Assessing the strategic value of Information Technology: An analysis on the insurance sector

Even though companies today are well aware of the pitfalls in making IT investments and that many IT applications have become commodities, IT projects still fail. Obviously IT has a strategic value to firms but they have not determined how IT management capabilities and IT governance schemes explain commonalities and differences in their use of IT. We analyzed the insurance industry in the US and Europe through case studies and an analysis of 30 Italian firms. Twenty case studies carried out between 1998 and 2003 led us to conclude that technological and business path dependencies, along with time compression diseconomies, resulted in diversities in IT adoption dynamics due to their differences in IT governance and management practice. Our analysis showed that most of the firms in the Italian insurance sector increased their productivity through IT regardless of their IT management capabilities. It also showed that competitive advantages were not correlated with IT spending levels nor with the kind of IT investments that made general productivity growth in the industry possible.