Measuring the Performance of

Information System Function

Rajesri Govindaraju
Industrial Technology Faculty, Bandung Institute of Technology,
Jalan Ganeca 10, Bandung 40132, Indonesia
Email: [email protected]

Usman
Department of Accounting, STIE Bank BPD Jateng, Jalan Pemuda 4A,
Semarang 50136, Indonesia

Abstract. Information systems (IS) function is defined as all individuals, group, or department in an
organisation daily responsible for information systems related activities in the organisation. This paper
presents the development of a model and scorecard to measure the IS functions performance based on a
number of earlier models such as Pitt and Watson (1995), Seddon (1997), and Heo and Han (2003).
Founded on literature study in the areas of IS success, IS organisations effectiveness, IS resources and
capability, and IS function performance, 66 performance items were identified. 132 data set from 29
national and multinational organisations were used to validate the measurement instrument. The resulted
performance scorecard covers four main dimensions, namely:1) Product Quality, 2) Service Quality, 3)
Planning, Adaptation and Operational Support Capability, and 4) Net Benefit. This study highlights the
importance of IT/IS-Business partnership to increase the performance of the IS function, especially related
to the capability of IS function to perform a good quality planning, effective system adaptation and good
operational support.

Keywords: IS function, Performance measurement, IS Product Quality, IS Service Quality, Exploratory

factor analysis, SEM.

1. BACKGROUND regularly assess the performance of their IS function. This

leads to a need for knowledge on how comprehensively
Realizing the high potential role of IS in improving
evaluate IS functions performance. A number of studies
business performance, the annual IS budget spent by
have been done into the performance of IS function (e.g.
companies to develop and maintain their IS has increased
Chang and King 2005, DeLone and McLean 2003, Myers et
quite significantly (Seddon et al. 2000). Along with this
al. 1997, and Saunders and Jones 1992). Most of these
increased in IS spending, a number of research have been
previously published work use constructs that were generally
focused on assessing the IS success (e.g. Chang and King
used to measure IS success. Chang and King (2005) look at
2005; DeLone and McLean 2003; Jiang et al. 2002;
the performance of IS function by focusing on the quality of
Kettingger and Lee 1997). Some researchers use the terms IS
product and service provided. Quality of product and service
effectiveness to refer to the success of the organisations in
provided, though very important, are not sufficient to
getting benefits from their IS (e.g. Seddon 2000 and DeLone
represent the overall IS function performance. In this
and McLean 1992).
information era in which achieving high performance from IT
The success of organisations in benefiting from IS cannot is not just about the IT functions ability to build, maintain
be separated from the success of IS function in performing and deliver system, but is an organisational wide activity
their tasks. Therefore it is necessary for organisations to requiring a strong business/IT partnership (Peppard and
Ward, 1999), measures related to the ability of the IS function 2. MODEL DEVELOPMENT
to understand the needs of business is critical for the
IS function is defined as all individuals, group, or
organisations.
department in an organisation daily responsible for
In their study, Saunders and Jones (1992) developed the information systems related activities. IS function usually
IS function performance evaluation model from senior work together with business users or departments in
management perspective. This study, as also several other developing IS solutions in the organisations (Saunder and
studies (e.g. Saunders and Jones 1992, Myers et al. 1997, and Jones 1992, Raghunathan and Raghunathan 1989). An IS
DeLone and McLean 2003) did not produce a measurement function also supports the operation of already implemented
instrument that can be used as a basis for assessing the IS applications by giving services such as maintenance, training,
functions performance. The study reported here aims at and help-desk (, Govindaraju et al. 2001, Chang and King
developing a more comprehensive model and scorecard to 2005). Considering the complex nature of the
measure the IS functions performance. The IS functions tasks/operations of the IS function, the overall performance
performance is evaluated from a user point of view. The of IS function is difficult to be conceptualized and measured
choice for user perspective is firstly aimed at having a clear (Chang and King 2005). However, in this study an effort is
focus in the exploration. Secondly, having IS function seen as made to develop a model to measure the performance of the
performing well by IS users is a good basis for a strong IT- IS function by studying previous related studies.
Business partnership that is critical to induce IT-based
improvements or innovations in the organisations.
 Table 1: Dimensions Identification

DOMAIN INPUT PROCESS OUTPUT OUTCOME

IS Success Degree of IS IS Use (Heo and Han System Quality, Net Benefit,
Centralization, 2003) Information Quality, Business Process
Hardware Service Quality (DeLone Effectiveness,
Deployment, Degree & McLean 1992, Myers Organisational
of IS Integration (Heo et al. 1997, Seddon 1997, Performance
and Han 2003) Heo and Han 2003, (DeLone& McLean
DeLone & McLean 2003) 1992, Myers et al.
1997, Seddon 1997,
Heo and Han 2003,
DeLone & McLean
2003, Chang and
King 2005)
Organisational Organisational Resource Use, Staff Productivity, Profitability, Adaptation and
Effectiveness Culture, Leadership Training and Product Quality, Service Flexibility,
Style, Stakeholder Development, System Quality Carnall 1999, Stakeholder
Commitment/Support, Development, Jones 2004) Satisfaction,
Cost, Resource Transparency and Organisational
Quality (Carnall Interaction, Staff health, Growth,
1999, Jones 2004) turnover, Delivery, Image (Cameron
New Technology 1986, Carnall 1999,
Utilization (Cameron Jones 2004)
1986, Carnall 1999,
Jones 2004).
IS Resource Human Capital, IS System Development Organisation
and Capability Partnership Quality, Capability, Operation Performance,
IT Infrastructure Capability, Planning Support on Core
(Zhu 2004, Sophistication (Zhu 2004, Competence
Ravichandran and Ravichandran and (Ravichandran and
Lertwongsatien 2005) Lertwongsatien 2005) Lertwongsatien
2005)
IS Function Staff Competence, Management Attitude, Information Output Impact on Strategic
Performance System Integration Planning Integration, Quality, Operational Direction,
(Saunders and Jones the goodness of system Efficiency, Capability to Contribution on
1992) development practice Identify and to Assimilate Financial
(Saunders and Jones New Technology Performance
1992) (Saunders and Jones (Saunders and Jones
1992) 1992)

Several earlier works on IS functions performance were 1999, Jones 2004). Finally, Several works in the area of IS
studied (e.g. Saunders and Jones 1992). Results of studies in resource and capability (e.g. Zhu 2004; Ravichandran and
the area of IS success were explored (e.g. DeLone& McLean Lertwongsatien 2005) were also used in this study
1992, Myers et al. 1997, Seddon 1997, Heo and Han 2003, considering that users view on the capability of IS function
DeLone & McLean 2003). Looking at the IS function as a in performing their tasks and the quality of IS resources
special unit within an organisation, studies that analysed the available can influence the willingness of users to propose
effectiveness of the IS organisation are studied (e.g. Carnall IT-based innovations in the organisations.
 The identification of dimensions of the performance Further, not all dimensions within both Output and Outcome
measurement model is done through an analysis using the categories are further included, since some of the dimensions
input-output logic model as a basic framework. This basic are more the concern of management people. Those
framework had been used in a number of studies, e.g. dimensions include: Productivity, Profitability, and
Heavisides and Price (2001) and Brophy and Wynne (1997), Operational efficiency from Output category, and the
to develop a performance measurement system. The effectiveness of organisational business processes,
framework suggested that performance measurement organisational performance and growth for Outcome
dimensions can be derived by analyzing performance category. It is necessary to include other organisations
measures in the following four different categories/groups: stakeholders such as senior management to evaluate/measure
Input, Process, Output and Outcome. In this study, the those dimensions. At this stage, there are 17 measures
identification of the dimensions based on the Input-Output included in the measure list. In designing and developing a
logic model is done based on results of previous studies in performance measurement instrument, it is necessary to
four literature domains namely IS Success, IS Organisations remove the duplications in the measures (Folan and Browne
Effectiveness, IS Resource and Capability, and IS Function 2005). Further, combining a few closely related measures into
Performance. The result of dimensions identification is one measure is suggested to get a simple list of measures.
presented in Tabel 1. The identification was done for each After removing the duplications and performing some
theoretical domain. combinations in the measure list, the following four main
dimensions were resulted, namely: Product Quality (1),
Considering that the IS functions performance
Service Quality (2), Planning, Adaptation and Operational
measurement model developed in this study is focused on the
Support Capability (3), and Net Benefit (4).The process to
user perspective, only dimensions in Output and Outcome
come into the four main dimensions is globally presented in
categories are included in further model development stage.
Table 2.

Table 2. The Process of main dimensions identification

Information Output Quality Information Quality

Product Quality
Sistem Quality
Service Quality
Planning Sophistication System Development Capability
Planning, Adaptation
Operation Capability and Operational
Capability of New Technology
Adaptation and Flexibility Support Capability
Identification and Assimilation
Stakeholder Satisfaction User Satisfaction
Contribution on Financial

Performance
Organisational Health Net Benefit
Organisational Net Benefit
Support on Core Competence
Image
Impact on Strategic Direction

The next step in the development of the measurement identification is done based on literature as shown in Table 1
scorecard is to identify measures of IS functions (Dimension Identification). As can be seen in Table 2, the
performance within the four main dimensions. The measures first dimension (Product Quality) addresses system quality
and information quality (included information output quality) 17. Ease to understand the information provided
of the products provided by IS function. For Product Quality, 18. Information precision
20 measures were identified and they are presented in Table 19. Information concision
3. 20. Organisation of information
The second dimension (Service Quality) addresses many
aspects related to the services provided by IS function. Service Quality
Besides relevant studies which presented in Table 1, a 1. Usefulness of training delivered
number of other literature related to SERVQUAL were also 2. Variety of training delivered
used in identifying the relevant service quality measures (e.g. 3. Socialization of proper technology development
Jiang et al. 2002, Kettinger 1997, Pitt et al. 1997, Pitt et al. insights to other stakeholders
1995, Van Dyke et al. 1997, Watson et al. 1998, and Zeithaml 4. Suggesting ideas for improvements
et al. 1990). For Service Quality, 16 measures were identified 5. Willingness to help
(See Table 3). 6. Willingness in give help more than expected
The third dimension (Planning, Adaptation and 7. Responsiveness in giving service
Operational Support Capability) addresses many aspects 8. On time delivery of service needed by users
related to the capability of IS function in planning and 9. Ability to give personalized service
developing systems, giving operational support, identifying 10. Willingness to give emergency service
and assimilating new technology that is suitable to the need 11. Willingness to give service to users (business)
of business, providing flexibility in managing the relation
organisations IS and finally the capability of IS function in 12. Efficiency and effectiveness in giving service
adapting the organisations IS in line with the changes in 13. Hospitality of IS people
business. For Planning, Adaptation and Operational Support 14. Sincerity of IS people
Capability, 9 measures were identified and they are presented 15. Ability of IS people to cooperate with business
in Table 3. people
16. IS people attitude towards giving good response to
The forth dimension (Net Benefit) addresses measures
the business people
related to the impact of using the products provided and
services given by IS function. Relevant factors found in
Planning, Adaptation and Operational Support Capability
literature such as user satisfaction, individual benefit, work
1. Capability to identify and overcome problems
group benefit, organisational benefit, and image were used.
2. Capability to comprehend specific need of users
For Net Benefit, 21 measures were identified and they are
3. Capability to overcome emergency conditions
presented as follow.
4. Planning sophistication
Product Quality 5. Capability to identify technology change
1. Ease of use 6. Capability to convey ideas
2. Ease to learn 7. Capability to adapt to new technologies
3. Ease to access features available 8. Capability to adapt to the changes in the environment
4. Response time during usage 9. Transparency in managing activities
5. System downtime
6. Presentational quality of information Net Benefit
7. Tidiness of the systems arrangement 1. Benefit on ease to complete the tasks
8. Integration capability 2. Benefit on work efficiency
9. System reliability 3. Benefit on user and department productivity
10. System flexibility 4. Benefit on product quality
11. Ability of systems to meet user expectation 5. Benefit on decision making capability
12. Ease to handle error 6. Benefit on communication effectiveness among
13. Ease to up-date information organisations members
14. Ease to access information 7. Benefit on client satisfaction toward product and
15. Ease to verify information service provided by individuals and organisation
16. Information security
 8. Benefit on information exchange between users and Y 11k
their client
Y 21k
9. Benefit on delivery time of products or services
M
10. Benefit on work monitoring Factor 1k M
Y l1k
11. Benefit on business process management
Y 12k
12. Benefit in cost efficiency
13. Benefit on collaboration effectiveness kth Prime Factor 2k Y 22k
Dimension M
14. Benefit on collective decision making process M M
15. Benefit in learning new things M Y l2k

16. Benefit in knowledge transfer Factor mk Y 1m k

17. Benefit on willingness to propose innovative ideas M Y 2m k

18. Benefit in knowledge utilization. M
19. Benefit regarding the image of the organisation or Y lm k

division Figure 1: Generic performance measurement model

20. Benefit in improving self confidence
21. Benefit in improving the organisational competence Descriptions:
k = 1, 2, ..., n
n is the number of main dimensions (exogenous
3. RESEARCH DESIGN constructs) identified
k is kth main dimension (exogenous constructs)
This study uses literature survey to develop the proposed jk = 1, 2, ..., mk
measurement model. Field survey is then used to validate the mk is the number of factors (endogenous constructs)
developed instrument. The unit of analysis used in this survey resulted for each kth main dimension.
is individual IS users. Users participating in the survey are j.k is jth factor (endogenous constructs) for kth main
expected to come from different levels and units/divisions, dimension
from a number of big state own and private companies. The j.k is the estimated value (loading) from jth factor to kth
choice of big companies was made considering that big main dimension
companies in general have dedicated IS function to support j.k is the structural error for jth factor on kth main
their operation. Besides, these companies usually have a large dimension
number of IS users who are familiar with using IS ij.k = 1, 2, ..., lj.k
applications. lj.k is the number of measure (endogenous indicators) for
The analysis tool used to validate the measurement jth factor on kth main dimension
instrument is exploratory factor analysis and confirmatory Yi.j.k is ith measure for jth factor on kth main dimension
factor using structural equation modelling (SEM). Generic i.j.k is the estimated value (loading) from ith measure
model used to validate the performance measurement to jth factor on kth main dimension.
model/scorecards developed in the study is presented in i.j.k is the measurement error for ith measure on jth
Figure 1. In LISREL notation, the model is manifested as factor on kth main dimension.
follows:
Measurement model equation: An interval data scaling was used. Thus respondents need
Yi.j.k = i.j.k j.k + i.j.k to sign a point in a line with 20 point scale, to give answer to
Structural model equation: each item of the questionnaires. The exploratory factor
j.k = j.k k + j.k analysis is used to determine measurement factors
(endogenous constructs) of instruments that are successfully
identified for each dimension. First order confirmatory factor
analysis is used to validate measures toward each factor.
Second order confirmatory factor analysis is used to test the
validity and uni-dimensionality of the measurement
 System, General Characteristics of Systems, and Intrinsic
model for each dimension. To test the reliability of each
Quality of Information. All the four factors explain 81.96%
factor, Cronbach alpha statistics, composite reliability value,
of total variance of all variables measuring this dimension.
and average variance extracted (AVE) were used.
For Service Quality dimension, the exploratory factor
analysis on the 16 measures resulted in the following four
factor: Interpersonal Character, Service Flexibility,
4. DATA COLLECTION AND ANALYSIS
Technology Assimilation and Responsiveness. All the factors
170 questionnaires were sent to potential respondents in explain 79.41% of total variance of all variables measuring
45 national and multinational companies. 132 sample data this dimension. For Planning, Adaptation and Operational
from 29 national and multinational companies located in Support Capability dimension, the following 3 factors are
Indonesia were collected. More than 40% companies where derived: Operational Capability, Planning Capability and
respondents come from are manufacturing company. From Adaptation to Change Capability. These factors explain
132 samples, 27% respondents are from manufacturing 83.61% of total variance of all variables measuring this
companies, 24% respondents are from Telecommunication dimension. Finally, for Net Benefit dimension, the following
companies, and 21% respondents are from banking/finance 5 factors are derived: General Benefit, Benefit on Work
institutions. The rest of the samples were collected from Quality, Benefit on Product and Service Quality, Benefit on
education and health institutions. Business Process, and Benefit on Knowledge Transfer, with
the ability to explain total variance of all variables measuring
Through the exploratory factor analysis on the 20
the dimension of 75.46%.
measures of Product Quality dimension, the following 4
factors are derived: Ease of Product Use, Intrinsic Quality of

Table 3: Reliability of factors and dimension

Factors Cronbach Alpha Composite Reliability AVE
Product Quality Dimension 0.89 0.66
Ease of Product Use 0.97 0.96 0.78
Intrinsic Quality of System 0.92 0.91 0.69
General Characteristic of System 0.95 0.95 0.83
Intrinsic Quality of Information 0.89 0.89 0.68
Service Quality Dimension 0.80 0.52
Interpersonal Character 0.86 0.87 0.58
Service Flexibility 0.96 0.96 0.89
Technology Assimilation 0.92 0.92 0.79
Responsiveness 0.85 0.88 0.71
Planning, Adaptation and Operation Support 0.76 0.52
Capability Dimension
Operational Capability 0.93 0.93 0.83
Planning Capability 0.81 0.81 0.59
Adaptation to Change Capability 0.89 0.90 0.81
Net Benefit Dimension 0.78 0.43
General Benefit 0.92 0.93 0.77
Benefit on Work Quality z0.90 0.93 0.76
Benefit on Product and Service Quality 0.90 0.88 0.65
Benefit on Business Process 0.90 0.89 0.67
Benefit on Knowledge Transfer 0.81 0.84 0.64
 Exploratory factor and confirmatory factor analysis
Within the four dimensions, during the exploratory
(first order as well as second order analysis) show that other
factor and the confirmatory factor analysis, 5 items must be
items are valid (based on statistical t value) and reliable
omitted because of several reasons. Within the service quality
(based on R2 item value) in measuring each factor of each
dimension, one item (level of training variation given) was
dimension. The result of reliability test shows that all factors
omitted because of the low MSA (Measure of sampling
are reliable enough to be measured by the instrument (with
adequacy) value (MSA<0.5) and one item (efficiency and
reliability value > 0.5), based on the Cronbach alpha
effectiveness in giving service) was omitted because of
statistics, composite reliability, as well as AVE tests.
weak loading factor. Within the planning, adaptation and
Composite reliability and AVE test results also show that all
Operational Support dimension, one item (transparency in
dimensions are reliable to be measured by each factor.
managing each activity) was also omitted for having a weak
Complete result of the reliability test is presented in Tabel 3.
loading factor. Finally, within the Net Benefit dimension, one
item (benefit on users participation in decision making) The final scorecard was resulted after a few iterative
was omitted because of low item reliability reason ((R2 = modification of the model according to what LISREL
0.18) and considered not valid enough (having standardized suggested. The final structural model is shown in Figure 2.
estimation value of 0.42), whereas one item (benefit on Further, the structural loading value (among each dimension
management the relationship among people, department, and each factor) can be used to give weight for each factor
other stakeholder) was omitted because it does not meet the when used to measure the performance of an IS function.
uni-dimensionality requirement.

Easy of 0.84
0.21 Product Use
0. Interpersonal
Intrinsic Qual. 89 Character 0.49
0.37 of System 2
0 .7 9 0 .7
PRODUCT SERVICE Service
G eneral 0.45 0.80
Characteristic 0. 86 QUALITY Flexibility
0.25 QUALITY 0 .8
of System 0 6
0 .7 0. Technology
Intrinsic Qual. 77 Assim ilation 0.26
0.51 of Inform ation
073 050 Responsive-
ness 0.41
061
069

0.44 General Benefit

Operational
0 .7 Capability 0.49
5 CAPA- 0 .7 1
Benefit on NET
0.71 W ork Q uality 0.54 BILITY 0 .5 8
BENEFIT Planning
7 0 .8 Capability 0.67
0 .8 2
Benefit on Prod 9
0.25 3
& Serv. Qual. 0. Adaptation to
0.32
63

Change Capab.
0.

Benefit on
0.85 Business Proc. 054

Benefit on
0.60 Know ledge
Transfer

Figure 2: Structural Model of IS Function Performance Measurement Scorecard

 Folan, P. and Browne, J. (2005). A Review of Performance
5. CONCLUSION
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