Information System Flexibility And The Cost Efficiency of
Business Processes
Judith Gebauer, Assistant Professor of Business Administration, UIUC
In order to be effective, an information system (IS) needs to be flexible, that is, it must be
able to accommodate a certain amount of variation regarding the requirements of the
supported business process. Despite many previous studies on the flexibility of
organizations, processes, and various organizational technologies, the economics of
flexibility are not yet well understood. The current paper contributes to IS theory building
with a focus on the impact of IS flexibility on the cost efficiency of a given business
process. We present a theoretical model that details the economics of two generic
strategies of IS flexibility (i.e., flexibility-to-use regarding the IS features that are provided
at the time of implementation, and flexibility-to-change regarding the IS features that
constitute an option for later system upgrade), and that also includes the possibility of
process performance outside of the IS (manual operations). Based on an analysis of the
model, we conclude that IS flexibility-to-change is cost efficiently deployed to support a
business process characterized by a high level of structural and environmental
uncertainty, whereas a low level of process uncertainty corresponds efficiently with IS
flexibility-to-use. The model also indicates that high process variability can improve the
importance of IS flexibility management in general, as it tends to limit the value of an IS
over manual operations, whereas a high level of time-criticality of process requirements
tends to increase the value of an IS over manual operations.
Slides