He has produced the very interesting concept of Return on Management (ROM).
ROM is a measure of performance based on the added value to an organization provided
by management. Strassman’s assumption here is that, in the modern organization,
information costs are the costs of managing the enterprise. If ROM is calculated before
the after IT is applied to an organization then the IT contribution to the business, so
difficult to isolate using more traditional measures, can be assessed. ROM is calculated
in several stages. First, using the organization’s financial results, the total value-added is
established. This is the difference between net revenues and payments to external
suppliers. The contribution of capital is then separated from that of labour. Operating
costs are then deducted from labour value-added to leave management value-added.
ROM is management value-added divided by the costs of management. There are some
Problems with how this figure is arrived at, and whether it really represents what IT has
Contributed to business performance. For example, there are difficulties in distinguishing
between operational and management information. Perhaps ROM is merely a measure
in some cases, and a fairly indirect one, of how effectively management information
is used. A more serious criticism lies with the usability of the approach and its
attractiveness to practicing managers. This may be reflected in its lack of use, at least in
the UK, as identified in different surveys (see Butler Cox, 1990; Coleman and Jamieson,
1991 : Willcocks and Lester, 1993).
He has produced the very interesting concept of Return on Management (ROM).ROM is a measure of performance based on the added value to an organization providedby management. Strassman’s assumption here is that, in the modern organization,information costs are the costs of managing the enterprise. If ROM is calculated beforethe after IT is applied to an organization then the IT contribution to the business, sodifficult to isolate using more traditional measures, can be assessed. ROM is calculatedin several stages. First, using the organization’s financial results, the total value-added isestablished. This is the difference between net revenues and payments to externalsuppliers. The contribution of capital is then separated from that of labour. Operatingcosts are then deducted from labour value-added to leave management value-added.ROM is management value-added divided by the costs of management. There are someProblems with how this figure is arrived at, and whether it really represents what IT hasContributed to business performance. For example, there are difficulties in distinguishing between operational and management information. Perhaps ROM is merely a measure in some cases, and a fairly indirect one, of how effectively management informationis used. A more serious criticism lies with the usability of the approach and itsattractiveness to practicing managers. This may be reflected in its lack of use, at least inthe UK, as identified in different surveys (see Butler Cox, 1990; Coleman and Jamieson,1991 : Willcocks and Lester, 1993).
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