International Conference


IT VALUE ESTIMATION USING PARTIAL ADJUSTMENT VALUATION WITH TOBIN’S Q DYNAMIC FACTOR

Lastri M.A Doloksaribu1, Lukman Abdurrahman 2, Rohkman Fauzi3
1 Student of Information System, School of Industrial Engineering, Telkom University, Bandung, Indonesia, 40257
2 Information System, School of Industrial Engineering, Telkom University, Bandung, Indonesia, 40257
3 Information System, School of Industrial Engineering, Telkom University, Bandung, Indonesia, 40257
Email: [email protected]; [email protected], [email protected]

The rapid development of Information Technology (IT) directly and indirectly forces companies to adopt IT in the company’s work processes/systems. These developments and being followed by the Covid 19 pandemic directly demanded almost all lines of life, especially in companies, to utilize IT to support the continuity of processes/performance systems in the company. IT is a system used by companies to optimize company performance. To find out, it is necessary to measure IT performance in work units that adopt IT, which is called IT Value. The value of IT is a quantitative measure of the use of IT in the company whether it provides positive or negative optimization for the company. The value of IT can be used as a measure of a company’s value in the market after and before using IT. Measurement of IT Value can be done in various ways, in this journal research the estimation of IT Value uses Partial Adjustment assessment with two-factor model (primary data K, L, Tobin’s Q) and three-factor model (with primary data K, L, I, Q Tobin). The estimation results of the two-factor model and the three-factor model will be compared to calculate the Performance Measure of IT Value in terms of Performance Ratio (PR) in ratio units and Performance Value (PV) in rupiah. The results of the value of IT PV and PR can be used by companies as evaluation and decision-making materials for optimizing the use of IT in the company for the present and the future.

Keywords: IT Value, Partial Adjustment Valuation, Dynamic Speed Adjustment, Tobin’s Q, SPSS

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IT VALUE ESTIMATION USING PARTIAL ADJUSTMENT VALUATION WITH MVA DYNAMIC FACTOR

Maiziah Azka Nurhakim1, Lukman Abdurrahman 2, Rokhman Fauzi 3
1 Information System, School of Industrial Engineering, Telkom University, Bandung, Indonesia, 40257
2 Information System, School of Industrial Engineering, Telkom University, Bandung, Indonesia, 40257
3 Information System, School of Industrial Engineering, Telkom University, Bandung, Indonesia, 40257
Email: [email protected] 1, [email protected] 2, [email protected] 3

This paper discusses the substance of the value of IT in an IT-based company, namely PT. Telkom Indonesia. IT value is a value in financial benefits when capital expenditures include IT factors compared with capital expenditures that do not include IT. Nowadays, IT has become a business enabler that can improve the performance of business organizations efficiently and effectively in the company. The method used in this study is Partial Adjustment Valuation (PAV), which states that changes in output that occur in the production process are usually not exactly the desired one, so a Speed of Adjustment coefficient is needed to bridge the desired output with the actual output. This paper uses Dynamic Speed of Adjustment to calculate the fluctuates in IT values and the Market Value Added (MVA) factor to measure its dynamics. This study uses two calculation models: a three-factor model (K, L, and I) and a two-factor model (K and L) to prove the benefits of the IT value within a company. These measurements are split into two units: the currency unit (Performance Value) and the ratio unit (Performance Ratio). This paper leads to an understanding that the value of IT is real in improving business performance and refutes the paradox that states there is no relationship between IT investment and the size of the profits received by the company. Thus, the results of this study are open to studies that discuss the value of IT to develop further.
Keywords: it value, mva, pav, speed of adjustment, spss

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Parallel Construction of Information Technology Value Model: Design-Science Research Methodology

To date, the study model of IT value usually takes the form of a serial construction relating its components. This paper tries to offer a parallel construction in modeling the IT value study. The applied methodology is the design-science research approach to create the construction relating its components. To perfect the construct, the paper applies the partial adjustment valuation that functions as an estimating technique to approximate and evaluate the mathematical magnitude of the performing returns of a component compared to the real figures. The developed pattern undertakes a case study with Mandiri’s data, an Indonesian state-owned banking industry, shows that the estimated revenue of the parallel configuration has a deviation of only 0.28% when compared with the bank’s real revenue during the period 2004-2014. Thus, the parallel configuration may appear as the alternative configuration in the study of IT value as a result of its authenticity academically as well as pragmatically.

KeywordsIT value model, design-science research, parallel construction, artefact, component

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Methodology Development of Information Technology Value Engineering using Systems Engineering Approach

This study directs to research the developed business performance based on optimal costs, which is enabled by an IT value engineering concept, namely an engineering method due to IT inclusion within an organization to generate excellent performances at minor cost. Thus, the method is using systems engineering in which the processes through an engineering design the process by defining the problem, generating alternative solutions, selecting a solution, detailing the design, validating the model. Furthermore, this methodology combines with the resource-based view and the partial adjustment theories. At that point, the results disclose a parallel fashion model to remain business performance completely at minimum costs.
Keywords—business performance; partial adjustment; IT value engineering; systems engineering.

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Development of Methodologies for Measuring IT Capability in the Information and Communication Industries

There are many studies regarding the IT (Information Technology) value, however, until now there are not yet any researches discussing an exact method to estimate this value. Accordingly, this study tries to present a methodology to assess this value using both qualitative and quantitative methods. The offered methodology addresses the valuation of IT by means of IT value definition approach as a division of functions by costs. This valuation will be achieved by analyzing functions and costs previously, in turn, results in the intrinsic IT value. Additionally, this methodology using the Telkom data is simulated to test its accuracy. The results show that there is an alignment between the offered methodology and the case study, although there still should be improved here.
Keywords— IT value, methodology, intrinsic value

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Information Technology (IT) Value Model using Variance-Based Structural Equation Modeling: Towards IT Value Engineering

Information Technology in business is significant. This study tries to trace the relationship between IT value and firm performance. The methodology of the study is analyzing some variables forming the relationship of IT value to  firm performance based on the Resource-Based View Theory. The analysis results in IT Value Model using Variance-Based Structural Equation Modeling. Using computer simulation data and an SEM application software, the conceptual models are tested. The testing consists of the outer model, the inner model, and the hypotheses testing. The outer model testing is to examine the relationship between the reflective manifest variables and their construct.  Similarly, the inner model and hypotheses are tested to make sure that among the constructs have causality relationships. According to the testing results, the models meet the fit model criteria as required by the Variance-Based SEM. Likewise, the hypotheses can be accepted. Furthermore, the IT value engineering concept can be developed referred to the fit model and linked to business requirements.
Keywords—Modeling; Resource-Based View; IT value; Structural Equation Modeling; outer model; inner mode; IT value engineering

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Comparison of RBV-Based Information Technology (IT) Value and IBM-Based IT Value Model

IT values are the interests of organizations that invest the IT resources. Creating IT value can be carried out using the RBV-based IT value model and the IBM IT value model. The researchers stated that the major theory adopted to understand the relationship between IT and firm performance is Resource-Based View (RBV) theory. Drawing from the RBV, IT must be one of the resources to build IT capability. The other methodology to do the relationship is IBM IT Value Model. This model is more practical than RBVBased IT Value Model. However, both model can be combined in order to produce a complete model. As a result, IT will be able to create IT values to raise business performance. The better business performance leads to a firm sustainable competitive advantage.

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Modeling Information Technology (IT) Value: An Ontological Approach towards IT Value Engineering

The use of IT has become a necessity in today’s business because of its benefits, which has been felt in the daily work. Consequently impressed that IT spending into massive without considering again the ability to control. Therefore, it needs to research values of IT in terms of relationship to business performance so, in turn, there will be created an IT value model. The methodologies adopted to do this research are a meta-analysis, Resource-Based View analysis, value engineering analysis, systems engineering analysis, and business model analysis. The study results in IT value conceptual model and IT value business model. Both models can lead to reposition the IT role within the business, on one hand. On the other hand, the models will increase its role such that “the picture” of business can be controlled due to IT value engineering as well.

KeywordsIT, value, reposition, engineering, model, business.

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IT Value Analysis by Resource-Based View Theory: The Case Study of PT. Telekomunikasi Indonesia, Tbk.

It’s believed that IT spending has influenced business performance. This departs from a theory, which stated that resources owned by business organizations have closed relationship to levels of the business competitive advantage as Resource-Based View (RBV) theory proposes. To confirm this theory, a case study is performed for PT. Telekomunikasi Indonesia, Tbk., the largest telcos industry in Indonesia. Researched data refer to Telkom Annual Report published between 2005 and 2012. The study focuses on data reflecting the relationship between IT spending and business performance. Findings show that IT spending has had a positive correlation to Telkom IT revenue. Likewise, metric-based performances such as ROA, ROE, Tobin’s q, and MVA have shown positive values, which strengthen the hypothesis above that the managed resources are in line with firm’s profitability, effectiveness, and total-amount value created. Telkom IT resources referring to RBV are then analyzed in terms of IT capability, IT competence, and competitive advantage that lead to being the IT value model.  To sum up, the case study result indicates that IT value has definitely affected Telkom business performance. However, it is necessary to enlarge the case study to the other similar industry or the different one.
Keywords: Telkom; resource-based view; IT value; business performance; IT resource; capability; competence; competitive advantage.

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Modeling Information Technology Value

This paper offers a comprehensive study to research the relationship between IT and business performance. According to Resource-Based View (RBV) theory, the study explores parts of resource and business performance based on 24 studied papers using meta-analysis methodology. In order to understand IT value within the business, the study breaks down IT value into the resource, capability, competence, and competitive advantage component. The well-managed resources will result in capabilities. Furthermore, the capability will embody as a core firm competence. The competence leads to achieving more market share because of improvement of its competitive advantage. Previously, the researchers have highlighted the study directly between resources to competitive advantage or resources to capabilities then to competitive advantage. However, this study has not yet formulated details of factors/parameters of those components. Also, the limitation of the meta-analysis is that results are based on prior research conducted on different sources at different times, in turn, it may cause study biases. Moreover, the model might be an urgent requirement of industries because they will take care of IT investment to obtain a normal return in terms of the spent investment.
Keywords: IT resource; resource-based view; IT capability; IT competence; competitive advantage, meta-analysis.

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