The Four P's Revisited: Business Value Assessment of the Infrastructure Impact of it Investments

Abstract

Assessing the business impacts of increased IT investment has become one of the major issues in contemporary management. Many senior managers realize that a well-structured appraisal process might make the vital difference between IT success and IT failure, both in the private and the public sectors. Senior management's prime concern has shifted from controlling IT costs to managing and delivering IT benefits. Today, increased emphasis is being put on the role of infrastructure investments in order to fully exploit the profit potential of IT. The infrastructure impact of IT investments more and more centres around the emerging notion of an information infrastructure. Assessing the role and impacts of infrastructure investments, however, has proved to be particularly difficult and it is not yet clear how the underlying strategic decision-making process should be managed. The purpose of this paper is to present a model that offers four control options – paraphrasing conventional business wisdom in marketing coined the ‘P4 model’ – to manage investment appraisal and to support organizational decision-making. As a prelude to this, the paper explores the role of an information infrastructure from an IT investment perspective and examines four styles of decision-making. It also presents case study material from the financial services sector, in order to illustrate the relevance and applicability of the P4 model. Much of this paper draws on a research study funded by Eindhoven University and two large financial services organizations.