Investing in information technology to grow firm value

Authored by: Daniel J. Connolly

Handbook of hospitality strategic management

Print publication date:  July  2008
Online publication date:  September  2008

Print ISBN: 9780080450797
eBook ISBN: 9780080914343
Adobe ISBN: 9781136439520


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The perennial question of any business is “How does an organization add value?” Value can be defined from many different perspectives and may result from tangible and intangible factors. Principal stakeholders include shareholders (investors), customers, and employees. Shareholders typically measure value in terms of economic return on their investment based on some level of perceived risk. For customers, value is assessed in terms of a price–value relationship; that is, how much they received in terms of product and services for the price they paid. For employees, value is measured by salary and by the intrinsic rewards of the job. Yet, one of the most elusive questions with respect to information technology (IT) is “How can value be measured?” This question is especially important given the growing costs, capital intensity, and competitive requirements to invest heavily in IT and is the subject of this chapter. Hospitality business professionals must be able to successfully answer this question to create compelling business cases, to evaluate and make appropriate strategic and resource allocation decisions, measure and monitor the success of IT projects, and hold IT staff accountable.

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