Assessing the value and cost implications of manufacturing information and data systems: an empirical study

Although manufacturing information and data systems (MIDS) form an integral part of a manufacturing organization's infrastructure, the growth of corporate IT expenditure has left many companies questioning the value of their MIDS deployment. The use of traditional appraisal techniques to justify investments in MIDS typically relies on measures based on direct cost savings and incremental future cash flows. These techniques are considered no longer appropriate because of the largely intangible cost and benefit dimensions of many IT projects. This paper presents the results of a research study based on interviews in eighteen manufacturing companies, which investigated the methods used to assess the value and cost of MIDS investments. After showing that the concepts used to justify value vary significantly between respondents, the research indicates that intuition plays an important role in value prediction and assessment. A comparison between small and large companies indicates that the systems implementations are perceived in a better light in smaller companies. The results obtained are then compared with recent research.

[1]  Christopher A. Voss,et al.  Managing Advanced Manufacturing Technology , 1986 .

[2]  P. Primrose.  Selecting and Evaluating Cost‐effective MRP and MRPII , 1990 .

[3]  Tim Lincoln,et al.  Managing Information Systems for Profit , 1990 .

[4]  Beat Hochstrasser,et al.  Evaluating IT investments – matching techniques to projects , 1990, J. Inf. Technol..

[5]  P. Strassmann.  The business value of computers , 1990 .

[6]  D. J. Rhodes,et al.  The facilitator—an organizational necessity for the successful implementation of IT and operations strategies , 1991 .

[7]  W. E. Riggs,et al.  Critical Success Factors in Manufacturing Resource Planning Implementation , 1991 .

[8]  H. J. Roberts,et al.  MRPII implementation: key factors for success , 1992 .

[9]  Frank F. Land,et al.  Evaluating investments in IT , 1992, J. Inf. Technol..

[10]  Ephraim R. McLean,et al.  Information Systems Success: The Quest for the Dependent Variable , 1992, Inf. Syst. Res..

[11]  Peter L. Primrose,et al.  Investment in Manufacturing Technology , 1992 .

[12]  Sabah U. Randhawa,et al.  Evaluating automated manufacturing technologies: Part II — a methodology for evaluation , 1992 .

[13]  Leslie P. Willcocks,et al.  Risk and information systems: developing the analysis , 1994 .

[14]  W. Currie,et al.  Management strategy for IT : an international perspective , 1995 .

[15]  Dan Remenyi.  Ten Common Information Systems Mistakes , 1996 .

[16]  Z. Irani,et al.  Identifying the cost implications of manufacturing IT/IS investments , 1997, Innovation in Technology Management. The Key to Global Leadership. PICMET '97.