An Exploration of Firm-Wide Information Technology Infrastructure Investment and Services

Information technology (m infrastructure investments are a major component of firm investment in information technology. Becausethese investlnents are frequentlymade in anticipation of business developments, their subsequent benefits can be difficult to track andquantify(Grossman and Packer 1989). Infrastructure investments are often viewed only from a cost perspective, as any gains comeindirectlyfromthebusiness applications they enable (Parker and Benson 1988). We define IT infrastructure as the base foundationofr[' capability, in the form ofreliable services, shared throughout the firm and usually provided bythe information systems (IS) function.The r[' capability includes both the technical and managerial expertise required to provide reliable services (McKay and Brockway1989; Weill 1993; Weill, Broadbent and St. Clair 1995).·'Ihis study examines the rationalebehind decisions on firm-wide infrastructure investments, the types of infrastructure-related servicesprovided by firms, and levels of IT infrastructure expenditure. A major goal ofthe study is to establish whether certain IT infrastructureapproaches are adopted for particular strategies or bycertain industries. Twenty*five large firms in three industries finance (bankingand insurance), process manufacturing and retailingare included in the study. An exploratory research approach is used involvingdata collection and onsite interviews about the nature ofcorporate level and business unit level r[' infrastructure investments and decisionmaking in each firm.Preliminaryresults from seventeen firms (thirty-four business units) suggest that firms view the role of firm-wide IT infrastructuresin three different ways: utility, dependent and enabling. In addition, each view involves different cost justification and investmentlevels, exhibits different patterns of service provision and infrastructure reach and range (Keen 1991), and has different expectationsfor the types of return on investment. Eight different infrastructure services were identified as being common to all firms, while anadditional fifteen services were provided in only a subset of firms.Initial data suggest that, over the last five *ars, these seventeen firms spent between 3% and 100% of their IT investment on providingfirm-wide infrastructure with an average across all firms of 46% increasing at 9.5% per annum. During this period, investment infirm-wide rr infrastructure averaged 4.1% ofthe firm's total expenses and 2.0% of revenue, with the rate of increase being significantlyhigher in retail firms. The nature of the firms' centralized IT investment also changed with infrastructure accounting for 76% ofcorporate IT and increasing at 5.7% per annum.REFERENCES Grossman, R., and Packer, M. "Betting the Business: Strategic Programs to Rebuild Core Information Systems." 0#ice Technologyand People, Volume 5, Number 4,1989, pp. 235-343. Keen, P. G. Shaping the Future. Boston: Harvard Business School Press, 1991.