Managing the Business Case Development in Inter-organizational IT Projects: A Methodology and its Application

Silja Mareike Eckartz

    Research output: ThesisPhD Thesis - Research UT, graduation UT

    615 Downloads (Pure)

    Abstract

    The business case (BC) is an artifact that is used to justify an investment in terms of its expected costs, benefits and risks. In the field of IT it is commonly used to justify an investment into an IT project in order to get the investment approval from upper management. Decision makers also may use the business case to compare different projects within a portfolio and decide into which they want to invest money. While the general role of business cases in single organizations is rather clear and subject to most BC research, its role and importance in an inter-organizational setting are less articulated and researched. The inter-organizational setting in this PhD research refers to multiple profit and loss responsible units that are working together in a project to jointly implement an IT system. Such profit and loss responsible units can either be different business units within one multinational or different companies within a business network. The fact that the role of the BC is rather clear in single organizations, however, does not mean that everything goes as planned and the expected benefits are achieved in time and within budget. Uncertainties related to both the cost and the benefit estimations included in the BC, may interfere greatly with the realization of the BC itself. While the estimation of the costs is a well-understood problem in a mature research domain, the specification of the benefits is often more challenging and less well understood and researched. In line with previous research we find that current knowledge and practices on benefits estimation are not satisfactory and many projects fail to realize their anticipated benefits. In this thesis we provide a better understanding of the problem of BC development in general, and in inter-organizational settings in particular. The research yields the following outputs/deliverables: Based on literature we develop a conceptual model that helps to identify and understand the mechanisms in place in such a setting. Following design science as main research paradigm we develop our business case for inter-organizational projects (BC4IOP) methodology specifically for this problem domain. Our methodology supports stakeholders in inter-organizational projects with the assessment and management of the benefits as well as the distribution of costs of a joint investment. It provides participants with a platform and process that initiates and supports discussion. The methodology consists of the following three independent but complementary components: -BM4IOP: a comprehensive benefits management method; -VM4IOP: a method that explores how a network creates value and what the impact is on business case development; -SID4IOP: a method that supports stakeholders to achieve agreement on the cost distribution of a shared project, by structurally disclosing more information. We follow a multi-method research approach where we use a variety of techniques, such as interviews, surveys, iterative design cycles and focus groups with experts to design the components underlying the BC4IOP methodology and the methodology itself. We validate our methodology by conducting (i) five case studies in different multinationals and (ii) four experiments with experts from academy and industry. Our empirical results confirm that developing a shared BC in an inter-organizational setting is more complex than in intra-organizational settings. The BC4IOP methodology is found to be feasible and useful in inter-organizational settings. It helps to overcome challenges typically found during the BCD process when stakeholders have different goals and no centralized decision-making power. The methodology is able to overcome these challenges by, among others, providing structure and a way to handle sensitive stakeholder information and encouraging in-depth discussion among project participants. We conclude that it is the combination of: the identification and specification of costs and benefits for an individual BC and the decision about the cost and benefit distribution in a shared BC, that make BC4IOP a strong and unique methodology.
    Original languageEnglish
    Awarding Institution
    • University of Twente
    Supervisors/Advisors
    • Wieringa, R.J., Supervisor
    • van Hillegersberg, Jos , Advisor
    Thesis sponsors
    Award date31 Aug 2012
    Place of PublicationEnschede
    Publisher
    Print ISBNs978-90-365-3402-4
    DOIs
    Publication statusPublished - 31 Aug 2012

    Keywords

    • EWI-22262
    • METIS-288049
    • Business Case Development
    • IR-81676
    • Benefits Management
    • NWO 638.003.407

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