European Journal of Information Systems

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Research opportunities in information technology

funding and system justification

Ken Peffers & Brian L Dos Santos

To cite this article: Ken Peffers & Brian L Dos Santos (2013) Research opportunities in information
technology funding and system justification, European Journal of Information Systems, 22:2,
131-138, DOI: 10.1057/ejis.2012.60

To link to this article: https://doi.org/10.1057/ejis.2012.60

Published online: 19 Dec 2017.

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GUEST EDITORIAL
Research opportunities in information
technology funding and system justification
Ken Peffers1 and
Brian L. Dos Santos2
1
Lee Business School, University of Nevada Las
Vegas, Las Vegas, NV, USA; 2College of Business,
University of Louisville, Louisville, Kentucky
Correspondence: Ken Peffers, Lee Business
School, University of Nevada Las Vegas,
Las vegas, NV 89154, USA.
Tel: þ 1 702 807 1181;
E-mail: ken.peffers@unlv.edu
European Journal of Information Systems (2013) 22, 131–138
& 2013 Operational Research Society Ltd. All rights reserved 0960-085X/13
www.palgrave-journals.com/ejis/
Abstract
This article reviews IT funding and system justification practice and research in
two dimensions, previews papers in the special issue on ‘Information tech-
nology funding and system justification in the organization’, and identifies
opportunities for research in IT funding. IT funding decisions have been hard
problems for firms and, because IT investments are so pervasive, they have
been very important. Here we review IT funding decisions and research about
IT funding historically, using two dimensions, justification dynamism and
justification evidence. Over time, the IT funding decisions have changed from
static, one time events to iterative and even continuous efforts. Early IT funding
decisions were based on finance and accounting models, but changes in the
purposes of new systems have necessitated justification based on a variety of
qualitative measures. We preview the six papers in the special issue, with an eye
to introducing them to readers and also to looking for areas that represent
opportunites for future IS research. Finally, we identify eight areas that should
represent good opportunities for future research in IT funding and systems
justification.
European Journal of Information Systems (2013) 22, 131–138. doi:10.1057/ejis.2012.60
Keywords: IT funding; system justification; event study; options value; IT projects; cost
benefit
Introduction
IS researchers have long focused on problems related to the identification,
selection, development, and implementation of new IT-enabled opportu-
nities available to firms (Dos Santos et al, 2012). Within this broad scope,
one stream of research has addressed problems related to IT funding and
system justification (hereafter IT funding) research. IT funding research
aims to improve processes by which firms determine whether they should
make new IT investments. Within the past several decades it has become
clear that most major investments by firms, whether for processes,
products, supply chains, or support, require complementary IT invest-
ments. Clearly, IT funding research is important.
Although firms have made very large IT investments in recent decades,
these investment decisions have never been easy. Many of the biggest
challenges have been in identifying and estimating the benefits and costs
for new IT applications. Consequently, most of the IT funding research to
date has focused on funding for new IT applications. Today, however, the
IT funding decision landscape has become much more complex. Many
firms have become so dependent on the continuous operation of
transaction systems that a disruption in their functioning for even an
hour is damaging to the firm. Infrastructure investments necessary for
continuous operation, as well as for new investments are often made
independently of application investments. Sourcing decisions, including
132 Research opportunities in IT funding
Justification Dynamism
Static
One-time (Myers 1984; (Cao et al. 2013; Dos Santos, 1991;
Zheng et al., 2013) Khan et al., 2013)
The frequency or reoccurrence of evaluative or justificatory action
Quantitative
Justification Evidence
Finance
Options (Dos Santos, 1991 (Bernroider, 2013; Zheng et al., 2013;
Market study Khan et al. 2013; Cao et al., 2013, Rockart, 1979;
Filbeck et al., 2013) Kling, 1980; (Peffers et al., 2003)
The process and evidence used to justify resources for new systems.
Figure 1 Two dimensions of IT funding process and thought.
the use of packaged applications and infrastructure ser-
vices add another dimension to the investment decision.
The rise of iteratively determined requirements and incre-
mental development methodologies creates questions
about how to make the IT funding decision.
In this article we briefly review the landscape of the IT
funding decision and IT funding research to draw infer-
ences about where the opportunities may lie for a robust
new research stream that can make substantial contribu-
tions to the efficacy of the IT funding decision. In the
process we introduce six research papers that make up
this special issue on ‘Information technology funding
and system justification in the organization.’ We begin by
describing IT funding research in terms of two dimen-
sions along which much of the IT funding research to
date can be categorized. We continue by previewing the
papers in this special issue. Then we conclude by sug-
gesting eight general areas of opportunity for IT funding
research.
Dimensions of IT funding research
A look at IT funding decisions in two dimensions can
help us to identify key areas where IT funding research
opportunities may be found. The dimensions can be
characterized as justification dynamism, from static to
continuous evaluation, and justification evidence, from
quantitative to qualitative approaches. Figure 1 repre-
sents the two dimensions graphically.
On the first dimension IT funding research has moved
from static evaluation in early years to a mix of static,
iterative, and continuous justification now. Four things
about the context changed in the past four decades
that rendered exclusive use of static IT funding models
obsolete: investments in strategic systems, the move to
the institutionalists view of new systems, a shift to
incremental approaches to development, such as agile
development, and increasing investments in IT infra-
structure not tied to specific applications.
On the second dimension, there has been a trend from
the exclusive use of accounting and finance-based models
toward a mix of quantitative and qualitative methods
based not just on the nature of the investment, but also
on the social and cultural context in which the firm
European Journal of Information Systems
Ken Peffers and Brian L. Dos Santos
operates and the view of the firm’s relationship to this
Continuous context.
Iterative
Justification dynamism: static to continuous
Early IT funding practice generally followed accounting
Qualitative and finance processes to justify spending proposals on
Strategy the basis of capital budgeting practice, if they were
SSM
Socio-technical sufficiently material, to be considered investment, or as
overhead costs, if not (King & Schrems, 1978). This prac-
tice was based on several premises. First, the architecture
and functional requirements of the new systems were
reasonably well known and stable. Mainframe-based
automation projects lent themselves to large, highly
structured development efforts, for which highly struc-
tured methodologies, like the system development life
cycle, were appropriate. Second, the benefits that would
result from developing the system were, if not known, at
least estimable, with a reasonably estimable variance.
Most projects, early on, were automation of previously
manual systems, for which cost savings was the primary
benefit. As existing costs were easily tallied, cost savings
could be estimated with low variance and low levels of
uncertainty. Third, the estimated parameters would not
change markedly over the life cycle of the investment
because the processes being automated were well known
and stable. Simple automation projects lent themselves
to stable requirements over time.
Strategic systems (Rockart, 1979; Clemons, 1984;
Myers, 1984) in the 1980s altered the premises on which
static funding decisions were made. Strategic systems
changed the competitive nature of industries with new
information-based products, new delivery channels, and
substantially altered economies of scale and scope. The
appearance of strategic systems required firms to con-
sider dynamic changes in competition that required fast
response. Consequently, it was no longer certain that
estimated costs and benefits or even functional require-
ments would remain the same over the life of the project,
much less the expected life of a new system or application.
The second change in context that affected the static
funding model was the rise of institutionalist views of IS
and their impact on funding practice. One premise of the
static funding model, based on accounting and finance
theory, is that funding decisions are based on a unified
model of the firm, where the purpose of any investment
decision is to maximize returns for the firm’s owners, that
is, its equity and bond holders (Brealey, 2007). Institu-
tionalist views come in many flavors, but their essence for
this purpose is that they view the firm as an ecosystem of
competing interests: labor vs management vs the com-
munity vs customers, people of different classes, social
actors with various identities who are members of
political groups in and around the firm (Kling, 1980;
Avgerou, 2000; Rai & Tang, 2010). These two views may
sometimes be reconciled in practice, when the interests
of owners and other stakeholders coincide, however they
are fundamentally different. They may result in very dif-
ferent outcomes, for example, when a funding decision
 Research opportunities in IT funding
would benefit workers, but not be well justified by cash
flow.
The third event that affected the efficacy of the static
funding model was a general move over time toward
phased and iterative system development. At first,
incremental development was proposed as a mechanism
to reduce system development risk by breaking large
projects into smaller ones that delivered system outcomes
in smaller, more quickly delivered packages (Ji et al,
2005). Next, development concepts such as application
prototyping, moved the development process toward the
idea of provisional requirements (Conboy, 2009; Doolin
& McLeod, 2012). At first prototypes were used to test and
revise the user interface, but over time, their use has
moved forward in the system development process until
prototyping was used as part of the process to determine
the basic functionality for new applications. When that
happens, costs and benefits cannot be estimated in
advance, because the functionality is uncertain. Finally,
new development methodologies, such as agile comput-
ing, spiral development, hacking, and extreme program-
ming, make it very difficult to estimate costs and benefits
with reasonably certain variance, because the basic
functionality and architecture of the solution is not
determined in advance.
Fourth, infrastructure investments have over the past
several decades become more independent of applica-
tions and more important for the firm. In the mainframe
era, infrastructure and applications were typically justi-
fied together; processing capacity, storage capacity, and
communication infrastructure were designed as part of
an application system development project. Disruptive
technology changes were not anticipated. Today, proces-
sing capacity, data storage, and communication capacity
together comprise infrastructure for the firm that must be
justified, funded, and sourced, largely independent of
justification for specific application systems (Byrd &
Turner, 2000). Furthermore, to the extent to which they
are independent of specific applications, these invest-
ments are often not easily linked to specific benefits.
Instead they create options for the firm to make sub-
sequent investments in applications for new processes
and products that are beneficial (Benaroch & Kauffman,
1999).
Option value is created when a first investment in
IT infrastructure creates the right, but not the obligation
to make a subsequent investment. For example, for a
university, investments in Internet 2.0 capacity might
provide an opportunity to develop an online masters
program in nursing. The communications investments,
by themselves, don’t create the online program and the
decision to develop such a program may not have been
made, so a static funding justification model could not
attribute tuition revenue from the masters program to the
Internet 2.0 investment. Nonetheless, the option to make
a subsequent investment does have value. A variety of
IT investments now provide infrastructure that enable
follow-on investments, for example, ticketing systems
Ken Peffers and Brian L. Dos Santos 133
(Ting et al, 2009). A number of IT funding papers treat
IT infrastructure investments as options, for example,
(Fichman, 2004; Pendharkar, 2010; Cao et al, 2013; Khan
et al, 2013)
Justification evidence: quantitative to qualitative
A second dimension for justification processes and evi-
dence observes the extent to which new IT investments
are justified on the basis of quantitative measures, gene-
rally directly related to financial impact, or on a variety
of qualitative, categorical factors that are not easily
measured in financial terms. When firms first began
using IT, justifying the investments was fairly straight-
forward. The early applications of IT in corporations
involved replacing clerical and other information work-
ers, whose work could be performed by IT applications.
Estimating the savings from elimination of staff was a
simple arithmetic exercise, which, coupled with the use
of simple capital budgeting tools, made it easy to justify
technology expenditures.
Several concepts and techniques characterize early use
of these financial measures to justify IT investments. Cost
and benefit analysis seeks to juxtapose financial costs of
developing and operating new systems, with expected
financial gains, so as to determine whether the firm
will realize a net gain (King & Schrems, 1978). Related
techniques borrowed from finance theory included cash
flow and discounted cash flow (Nasher et al, 2011) and
(discounted) return on investment. These techniques
related cost and benefit analysis more closely to what
finance theory considers as central to the purpose of the
firm: to generate after tax cash flow for its owners.
Although we describe these methods as related to early
investments, they have by no means become irrelevant
today. Most IT steering committees and their equivalents
include representatives from the finance wing of the firm,
for example, (Varon, 2003), and project proposals generally
give at least lip service to some kind of cash flow argu-
ment, no matter whether the project is being primarily
justified on the basis of estimated returns or not.
Financial markets react to new material information
about a firm by bidding the firm’s stock price up or down.
Event studies make use of this phenomena to deter-
mine whether new IT information, for example, about IT
investments, newly created CIO positions (Chatterjee
et al, 2001), and IT processes (Filbeck et al, 2013), is
thought by investors to change the value of the firm. So
far, event studies have been used to determine the
systematic impacts of categorically defined behaviors
and investments, but they have not been extended for
practical use at the project level as methods for ex ante IT
funding justification. The standard event study approach
is ill suited for use in ex ante evaluation of individual
projects, as it requires a sample of announced events
(new information) to estimate impact.
Option pricing models fit well into the quantitative
side of this dimension. They seem well suited for ex ante
evaluation, and as demonstrated by Dos Santos (1991),
European Journal of Information Systems
134 Research opportunities in IT funding
they are not exceedingly difficult to estimate, but in their
quantitative form may seem difficult to understand and
implausible or difficult to explain. There is little evidence,
consequently, that in their quantitative form they have
much influence on IT funding (Fichman et al, 2005).
Managers are more likely to use an intuitive version of
the options model, for example, ‘if I make these invest-
ments in network infrastructure, I’ll be able to decide
later whether to invest in e-commerce applications.’ That
turns options value estimation from a quantitative into a
qualitative argument.
In using strategy as the justifying paradigm for IT
investments, the decision maker is aligning the invest-
ment with the mission of the firm, given the firm’s
product portfolio, resources, and capabilities, its target
customers and pricing concept, the structure and com-
petition within the industry, and similar factors. These
factors affect firm’s IT investments (Dewan & Michael,
1998). Critical success factors (CSF) (Rockart, 1979) are a
short list of things that the firm must do right to survive
and prosper. Using CSF’s to justify IT investments is a
very qualitative and intuitive methodology. Earl (1993)
suggested a holistic approach based on organizational
strategy. Interestingly, the intuitive argument for options
value and the strategic argument for value may in some
cases be very similar. If the manager says, ‘I’ll make the
investment in network infrastructure, because the firm
should be moving into the development of e-commerce
applications in the near future,’ she is making a strategic
argument and/or an options value argument.
Systems thinking (Checkland, 1999) is another approach
that looks at whole systems of interactive elements to
ascertain all of the interactions and effects of a proposed
technology investment, for example, (Panagiotidis &
Edwards, 2001). Soft systems methodology elaborates
on system thinking by incorporating larger social systems
into IS portfolio planning and system development
efforts (Winter et al, 1995; Córdoba & Midgley, 2008) or
by modeling networks of actors in and around the firm
(Atkinson, 2000). Socio–technical systems consider not
just technical matters and financial returns to the firm,
but also organizational, human, and community factors,
effectively negotiating a satisfactory overall solution for
all stakeholders (Lyytinen & Newman, 2008; Sommerville
et al, 2012)
Papers in this issue
Schryen (2013) observes that the number of published
papers on IS business value has declined since 2000, not
because of a decline in interest in the subject by editors and
reviewers, but because researchers have turned their atten-
tion to other matters. His objective, as the title suggests, is
to explicate the known and the unknown about IS business
value research and to infer opportunities for new lines
of productive research. This article holds promise as an
important point of departure for new research.
There is a good deal of overlap between business value
research and IT funding research. The two streams differ
European Journal of Information Systems
Ken Peffers and Brian L. Dos Santos
largely on evaluation timing, level of aggregation, and
the object of evaluation. IT funding research largely addresses
ex ante estimation of investment value for the purpose of
deciding whether to fund IT investment opportunities.
Conceptually, business value research entails an estima-
tion of value at any time in the conception, design,
implementation, and use phases of the IS life cycle. In
practice it is ex post measurement, because that is where
the actual impacts can be observed. IT funding research is
dominated by attention to projects and portfolios of
projects because that is the way firms generally make
their IT investment decisions. Business value research
includes work done at the level of the economy, industry,
firm and application levels, with an emphasis at the firm
level.
Interestingly, one of Schryen’s solutions to the malaise
that he observes in business value research is to make it
more like IT funding research, for example, by disaggre-
gating the object of evaluation to bring it closer to the
individual project. Making this shift can make IT value
research much more useful. Measuring IT value at the
firm level helps make the case that IT is having a positive
impact on firms, but does little to help us understand
how IT provides value. Studying business value at the
level of the individual project can help us understand
how IT use affects value and can help improve IT
products and processes.
Ideally, business value and IT funding research should
complement each other. IT funding research can help
business value research by providing the bases from
which researchers look for business value, and business
value research can help IT funding research by identify-
ing sources of value and providing better value estimates.
However, this can only happen when both streams of
research are undertaken at the same level, preferably, the
level at which investment decisions are made (typically,
the project level). The inferences drawn from research
about the business value of IT at the firm level, is unlikely
to inform those charged with the valuation of a specific
project, for example, the consolidation of two data centers
into one or a proposed smart phone application for
banking.
Schryen proposes a research agenda based on six
research thrusts that he asserts are neglected: under-
standing the IS business value construct; accounting for
the context of evaluation; disaggregating IS investment
impacts; accounting for synergies and complementarities
in disaggregated IS investments; and how IS assets, IS
capabilities and other firm capabilities affect each other
to create value (internally and in competition). These
thrusts can form the bases for many new and important
research endeavors.
Filbeck et al (2013) introduces readers to the contem-
porary potential of the event study methodology for
IS researchers. Event studies harness the power of the
investment securities markets to observe the value of
investments and behavior of the firm. Early event studies
in IS determined whether IT investments were worth
 Research opportunities in IT funding
more than they cost, for example, (Dos Santos et al, 1993;
Im et al, 2001). Subsequent event studies have broached a
variety of research questions, including strategic (Sabherwal
& Sabherwal, 2005), behavioral issues (Hunter, 2003),
and investments in infrastructure (Subramani & Walden,
2001).
Event studies observe the impact of new information
on the firm’s stock market price. These methods have
been very widely used in accounting and finance
literature to study such phenomena as the impact of
accounting rule changes, governance architecture, and
personnel changes in the firm, for example, (Patell, 1976;
Loderer & Mauer, 1992; Ittonen, 2012). The methodology
is based on the semi-strong form of efficient market
theory (Fama, 1991), which asserts that all publicly
available information is quickly reflected in current asset
prices for traded securities. Event study models generally
incorporate a market model (Elton & Gruber, 1987), that
is, a linear regression model that seeks to predict the
effect of changes in the general securities market, for
the period of interest, on the price of the firm’s stock. The
estimated market impact price change, given no firm-
specific information, is subtracted from the actual
impact, given that some potentially relevant firm-specific
information becomes available, plus an error term. Given
a sample of events with a common characteristic of
interest, the null hypothesis is that the event has no
impact on the value of the firm, that is, the actual impact
of the new information is zero.
Filbeck et al’s paper describes an event study to deter-
mine the value of implementing the capability maturity
model (CMM), a standard for software and systems
process development and improvement. The paper differs
from most of the earlier event studies in the IS literature
in that they estimate the impact of an important IS
process decision. They do this by using long-term returns
that is, annualized returns, and modifying the basic
event-study model in a number of ways. The typical
event study determines the effect of new information
using a much shorter window, for example, 2 days. The
reasoning is that the financial markets react very quickly
to new information and immediately revalue the firm
based on the new information. Another elaboration is the
addition of estimation parameters to the market model
for behaviors of interest, in this case for implementation
of certain levels of the CMM. A third elaboration is to
compare returns of the firms that implement CMM with
returns of a paired sample of firms that do not have a
public record of having implemented CMM. This is an
example of a quantitative research effort to study a
qualitative, strategic IT management concept.
Cao et al (2013) tackle the unexplored territory of
justifying IS projects that employ agile development
methods, where the cost, schedule, and scope of the pro-
ject are often very much unknown. Traditional funding
and justification processes assume that cost, schedule and
scope, if not known, can at least be estimated with
understood levels of risk. With agile methods, knowledge
Ken Peffers and Brian L. Dos Santos 135
of these parameters is deliberately foregone in the interest
of flexibility and speed of execution.
This is an exploratory study, using case study metho-
dology, that aims to frame the issues and to describe some
of the in-practice solutions, while organizing them in
terms of adaptive structuration theory (AST) (DeSantis &
Poole, 1994). The study uses multiple qualitative data
collection methods, including interviews, observation,
and evaluation of documents, involving 12 projects from
as many organizations. All of the projects involved the
use of a type of agile development.
The key contributions of this article include the
identification of six conflicts between agile development
methods and key requirements for traditional project
justification and eight practices that mitigate or negotiate
acceptable justification performance. The conflicts invo-
lve evolving functional requirements, the delay in imple-
menting non-functional requirements, fluid delivery
schedules, flexible developer agreements, continuous pro-
ject control, and incremental design costs. The practices
that mitigate these conflicts involve disaggregating the
justification outcomes and building trust among the
parties involved.
The nature of the study and of the evidence provided
by the authors doesn’t lend itself to the inference of theory
supported by strong evidence, but it does provide a rich
and practical theory. Coming as they do from multiple
case studies, the research results are sufficiently rich and
practical to be potentially useful in their current form for
use in real world justification of investments where agile IS
development methods are used. In addition, the article is
likely to serve as the basis for much subsequent research, as
it leaves much to be proven and much detail to be filled in.
This is an example of a qualitative research effort to study a
problem in dynamic IT funding decision making.
IS investment literature has long recognized that
investments in infrastructure can affect future cash flows,
but that these cash flows often depend in part or whole
on subsequent IT investments, for example, in applica-
tions that make use of the infrastructure. Managers can
and do defer decisions about whether to make these
‘future’ investments, when to make them, and the
specifics of these investments, until later periods. Conse-
quently, for infrastructure investments, a substantial
portion of the value of the investments is determined
by probabilities of positive cash flows from investments
that managers have not yet committed to make.
Discounted cash flow-based analysis is not well equipped
to capture this value, in part because it uses the ‘expected
value’ to determine cash flows. Expected value includes
negative cash flows that may never occur in reality when
managers can change future investment decisions.
The solution to this problem is to evaluate these
potential cash flows as options, that is, investments that
managers can make when future cash flows can be
predicted to be positive, but can eschew if they don’t
(Dos Santos, 1991; Panayi & Trigeorgis, 1998; Benaroch &
Kauffman, 1999). Unfortunately, because real options
European Journal of Information Systems
136 Research opportunities in IT funding
analysis is difficult to implement for IT investments or
because it is difficult to explain to decision makers, few
firms use real option analysis to evaluate such invest-
ments. Instead they use intuition to incorporate options
value into the evaluation of proposed projects (Fichman
et al, 2005).
Unfortunately managers are inconsistent in their
preference for cash flows over time, with a bias tilted
toward near term cash flows, resulting in suboptimal
decisions to execute options that result from infrastruc-
ture IT investments (Khan et al, 2013). In this issue, Khan
et al (2013) model how these temporal inconsistencies
effect managers, who do not realize their biases, evaluate
IT investment options, compared with the evaluations of
time-consistent managers. An inference is that time-
inconsistent managers may sub-optimize the timing of a
follow-up investment, perhaps buying into applications
involving new technology before it is sufficiently mature.
An objective methodology is required to adjust for this
time-preference bias to insure that managers can make
the best decisions about follow-on investment timing.
Managers with bias tilted toward near term cash flows
may exercise growth options early. Hence, in addition to
using an options approach to evaluate infrastructure
investments, firms may need to devise incentives to
mitigate the effects of near term bias. Understanding the
effects of time inconsistent preferences may help in
designing better incentives. This work is an example of
the use of quantitative methods to study a dynamic IT
funding problem.
Zheng et al (2013) identify factors that affect the
decision to adopt government-to-government eCom-
merce systems. When justifying IT funding in public
organizations, cash flows typically are not considered a
primary decision factor. Zheng et al (2013) combine
institutional theory and the resource based view of the
firm to model the decision factors for IT adoption in
public sector organizations. From institutional theory,
three factors affect top management commitment to the
investment, coercion, mimicry, and normative pressures.
From the resource based view of the firm, top manage-
ment commitment results in financial and personnel
resources to be applied to the investment. These resources
determine the intention to adopt.
Their model is partially supported with quantitative
evidence from data collected in a survey of government
managers in China. Their results suggest that the primary
influences of IT adoption are social and institutional,
rather than value based. This work is an interesting start
to understanding how public organizations make IT
funding decisions. There are many opportunities for
researchers to expand on their work and increase our
understanding of IT funding in public sector organiza-
tions. This work is an example of the use of a qualitative
approach to study a static estimation problem.
Bernroider (2013) describes a study that investigates
how funding behavior affects project performance and
success. He uses a sample of Austrian enterprise resource
European Journal of Information Systems
Ken Peffers and Brian L. Dos Santos
planning (ERP) projects to investigate how the role of
project ‘activators,’ that is, senior managers or IT depart-
ments that bias ERP projects toward technology or strategy,
affect the functional balance of the project team and
resource decisions. Then he looks at whether resources
expended to justify the projects and, in particular, the use
of outside consultants to perform justification services,
affect the cost and effectiveness of the project.
The results of this study are important in that they
have much to say about whether the resources spent on
IT funding are themselves justified, that is, do more IT
funding resources lead to better outcomes? Can you have
too much support for the IT funding decision? This
article suggests a somewhat non-intuitive line of reason-
ing and evidence in favor of wide participation in the
justification and requirements phases, as suggested by
Peffers et al (2003), and it suggests that consultant
participation in the justification process has negative
effects. This work is an example of the use of a quanti-
tative approach to study a static estimation problem.
Conclusion: opportunities for IT funding research
We conclude this article by recapping and extending
eight general opportunities for IT funding research that
are suggested by the preceding discussion and the other
papers in this special issue.
Schryen’s (2013) paper itemizes an agenda for business
value research consisting of research thrusts: understand-
ing the IS business value construct; accounting for the
context of evaluation; disaggregating IS investment
impacts; accounting for synergies and complementarities
in disaggregated IS investments; and how IS assets, IS
capabilities and other firm capabilities affect each other
to create value (internally and in competition). Several of
the thrusts suggest complementary IT funding research.
For example,
1. It is generally the business value construct in some
form that is estimated ex ante in the IT funding deci-
sion. In this article we have outlined a number of
permutations of the IT funding context, in terms of
justification dynamism and the quality of the evi-
dence. If IT funding practice is to be able to adapt to
the many permutations possible, new concepts and
techniques are required to incorporate dynamic justi-
fication and qualitative evidence of many types into
the business value construct. That should provide
many research opportunities to integrate and extend
IT business value and IT funding concepts.
2. Efforts in business value research to disaggregate IT
investments may place this stream of research closer to
IT funding research and practice, in terms of level of
aggregation. As that occurs it may become useful to
develop concepts and methods to bring evidence from
business value research to support the IT funding
decision.
3. Research about how IS assets, IS capabilities, and firm
capabilities affect each other has the potential to
 Research opportunities in IT funding
create knowledge that can be brought to the IT
funding research table.
In general, IS business value research should be
contributing to IT funding research and practice. Several
of the suggested research thrusts have the potential to
render knowledge about how IS investments affect
business value more usable in the ex ante IT funding
context.
Event study methodology has been extended to enable
it to observe the systematic business impacts of behavior-
al and strategic decisions in the firm, however, it has not
yet been adapted as a useful tool for ex ante IT funding
decisions.
4. Research to extend event study methods so that they
can enable fine grained and conditional inferences
would be useful for IT funding practice.
Cao et al (2013) identified six conflicts between IT
funding practice and agile development, including evol-
ving functional requirements, the delay in implementing
non-functional requirements, fluid delivery schedules,
flexible developer agreements, continuous project con-
trol, and incremental design costs. In reality these
conflicts apply to a varying extent to all development
processes, where the development process is in any way
incremental or where the business value proposition is
likely to change during the life of a project or the life of a
system.
5. Conflicts between nominal IT funding practice and
real IT development practices reflect our current
reality. Research to accommodate this dynamism in
IT funding decision making and downstream
management control, is critical and should provide
many opportunities for important and impactful
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