Strategic IT management: how companies can benefit from an increasing IT influence

Abstract

Purpose The purpose of this paper is to analyze the value of a strong decision-making information technology (IT) influence within organizations. Although research and managerial practice has repeatedly shown the importance of IT departments within firms and has commented on the influence of IT departments on business performance, prior research has still no evidence about the value of a strong decision-making IT influence yet. Design/methodology/approach To prove the influence of the IT department within the company, this study identifies and operationalizes a formative construct determined by four main specifics of the IT department: IT department size, IT department value assessment, IT experience of the top management and degree of digitization. A questionnaire was used to collect the data of 124 experts from companies that could be assigned mainly to the sectors manufacturing, trade as well as information and communication. The data were analyzed using exploratory and confirmatory factor analyses. Further, partial least squares structural equation model (PLS-SEM) was used to test the proposed model. Findings The results show that both investments in the size of the IT department as well as in top managers with IT experience, and a high degree of digitization in a company positively influence the role of the IT department. It also shows that a higher general appreciation of the IT department goes hand in hand with a higher influence of IT in the company. The measures are significant as companies, which do have an influential IT department, actually have higher monetary as well as non-monetary business performances. Practical implications The study is aimed equally at science and practice, as it provides information on the extent to which more importance should be attached to IT management in the future and what organizational adjustments need to be made. Originality/value Despite the ongoing discussions on the importance of IT management for business performance, no existing studies have delivered evidence that there is a significant direct link between the decision-making influence of IT and the extent of corporate performance. The present work therefore has two objectives. The theoretical goal is to clarify the impact of the IT department on business performance and to identify the factors that make up an influential IT department. The practical objective of the research is to provide recommendations on how firms could establish or expand the IT department.