0167-9236, E-ISSN 1873-5797, Vol. 59, p. 108-118Article in journal (Refereed)
    Abstract [en]

    Information technology (IT) requires a significant investment, involving up to 10.5% of revenue for some firms. Managers responsible for aligning IT investments with their firm's strategy seek to minimize technology costs, while ensuring that the IT infrastructure can accommodate increasing utilization, new software applications, and modifications to existing software applications. It becomes more challenging to align IT infrastructure and IT investments with firm strategy when firms operate in multiple geographic markets, because the firm faces different competitive positions and unique challenges in each market.

    We discussed these challenges with IT executives at four Forbes Global 2000 firms headquartered in Northern Europe. We build on interviews with these executives to develop a discrete-time, finite-horizon Markov decision model to identify the most economically-beneficial IT infrastructure configuration from a set of alternatives. While more flexibility is always better (all else equal) and lower cost is always better (all else equal), our model helps firms evaluate the tradeoff between flexibility and cost given their business strategyand corporate structure. Our model supports firms in the decision process by incorporating their data and allowing firms to include their expectations of how future business conditions may impact the need to make IT changes. Because the model is flexible enough to accept parameters across a range of business strategies and corporate structures, the model can help inform decisions and ensure that design choices are consistent with firm strategy.

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