Does IT pay to focus? An analysis of IT business value under single and multi-focused business strategies

  • Authors:

  • Paul P. Tallon

  • Affiliations:

  • Wallace E. Carroll School of Management, Fulton Hall 452A, 140 Commonwealth Avenue, Boston College, Chestnut Hill, MA 02467-3808, USA

  • Venue:
  • The Journal of Strategic Information Systems
  • Year:
  • 2007

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Abstract

Previous research finds that firm performance is highest when firms maintain a singular strategic focus as opposed to a multi-focused strategy. Yet, from an IT perspective, there is still some debate as to whether IT business value or the contribution of IT to firm performance is also maximized when firms maintain a single-focused strategy. Using the notion of value disciplines to model strategic foci, we find in a matched survey of executives in 241 firms that IT business value is highest in firms with a multi-focused business strategy and lowest in those with a single focus. We also find a relationship between strategic foci and the primary locus of IT value within the value chain for all focus-types except those emphasizing operational excellence. If all firms are using IT to reduce operating expenses, operationally excellent firms may find it increasingly difficult to sustain a low-cost advantage over time through IT.