A model to support IT infrastructure planning and the allocation of IT governance authority
Authors: Thompson, Steven; Ekman, Peter; Selby, Daniel; Whitaker, Jonathan
Journal: Decision Support Systems (2014)
DOI: 10.1016/j.dss.2013.10.010
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 strategy and corporate structure. Our model s…