Pursuing Value from IT-investments through IT-governance for SMEs: A supply-side perspective

Abstract: Background and problem: Investments in Information Technology (IT) are not only assets but also enablers of capabilities for organizations, such as enhanced performance through alignment between strategy and IT. Small and medium enterprises (SMEs) are currently increasing their IT-investments while the failure rate of IT-investments remains high, primarily due to a lack of IT-governance. Furthermore, IT-governance can support organizations in managing their IT-investments by framing their complexity. IT-governance contains three dimensions (structure, people and process) which encompass concerns regarding IT-investments. Previous research is calling for a rethinking of IT-governance when applied to SMEs. By taking a stage-based approach to the IT-investment decision-making process, this thesis aims to delineate IT-governance for SMEs and answer the call for increased understanding regarding the fit of IT-governance for SMEs. Purpose: The purpose of this thesis is to increase the understanding of how IT-governance can be applied to IT-investment decision-making processes, within the context of SMEs and from a supply-side perspective. Research questions:  RQ: How and why can IT-governance support the IT-investment decision-making process in SMEs?  Sub RQ 1: How and why are the IT-governance dimensions relevant for SMEs?  Sub RQ 2: What characterizes the stages of an IT-investment decision-making process in SMEs? Methodology: A qualitative scientific approach was taken consisting of five semi-structured interviews with vendors of IT-systems and consulting firms, i.e. suppliers of IT-investments. Discussion and conclusions: The three IT-governance dimensions are relevant in an SME-context, but certain aspects are less relevant due to the nature of SMEs. The IT-investment decision-making process in SMEs is characterized by unspecified needs and lacking follow-up processes. This study concludes that there are three pillars that jointly will contribute to IT-governance’s support of the IT-investment decision-making process. 1) Creating a project group to specify the needs of the organization. 2) Enunciating the decision-rights. 3) Formalizing the decision-making process. Suggestions for future research: Through an enrichment of the three stages of the decision-making process and combining those with an attribute-based process the complexity of IT-investments could be further alleviated, as the three stages might not be sufficient to capture the complexity of IT-investments. Further studies could also investigate the applicability of the findings by interviewing SMEs since this thesis had a supply-side perspective. Finally, the characteristics and differences among SMEs could be further explored due to this thesis’ assumed indifference of the heterogeneous group of SMEs.