Researching the Costs of Information Systems.

Author List: Jr., Lawrence A. West;
Journal of Management Information Systems, 1994, Volume 11, Issue 2, Page 75-107.
This paper explores the issue of scale economies in the construction of information systems. Economic theory is used to identify transaction attributes that contribute to scale economies and the concept of an information system is then decomposed into separable components. Each component is analyzed with respect to the availability of one or more of the sources of scale economy. The analysis finds that each component possesses at least some potential for realizing scale economies and that some components may realize very large per-unit cost savings as scale of system use or capability is expanded. The implications of these findings for the organization of information services, including outsourcing, are highlighted and illustrated with consistent examples from IS-intensive industries. Future research is proposed with respect to the actual nature of IS scale economies; the presence of scope economies with respect to multicomponent systems; the relative importance of production costs, transaction costs, and benefits as determinants of acquisition choice; and the impact of IS acquisition method on the organization of firms and industries.
Keywords: economies of scale;information economics;information services;transaction costs
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List of Topics

#162 0.331 structural modeling scale equation implications economies large future framework perspective propose broad scope resulting identified leading analyzed second interviews analysis
#151 0.140 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#240 0.130 systems information management development presented function article discussed model personnel general organization described presents finally computer-based role examined functional components
#274 0.072 outsourcing transaction cost partnership information economics relationships outsource large-scale contracts specificity perspective decisions long-term develop requirements economic association factors hypotheses
#44 0.065 approach analysis application approaches new used paper methodology simulation traditional techniques systems process based using proposed method present provides various
#292 0.058 information research literature systems framework review paper theoretical based potential future implications practice discussed current concept propositions findings provided extant
#29 0.052 industry industries firms relative different use concentration strategic acquisitions measure competitive examine increases competition influence result characteristics mergers industry-level functions