© All Rights Reserved

13 views

© All Rights Reserved

- QMT Assg 3
- Powerpoint - Regression and Correlation Analysis
- GRM: Generalized Regression Model for Clustering Linear Sequences
- Regression Analysis Mid Term Asin
- SPSS Tutorial
- Regression Analysis in SPSS
- Estimating Source Term
- 2009-11-14_BR_Assigment
- TBME2010
- ECON1203 Business and Economic Statistics PartA S12015
- Week 1
- Chapter+2
- Feyrer, J. (2009) w14910
- Sem With Amos II
- 2004_05_dummy
- Non destructive metodology of grapevine lesf area estimation
- sp99zu01
- Project Part C(Final)
- Notes on Linear Regression Analysis--Robert Nau
- Madsen Et Al-2002-Water Resources Research

You are on page 1of 4

Case Study PT. Kereta Api Indonesia (Persero)

Hilman Ramadhan

Suhardi

Institut Teknologi Bandung

Bandung, Indonesia

hilmanrmdhn@gmail.com

Institut Teknologi Bandung

Bandung, Indonesia

suhardi@stei.itb.ac.id

organization or firm. IT enable the firm to execute their process

more efficient and effective. That can be done by investing in IT

resources that will deliver the IT capability. However, IT

investment doesnt always give the promised capability. Some

researcher said that IT resources doesnt affect the firm

performance. But some others say in contrary that IT resources

does affect the firm performance. This lead to the IT Productivity

Paradox. Latter research propose the resource based view which

define certain resource characteristics that will increase the firm

performance. This theory is further modelled by using the

constant partial adjustment theory to validate the correlation

between the IT investment and the firm performance. PT. Kereta

Api Indonesia (Persero) one example of the company utilizing the

IT resources. The companys data is retrieved from its annual

report to be used to build the model. The resulting model will show

the IT investment significance on the companys performance.

Keywordsfirm performance, IT investment, performance ratio,

partial adjustment value, IT resources

I. INTRODUCTION

Information Technology (IT) has become one significant

driving force of business. Information technology provide

business with capability to increase their effectiveness and

efficiency. Those capability can be obtained by utilizing

sufficient information technology with respect to the firms

condition. Information technology resources that deliver the

capabilities require certain amount of effort to be deployed.

Also the realization of the capability needs proper synergy of

people and process. The capability hopefully will increase the

firm performance.

In order to realize the IT capability, enterprise must first invest

the resources. However investment in IT resources doesnt go

linearly with the firms performance. Higher IT investment

doesnt guarantee the increase in firms performance. There

conditions called IT Productivity Paradox proposed by past

researchers. Earlier studies examining the correlations between

IT investment and firms performance resulted in zero or

slightly negative correlation [1]. However, the latter empirical

studies show positive correlation [1]. [2] proposes five possible

reasons for this phenomenon, including mismeasurement of

redistribution of profits, mismanagement of IT, and

inappropriateness of traditional productivity measures.

Researchers propose a theory called Resource Based View. The

theory view the resource as something that are valuable, rare,

inimitable, and non-substitutable [3]. The theory tells us that

resources which is valuable, rare, inimitable, and nonsubstitutable will provide the competitive advantage to the firm.

IT resources itself can be classified in tangible resources

comprising the IT infrastructure, human IT resources

comprising the IT skills, and intangible IT-enabled resources

such as knowledge assets, customer orientation, and synergy [1]

[3].

IT investment and firms performance can be modelled to

determine the IT contributions in increasing the firms

performance. The model use the partial adjustment value to

measure the firms performance. The partial adjustment value

assumes that the change in the actual output (measured in

physical units) of a product in the current period (t) is adjusted

to the difference of the output desired in present period to the

output of the previous period at constant speed of adjustment

[4]. This theory is used in modeling the firms performance to

the IT investment.

PT. Kereta Api Indonesia (Persero) is Indonesia state owned

railway transport provider. The company provide railways

transport services including passenger transport, logistic

transport, and asset undertaking [5]. The companys vision is

provide railway transport service which focus on customer

service and fulfill the customer expectation. IT resources is one

important resources used by the company. It makes the

company suitable to use as the model. The companys IT

investment and the companys performance will be used to

build a model of IT value using constant partial adjustment

value method. The following section will describe the method

and materials used to build the model, the result of the model,

and conclusions of the model. [3] [2] [4] [5] [6] [1]

A. The Partial Adjustment Value

The method used to model the IT value is constant partial

adjustment value. The method assume that the output of the

current product is adjusted based on the expected value and the

previous value [6]. Below is the formula representation of the

method.

1

= ( )

( = 1,2, , )

From eq.(2) a logical measure of performance is provided by

= ( ; ) [6]. The performance value is written

by [6].

= ( ; )

=

The average performance value is denoted by [6].

(1)

=

output, is the expected value of the current output, and is

the adjustment value. The value of range is 0 1.

is quantified using production function ( ; ).

1 = (( ; ) )

(2)

= ( ; ) + (1 )1

(3)

and . is the production factor consist of (the

traditional capital) and (the traditional labor) in two factors

model, and add (the IT-capital) in three factors model. ITcapital comprise IT infrastructure and the IT human resources.

The form of the production function can be specified in several

way such as Cobb-Douglas (CD) function, Box-Cox (BC) and

Box-Tidwell (BT) [6]. The production function used in this

paper is Cobb Douglas Function.

Two factors function.

( ; ) = 0 1 2

(4)

( ; ) = 0 1 2 3

(5)

estimated to determine the model. Substituting Eq. (4) and (5)

to Eq. (3) give the following equation.

Two Factors Model.

(6)

2

= 0

(9)

performance ratio is formulated by [6].

=

+ (1 )1

(7)

Eq. (6) and (7) will be used to determine the unknown constant

, 0 , 1 , 2 , and 3 .

(10)

(11)

the current output with respect to the production function.

C. Non-linear Regression

The Eq. (6) and (7) contain the unknown constant which is

needed to determine the production function. Those equation

forms non-linear equation. In order to get the value of unknown

constant value, the non-linear regression is used. The regression

used in this paper is non-linear regression provided by the

Microsoft Excel Solver Add-Ins. The tool uses GRG non-linear.

The constant is initialized by using seemingly proper value. The

initialized constant will let us to create the model to be

compared with the actual value. The error is calculated also the

sum of squared error of all sample. The Solver Add-Ins is used

to determine the appropriate unknown constant value by

minimizing the sum of squared error.

The unknown constant initialized using the most proper value.

The is initialized by 0,5 as it is the average of the value range.

The 0 , 1 , 2 , 3 is initialized by 1 as it seems to provide

neutral degree on the production function factors (K t , Lt , It ).

Table 1 Initialization

= 0 1 2 + (1 )1

(8)

Constant

Initial Value

0,5

D. Data samples

Based on the partial adjustment method described before, there

are three factors involved in the modeling. Those are (the

traditional capital) and (the traditional labor) in two factors

model, and add (the IT-capital) in three factors model. Those

factors are determined by extracting the companys annual

report.

The K t factor, traditional capital, is retrieved by comparing with

the IT infrastructure spending. Based on Association of

American Railroads Total Annual Spending 2013 Data, the IT

spending of the company is assumed at 6.8%. This value is

obtained by summing the percentage of the computer

equipment spending and other track and property spending

which include communication system. The actual amount of K t

is the percentage of non-IT spending to the total company

equity.

The companys labor is classified in non-IT labor and IT labor.

The proportion of the non-IT labor to total labor is used to

determine the Lt factors. The Lt uses the non-IT labor to total

labor proportion of the total labor cost.

The It factors is the total IT spending which include the IT

infrastructure and IT labor. The amount of It is obtained by

summing the amount of IT infrastructure spending based on the

percentage on IT spending assumption, and the IT labor cost

based on the proportion of IT labor with total labor to the total

labor cost.

All units in trillion rupiah.

5,16

5,20

5,65

8,35

13,62

15,74

0,97

1,71

0,75

0,64

0,75

0,97

0,39

0,39

0,42

0,61

1,00

1,16

0,273727105

Value

0,54745421

0,453122474

1,981723317

1,72985897

SSE

0,111895657

ratio of two factors model and three factors model.

Year

2009

2010

2011

2012

2013

2014

Variable

Year

2009

2010

2011

2012

2013

2014

0,377961

0,816608

0,207055

0,16391

0,74781

0,676419

0,624537

0,443921

0,548852

0,464785

1,087783

0,531079

1,2

1

0,8

III. RESULT

Non-linear regression is done to the Eq. (6) and (7) to determine

the constant value. The initial value of the constant is using the

value of Table 1 Initialization. Following is the result of the

regression.

Table 3 Two Factors Regression Result

Value

0,6

0,4

0,2

0

2008

2009

2010

2011

2012

2013

2014

2015

Variable

0,342604162

0,024892316

1,476619006

0,006894137

SSE

0,158992824

shows fluctuations with maximum value at 2013. On the other

hand the performance ratio of three factors model shows

maximum value at 2010. From six sample gathered, the three

Three Factors

Two Factors

factors model mostly has lower performance ratio than the two

factors model. However, on the last data at 2014, the three

factors model shows higher performance ratio than the two

factors model.

The graphics shows that the performance ratio of the firm by

using IT resources are lower than using traditional resources.

However, this conditions may happen due to the companys

strategy. In 2010 until 2013, the company may focus on

increasing the operational capability which mostly concerned

about the railway transport infrastructure. On those years the

company seems not concerning the IT resources too much. This

can be seen as the railway service of the company is improved

based on the annual report. The company is focusing on

improving the railway transport infrastructure to increase the

firm performance. In 2014, the company is assumed to already

have good railway transport infrastructure, so it change its focus

on IT resources to maintain the railway transport infrastructure.

The companys performance ratio in 2014 using three factors

model is higher than the two factors model. The company IT

resources is improving the companys performance in 2014.

IV. CONCLUSIONS

The performance ratio of the IT resources involvement in firms

performance doesnt have significant change in 2009-2014.

This may be happened as the company is focusing on improving

their traditional capital such as railway transport infrastructure.

However, the impact of IT resources can be seen as the

company is focusing on maximizing their IT usage. IT

resources does affect the firm performance. The company can

be said as using the IT resources in their business and affected

by it.

The data used in this paper is data at 2009-2014. The regression

result may not sufficient to best fit the function. In order to

model the IT value.

REFERENCES

[1] L. Yongmei, L. Hongjian and H. Junhua, "IT Capability as

Moderator Between IT Investtment and Firm

Performance," Tsinghua Science and Technology, pp. 329336, 2008.

[2] E. Brynjolfsson and H. L, "Beyond the productivity

paradox," Communications of the ACM, vol. 41, no. 8, pp.

49-55, 1998.

[3] A. S. Bharadwaj, "A resource-based perspective on

information technology capability and firm performance:

An empirical investigation," MIS Quarterly, vol. 24, no. 1,

pp. 169-196, 2000.

[4] M. Nerlove, Distributed Lags and Demand Analysis for

Agricultural and Other Comodities, vol. 141, Washington,

DC: US Department of Agriculture, 1958.

[5] PT Kereta Api Indonesia (Persero), "Annual Report," PT

Kereta Api Indonesia (Persero), Bandung, Indonesia,

2014.

[6] W. T.Lin, C.-H. Chuang and J. H. Choi, "A partial

adjustment approach to evaluating and measuring the

business value of information technology," International

Journal of Production Economics, vol. 127, pp. 158-172,

2010.

- QMT Assg 3Uploaded bynurfhatihah
- Powerpoint - Regression and Correlation AnalysisUploaded byVivay Salazar
- GRM: Generalized Regression Model for Clustering Linear SequencesUploaded byFanny Sylvia C.
- Regression Analysis Mid Term AsinUploaded bymhussain480
- SPSS TutorialUploaded byDidi Rianto
- Regression Analysis in SPSSUploaded byriungumartin
- Estimating Source TermUploaded byAli ALdoosy
- 2009-11-14_BR_AssigmentUploaded byCyril Moreau
- TBME2010Uploaded byKamesh Sunkara
- ECON1203 Business and Economic Statistics PartA S12015Uploaded byNovels4lyf
- Week 1Uploaded bySüleyman Ünlü
- Chapter+2Uploaded bySoo Kim
- Feyrer, J. (2009) w14910Uploaded byGang Li
- Sem With Amos IIUploaded byFakher Khalili
- 2004_05_dummyUploaded bykishlay88
- Non destructive metodology of grapevine lesf area estimationUploaded bymister kid
- sp99zu01Uploaded bynaila_fitriah13
- Project Part C(Final)Uploaded bynirmitshelat
- Notes on Linear Regression Analysis--Robert NauUploaded byud
- Madsen Et Al-2002-Water Resources ResearchUploaded byayman_awadallah
- 1. Article Azojete Vol 10 1-11 WaziriUploaded byOyeniyi Samuel Kehinde
- CookUploaded bywindhyfrida
- Fu Ch11 Linear RegressionUploaded byKrithika Kaushik
- Lampiran Data KuisionerUploaded byrizkal rizaldi
- Hasil Spss FerisUploaded byKethut Suswantoro
- Variables Entered.docxUploaded byKapten Kid
- 2. Format. Man - Influence of Customer Relationship Management on the Business Performance of Smes in Case of Manufacturing Industry, SrikakulamUploaded byImpact Journals
- latihan 1Uploaded byDian Agustin
- Output SPSS.docxUploaded bybig_fir
- Uji Normalitas 2 PerlakuanUploaded byrahayu ayu

- OCW SKN3022 Instrumentation Ch 3Uploaded byramajax
- 204 spring 2011.pdfUploaded bycombatps1
- Linear PM generator for wave energy conversion.pdfUploaded byAwan Uji Krismanto
- The Mind Map BookUploaded bysooner123456
- Question Paper CheckedUploaded byAbhishek Kumar Chambel
- Inventory ProcessUploaded bybharat8791
- Chapter-1 History Physical Chemistry HdpeUploaded byUSUIE
- Catalog 2019Uploaded byNelson Jebasingh
- MODULE EASA 7Uploaded byRzVaan Arfi
- Fabrication_steel Scope of WorkUploaded byNatthawut Cheencharoen
- Assignment 1Uploaded byizatul_hairani
- 9D17102 Conduction and Radiation Heat TransferUploaded bycomputerstudent
- CA Cloud Base 2 j15 HelpUploaded byMade Sariyanta
- En Switch v6 Ch03Uploaded byMohamed Anass El Atrach
- Zapatista corn: A case study in biocultural innovationUploaded byOmarFelipeGiraldo
- BUJIA - NGK 2012Uploaded byEsteban Lau
- DIGSI-5-QN0004Uploaded byZoki
- Vasterman Media Hype 2005Uploaded byPeter Vasterman
- 74LS164-SIPO_Shift_RegisterUploaded byappalaraju2010
- Manual Java en EspañolUploaded byDíazGozue
- Procedure-for-WQT.docUploaded bywalitedison
- The Basics of Safety-1Uploaded byAnonymous ogx9ygX
- SRS TemplateUploaded byAaron Murphy
- B.srinivas Resume 09-04-11Uploaded byanuvas
- zcs zvs ieee exactUploaded byapi-344035309
- Abstracts OnlineUploaded by沈益
- Recruitment & Selection at BHARTI AIRTELUploaded bypreet
- Generalized state estimationUploaded byAnonymous 1880JHcG
- Manual Motor Ford V10Uploaded byNatan Hernandez
- Samsung 540, 740, 940 Service ManualUploaded byike4546

## Much more than documents.

Discover everything Scribd has to offer, including books and audiobooks from major publishers.

Cancel anytime.