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This paper suggests that firms that successfully integrate an information technology (I/T) strategy with their business strategies do so by focusing on the information itself, rather than on technology, as the real carrier of value and source of competitive advantage. A primary mechanism by which a firm becomes an information-intensive firm is the implementation of a procedure for measuring the value of its information assets V(I). This paper presents a methodology for measuring the value of information in the firm. This paper describes the application of that methodology in an actual case study and discusses some consequences of being able to compare organizations with respect to their relative levels of information intensity.
It is now widely believed that information technology (I/T) is transforming the nature of business practice. Firms such as American Airlines, Inc., USAA Life Ins. Co., Federal Express Corp., Inland Steel Co., and McKesson Drug Co., each of which has introduced I/T to alter the dynamics within its industry and change the requirements for its competitive success, have undergone among the most notable and well-publicized business experiences in recent years. At the same time, equally noteworthy is the emerging body of literature, based on a growing number of studies, that suggests little, if any, positive relationship between investment in I/T and overall financial performance. This includes a variety of firms in a wide range of industrial contexts.(1-3) Reconciling the evidence accumulating from these studies with the reports on firms such as those previously mentioned is becoming a major preoccupation of those managers charged with the responsibility of making I/T decisions. If we are to believe those studies, the firms that are usually cited as models for the innovative application of information technology are either unusually skillful, unusually lucky, or just plain unusual.
The theme of this paper is that, if the organizations that successfully use information technology for competitive advantage are unusual, it is because they approach the application of I/T from a different perspective than that of the typical firm. The successful organizations, while first installing an I/T infrastructure, have then gone beyond the technology to view the management of information itself as the key variable toward which to direct their attention. This capacity to recognize information as the firm's primary...