Information Technology Investment in Financial Sector of Ethiopia: Towards Qualitative Measurements of an IT ROI Conceptual Model
No Thumbnail Available
Date
2015-06-05
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
Information Technology is a major factor for changes in Financial Sector of Ethiopia. But
identifying the proper qualitative metrics and measuring return on investment has not been
given proper attention. The purpose of this study is to investigate the implication of IT
investment on the business performance through identifying constructs, their relationship
and influence on IT ROI. The final output of this research is a Conceptual Model and
recommendations which enhance IT ROI in Financial Sector of Ethiopia. This work is
limited on non-monetary ROI and only Banks and Insurances and it would be more fruitful
if it includes Microfinance Institutions.
Qualitative and quantitative approaches are followed and it is more of behavioral science
and adds few elements from design science. Purposive sampling technique is used in order
to select Commercial Bank of Ethiopia, Ethiopian Insurance Industry, Awash Insurance
Company and United Bank Share Company. Branch network, capital and technology
exposure have been taken into consideration for sample selection. In-depth interview
conducted with Top – Level IT Management members the result is analyzed using Directed
Qualitative Content Analysis techniques with respective constructs and SPSS Version 20.0
is used for quantitative data analysis.
Good IT Governance leads to best strategic Alignment of IT and Business, and maximizes
IT Business value in the organization. IT Governance in Banking Industry is relatively
better than Insurance Industry. There is gap on both Industries on Strategic Alignment and
IT Business Value optimization being severe in Insurance Industry especially in EIC. Their
organizational structure of IT imposes a negative impact on the strategic alignment of IT
with Business. As the result the value of IT is seen only as a cost and time reduction, not to
achieve long term strategic goal. There is no standard IT Projects portfolio management
trend in CBE, AIC and EIC which have a major share on Financial Sector of Ethiopian
except in United Bank. Regarding Soft Value of IT, Human Resource Development is good
in banking compared to Insurance Industry. Realization of Organizational learning and
Growth and Knowledge sharing culture is not yet flourished in both Industries. IT assets
especially software are not properly managed. Interruption of telecom service is becoming a
major challenge for Financial Sector in Ethiopia. The proposed Conceptual Model helps to
identify main constructs which influence optimal return of IT Investment and recommends
how to address them.
Description
Keywords
Financial Sector of Ethiopia;Measurements of an IT ROI