Analyzing Diffusion and Value Creation Dimensions of a Business Case of Replacing Enterprise Systems

This chapter introduces the Firm-Level Value Creation Model as a means of planning Information Systems projects based on their potential for generating business value. It presents a review of economic literature on firm-level value creation based on the premise that ex-ante economic inefficiencies embedded in the firm processes are the key enabler of effectiveness in IT project implementations. After presenting a detailed case study in the banking industry to discuss the argument, the chapter describes how to implement a practical assessment of the potential effectiveness of any IT project. By presenting the underlying theoretical foundations of the business value generation mechanism, the author intends to contribute to the academy by bringing the economic theories to the center of the analysis of IT value generation. On the other hand, the chapter also assists practitioners by presenting a tool that can identify projects more likely to deliver value.