Information System Flexibility and the Performance of Business Processes

Abstract

While insufficient flexibility of an information system to support a business process precludes the use of the system in certain cases, excessive flexibility of an information system can limit the usability of the system (Silver 1991), in addition to presenting an unnecessary investment. Despite a wealth of research on flexibility and its impacts on organizations and business processes (esp. manufacturing), the value of flexibility of an information system and the price at which it comes have rarely been included into the analysis, with the result that guidelines to determine an appropriate level of flexibility of an information system to support a given business process have not been developed. To support decisions regarding information system flexibility, the current paper presents an optimization model to relate business process characteristics (uncertainty, variability, and time−criticality) with two basic types of information system flexibility (built−in flexibility to use the information system and flexibility to change the information system). Based on an analysis of the model, we conclude that the focus of information system management should be on flexibility to change the information system in order to support processes of high uncertainty, while situations of low uncertainty tend to call for a focus on built−in flexibility to use the information system. The model also shows that very high process variability can limit the value of investments in an information system altogether, thus, improving the importance of careful flexibility and investment management, while a high level of time−criticality generally tends to increase the benefits of using an information system over manual processing.