infrastructure capability. The firms in the study varied from scores of 17–80 with a mean of 37. The shaded area in Fig. 3 shows an actual reach and range plot for one of the firms in
the study, with a score of 35.
6. Findings
We found evidence for six of the seven propositions amongst the 26 firms. In addition, the reach and range was significantly correlated with the number of IT infrastructure
services
r 0 :
35 ;
p :
04 :
Propositions were analysed using Pearson Correlation Coefficients and a summary matrix is presented in Appendix D. The qualitative data
was used to help interpret the correlations and further develop the concepts. 6.1. IT infrastructure capability and industry differences
Proposition 1: Firms operating in different industries have different requirements for information, and thus different patterns of IT infrastructure capabilities.
Evidence supporting this proposition was found in the number and nature of IT infra- structure services. Manufacturing firms tended to provide fewer services
r 20
: 38
;
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 168
Fig. 3. Reach and range.
p :
03 than retail or finance firms. The specific areas where those differences occur to a significant degree are in communications
r 20
: 35
; p
: 04
; applications
r
20 :
33 ;
p :
05 ;
IT management
r 20 :
27 ;
p :
09 ;
security services
r 20 :
26 ;
p :
09 and research and development
r 20 :
39 ;
p :
02 :
Retail firms had more IT infrastructure services in research and development
r 0
: 32
; p
: 05
: Reach and range
was not correlated significantly with whether a firm operated in a particular industry. Thus firms in each industry took a variety of strategies for connectivity and integration—some
with low Reach and Range and others with high Reach and Range. In manufacturing firms such as BP Singapore
2
and the diversified international company Southcorp Holdings,
3
IT has traditionally been viewed as providing support for all major functional areas. However, the retail firms reported a 16 average annual increase in their
investment in IT over the past five years. Developments in point-of-sale technology, electronic trading, category management at stock keeping unit SKU levels, and custo-
mer’s expectations for EFTPOS have meant that IT in now critical to competitiveness. In the words of a senior IS manager in a large retailer: ‘We rarely discuss the costs of our
systems because of where we are in the evolution of delivering them. Costs are accepted as being high because of the magnitude of the change. We are more concerned with ensuring
that the systems we implement are flexible and effective, and that they deliver maximum advantage to the business, and not just in the short term’.
4
6.2. IT infrastructure capability and marketplace volatility Proposition 2: Firms with greater emphasis on the need to change products more quickly
will have more extensive IT infrastructure capabilities. Support for this proposition was found by analysing the firm’s total number of
IT infrastructure services and two IT infrastructure service areas in particular. Firms which needed to change products more quickly provided more IT infrastructure services
r
: 29
; p
: 08 and provided a higher number of services in the areas of applications
r
: 27
; p
: 09 and data management
r 0
: 45
; p
: 01.
The Development Bank of Singapore DBS is the largest bank in Singapore with most of its international offices spanning the Asia-Pacific.
5
DBS has a reputation for innovation in consumer banking and is consistently the first local bank to introduce new financial
products and services. DBS has extensive IT infrastructure capabilities that enable it to continue to compete with product leadership. Staff and technology are seen as the pillars of
DBS’ success. In the words of a senior business manager: ‘If our approach had been to determine how much we could save, we would not have invested in technology in the way
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 169
2
Soh, C. and Neo, B.S. Case vignette of BP Singapore: Information Technology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1995.
3
O’Brien, T. and Broadbent, M. Case vignette of Southcorp Holdings: Information Technology Infrastructure Study.
Melbourne Business School, The University of Melbourne, 1995.
4
Butler, C. and Weill, P. Case vignette of Woolworths: Information Technology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1995.
5
Neo, B.S. and Soh, C. Case vignette of the Development Bank of Singapore: Information Technology Infra- structure Study. Melbourne Business School, The University of Melbourne, 1994.
we did. We view technology as strategic investments—to give us a competitive edge…. We do not just follow what other banks are doing’. A technology planning group conti-
nually tracks and evaluates new technologies that would provide a basis for new product development.
Proposition 3: Firms which tend to make resource decisions based on current needs will have less extensive IT infrastructure capabilities.
Support for this proposition was evident in only one IT infrastructure service area. Firms which tended to base resource decisions on current needs provided fewer IT education
infrastructure services
r 20 :
41 ;
p :
02 :
From our interviews, non-IT managers universally bemoaned the lack of training and education. Empirically this problem was
worse in firms that made investment decisions based on current needs. Interestingly, IT managers complained that when IT education was organised, business managers often
didn’t come.
Proposition 4: Firms with greater emphasis on flexibility to meet changing needs of their marketplace will have more extensive IT infrastructure capabilities.
No support was found for this proposition. Greater emphasis on flexibility to meet changing needs was not correlated significantly with IT infrastructure capability in
terms of either the number of services or reach and range, nor was such an emphasis correlated significantly with any of the IT infrastructure service areas. This could be
because flexibility requires different solutions in different contexts.
Greater flexibility to respond quickly might mean limited or no firm-wide infrastructure where there is little synergy between business units. For example, the manufacturer
Ralston Purina has several large business units with products as diverse as pet foods and dry cell battery products.
6
These businesses compete in quite different markets and the lack of firm-wide infrastructure can provide greater flexibility for each business unit.
On the contrary, the Commonwealth Bank of Australia has extensive IT infrastructure to provide flexibility and cope with higher levels of uncertainty and changes in strategic
direction.
7
The infrastructure provides the capability to meet the bank’s strategies that all information to service any customer be available at the point of contact to improve service,
enhance customer relationships and minimise risk. The extent of these services reflects the two-way flow of influence in the bank between business and information technology
strategies. As phrased by a senior manager: ‘The bank and information technology are inseparable’.
The construct of flexibility generated by IT infrastructure needs significantly more refinement.
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 170
6
Lentz, C. and Ross, J. Case vignette of Ralston Purina: Information Technology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1995.
7
Dery, K. and Weill, P. Case Vignette of the Commonwealth Bank of Australia: Information Technology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1993.
6.3. IT infrastructure capability and business unit synergies Proposition 5: Firms with greater emphasis on identifying synergies between business
units will have more extensive IT infrastructure capabilities. Firms which seek cooperation and synergies between business units to achieve strategic
intent have more extensive IT infrastructure capability in both the number of services provided
r 0
: 52
; p , 0
: 01 and the reach and range
r 0
: 31
; p
: 07
: Extensive
capability in six of the eight information technology infrastructure service groups correlate significantly with the objective to achieve cooperation and synergy between business
units. The six groups are: standards
r 0 :
61 ;
p , 0 :
01 ;
IT management
r 0 :
55 ;
p , 0 :
01 ;
applications
r 0 :
41 ;
p :
02 ;
communications
r 0 :
40 ;
p :
02 ;
data management
r 0 :
34 ;
p :
04 and security
r 0 :
29 ;
p :
08 :
Firms which document how business units contribute to the achievement of firm strategic intent have a
greater number of services in communications
r 0 :
39 ;
p :
03 and IT management
r :
32 ;
p :
06 :
Hence, the identification and achievement of business unit synergies is a primary driver for the development of IT infrastructure capability.
For the international manufacturer of health care products, Johnson Johnson, the desire to leverage its strength with its changing customer base resulted in a business driver
to ‘develop partnerships with customers on a worldwide basis’.
8
This meant understanding the synergies between business units and identifying large customers who were dealing
separately with different autonomous business units. Johnson Johnson recognised that this changed the amount and kinds of information and IT applications that had to be shared
across business units. The result was more extensive infrastructure services, including the aggregation of data and the introduction of common application systems to provide the
foundation for delivering consolidated customer profiles.
6.4. IT infrastructure capability and strategy formation processes Proposition 6: Firms with greater integration of information and IT needs as part
of the firm’s overall planning processes will have more extensive IT infrastructure capabilities.
There was a very strong positive association between the integration of information and IT in overall planning processes and the pattern of IT infrastructure capabilities. Both the
number of IT infrastructure services
r 0 :
64 ;
p , 0 :
01 and reach and range
r 0 :
43 ;
p :
01 were correlated to the integration of information and IT in the business planning process. A higher level of integration affected every infrastructure service group with the
most positive associations being IT management
r 0 :
70 ;
p , 0 :
01 ;
applications
r :
58 ;
p , 0 :
01 ;
communications
r 0 :
57 ;
p , 0 :
01 and standards
r 0 :
40 ;
p :
02 :
Thus, amongst this group of firms, a high level of IT infrastructure capability
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 171
8
Ross, J. Johnson Johnson: Building an Infrastructure to Support Global Operations. CISR Working paper no. 283, Center for Information Systems Research, Sloan School of Management, MIT, September 1995; Lentz,
C., J. Ross and J. Henderson. Case Vignette of Johnson and Johnson Company: Information Technology Infra- structure Study
. Melbourne Business School, The University of Melbourne, 1994.
was associated with a high level of integration of information and IT needs in planning processes. This strong relationship could be because such an infrastructure capability is
important in order for the firms to compete. Alternatively, it could be because deeper consideration of information and IT needs generally results in leading to more capability
and higher expectations.
Competitive pressures forced the Royal Automobile Club of Victoria RACV, a membership based provider of insurance, roadside vehicle services, travel and other
services in Australia, to rethink the role of IT, particularly firm-wide infrastructure invest- ments.
9
When an equivalent organisation in a neighbouring state extended its base into RACV’s geographic area, RACV engaged in extensive planning, resulting in a stronger
focus on customer needs, membership acquisition and innovative products and services. The planning processes and strategies raised the importance of cross-selling and surfaced
the urgency of sharing customer databases and transaction processing systems across businesses leading to more firm-wide IT infrastructure capability.
Proposition 7: Firms with greater emphasis on tracking the success of implementation of strategic intent will have more extensive IT infrastructure capabilities. The indicators of
the extent of a firm’s emphasis are: i the level of reporting progress against strategic intent; ii whether achievements are actively measured; and iii whether those
responsible are identified.
More extensive IT infrastructure capability is evident in both the number of services and reach and range where there is a higher level of reporting progress in achieving the
strategic intent of the firm services: r 0 :
42 ;
p :
02; reach and range: r 0 :
34 ;
p :
05 ;
where such achievements are measured services: r 0 :
45 ;
p :
01 and where those responsible are identified services: r 0
: 44
; p
: 01; reach and range:
r :
35 ;
p :
04 :
Thus firms with a higher level of tracking the success of strategy implementation have more extensive IT infrastructure capabilities. Service areas
which correlated most positively with these strategy formation process variables were communications, applications, and IT management.
The multinational insurance firm, Sun Life of Canada, has a strong culture of articu- lating strategic directions, then tracking, reporting and measuring strategy implementation
at multiple levels.
10
Sun Life has an acknowledge focus on sharing knowledge, fostering innovation and careful monitoring through regular reviews identifying and communi-
cating ‘lessons learned’. The firm has a series of interlocking business and IT committees which develop and monitor strategic business and technology developments and assist in
leveraging Sun Life’s IT investments. Sun Life offers both basic and strategically focused IT infrastructure services including the operation, maintenance and support of mainframe
computing facilities, data administration, planning and support of voice and data commu- nications, universal file access, a series of shared applications, electronic mail and voice
mail, and video conferencing. While business and information technologies influence each
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 172
9
Dery, K. and Weill, P. Case Vignette of RACV: Information Technology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1995.
10
Lentz, C. and Henderson, J. Case Vignette of Sun Life Assurance Company of Canada: Information Tech- nology Infrastructure Study. Melbourne Business School, The University of Melbourne, 1994.
other, infrastructure investments must meet defined and measurable business needs and are monitored for the value they provide.
7. Towards a model of infrastructure capability
