1. Effort and Operating Process Performance: If IT is used to substitute for human effort and automate tasks and business processes, the major benefits are likely to be an increase in system effectiveness and efficiency. Possible benefits include cycle time reductions, headcount reductions, reduction in communication time and related printing costs, increased income from product/service quality improvements, timeliness and accessibility of data, activity based cost improvements, operating process improvements relative to industrial benchmark, transformation of data into information, distribution of information, transforming information into desired outcomes and growth without corresponding increase in overheads.
2. Management Support: It facilitates new ways of managing like decrease time to decision, improvement in decision time and quality, improved communications, standardization, respond quickly to changes in law, better control, increased flexibility, compatibility with customers’ systems, more effective use of the sales force and improvement in the quality of the working life.
3. Competitive Advantage: It leads to competitive inequality in the favor of IT implementers. The benefits include improved operating margins relative to the competitors, increased market share, differentiation in the new products and services, creation of unique product features, buyer and supplier power, switching costs and search related costs, customer and supplier switching costs, preemptive strikes, first mover effects, positional advantage and timing, integration with company a\strategy and leverage of a firm’s intrinsic strengths.
4. Business Transformation: When the IT is used to restructure or transform the tasks, operations and procedures involved in the business processes, the investment characteristics can be summed up under the label ‘Business process reengineering’. The benefits here include allowing business process redesign, assisting business network redesign, facilitating flatter organizational structure, changing the symbols and the image of the organization and altering the organization’s boundaries to allow new forms of cooperation such as teams and work groups without geographic restriction.
A survey of 285 companies conducted by Information Week underscores the need to work beyond the cost savings in evaluating IT related benefits. These benefits are essentially strategic in nature hence can only be explained by their implications on the overall performance of the firm.
The benefits are not department specific and lack the quantifiable values and so could not be compared among themselves or with other more tangible benefits. These benefits are listed in order of highest significance to lowest significance below (Brynjalfsson, 1994) in order to gauge the relative importance they hold for the firms employing information technology tools:
1. Improved customer service
2. Cost savings
3. Timeliness of customer interactions
4. Improved product and service quality
5. Support of reengineering efforts
6. Better flexibility
