From comprehensiveness to cohesiveness: An organizational capability for achieving value from strategic information technology initiatives in the life insurance industry

In 1992 annual capital spending on investments in information systems (IS) and related technology was about one third of total corporate spending, or approximately 7% of the gross national product of the United States. Today, that percentage continues to grow at an accelerating rate worldwide. It is not surprising that both practitioners and researchers are actively seeking to understand how business value is derived from these investments. Acquiring an understanding of the real business value achieved from information technology (IT) investments and managing that value over time have proven to be much more elusive than measuring the costs of each investment.; To take full advantage of the opportunities facilitated by information technology, senior executives must better integrate the formulation and implementation of the strategic planning process to manage a portfolio of initiatives. Formulation refers to the decisions pertaining to competitive product-market choices. Implementation refers to the choices that pertain to the structure and capabilities of the firm to execute its product-market choices. Both are critical components of strategy. The ability of IT to affect the company's competitive position has highlighted the importance of information systems strategic planning process in this integration.; Using resource-based theory of the firm, the essential premise of this research is that IS strategic planning can be viewed as a critical organizational capability, called value management. The value management capability, as described in this dissertation, proposes that achieving business value from IT-intensive business initiatives involves adaptive, integrated, and ongoing processes, not simply a one-time investment decision.; Previous research has often focused on the importance of comprehensiveness of the planning process. The results of the case research study described in this paper suggest that the “cohesiveness,” or dynamic integration, among a set of four processes gives rise to the value management capability. The four processes are (1) formulate initiatives, (2) design measurement system, (3) deploy strategic control system and (4) learn IT-value linkages. The more cohesion which exists in the value management capability, the more likely that the firm's IT-intensive strategic initiatives will lead to improved business performance.