Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

Different IS and Budgeting Challenges:

Final Paper
Kelly Erazo
National University
CIS 601

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

Introduction
IS budgeting continues to become an important part of organizational budgeting over
time as technology improves. However, without the proper structuring and analyzing, this can be
a difficult task. Langer (2009) presents a situation that puts the challenges of budgeting into
perspective: often, a medical centersdepartment administrator is expected to track the annual
expenses associated with running various information systems infrastructure and predict the
costs needed to maintain them in the future (p. 400). In this situation, which can occur in many
different organizations, the changes in information systems during one year can easily affect
future expenses, making it difficult to predict what the future budget should be. Although it is
possible to predict what the future annual budget line should be (Langer, 2009), there are other
challenges related to budgeting that organizations face. This paper will explore different
challenges that relate to IS budgeting as found in several articles and possible solutions for each
challenge.
First Article
The first challenge is presented by Lee, Keil, and Kasi (2012) with the study of how goal
specificity and goal difficulty affect software project escalation. Software project escalation in
this study refers to the escalation of an individuals commitment to a course of action (Lee, Keil,
and Kasi, 2012). The researchers state that the relationship between initial budget and schedule
goals and software project escalation remains unexplored (Lee, Keil, and Kasi, 2012, p.53).
Therefore, their study explores key terms such as goal specificity, goal difficulty, and software
project escalation. Additionally, Lee, Keil, and Kasi (2012) state a similar challenge in their
study: "one of the challenges in setting appropriate budget and schedule goals is the difficulty
associated with generating accurate estimates of the work required to carry out a software

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

project" (p.55). This challenge is closely related to the statement made by Langer (2009) above.
Lee, Keil, and Kasi (2012) explore these challenges by conducting a scenario-based experiment
with 349 information technology (IT) professionals from more than 150 different companies.
They hypothesized about effects of goal difficulty and goal specificity on software project
escalation (Lee, Keil, and Kasi, 2012). The IT professionals were contacted through telephone or
e-mail initially, and eventually recruited enough participants so that they could then be contacted
via email containing a link to the experimental materials (Lee, Keil, and Kasi, 2012). Afterwards,
the participants were presented with a scenario and were then informed that the project was
already over budget and behind schedule relative to where the project should be for the
completion level (Lee, Keil, and Kasi, 2012, p.64). The responses were then measured for goal
commitment and the results were processed. Lee, Keil, and Kasi obtained several findings from
their studies. The first finding was that a very difficult budget and schedule goal is less likely to
cause software project escalation to occur, meaning that those involved in the project would most
likely decrease in motivation towards the goals set forth due to the strict budget and schedule
(Lee, Keil, and Kasi, 2012). A second finding was that the specificity of a budget and schedule
goal also influence escalation and that a specific budget and schedule goal is less likely to cause
software project escalation to occur (Lee, Keil, and Kasi, 2012, p.68). A third finding was that
the commitment to a budget and schedule was found to both moderate the relationship between
goal difficulty and escalation and the relationship between goal specificity and escalation (Lee,
Keil, and Kasi, 2012, p.70). To summarize, the researchers found that budgeting has certain
impacts on software project development and that the success of the project not only relies on the
technology, but also on the participants as well.

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

Second Article
Similar to the previous study, Halilovic and Cicic (2013) examined the behavior of
information systems (IS) users and influence of the users decision to continue using IS. The
researchers state that the eventual success of a new IS depends more on the userss IS
continuance of that IS than on its initial acceptance, since irregular and inefficient use of IS after
initial acceptance can cause undesirable costs or result in lost efforts to develop a certain IS
(Halilovic and Cicic, 2013, p.1280). In order to explore this idea, Halilovic and Cicic used two
IS usage models to determine which model gives more acceptable results in terms of predicting
the users continued usage behavior in workplace settings (2013, p.1281). The researchers used
the technology acceptance model (TAM) and the Expectation-Confirmation model of IS
continuance (ECM-IS). They tested five hypotheses and collected data from a survey of IABS
Finova users (Halilovic and Cicic, 2013). The IABS Finova is an integrated software package
for budget, accounting and finance for local governments (Halilovic and Cicic, 2013, p.1283).
After the data was measured, results were divided into sections. For instance, section 5.3
discussed the perceived ease of use and IS continuance intention and stated that although the
perceived ease of use significantly influences users intention to accept an IS, its influence
reduces over the time, since users get used to the IS (Halilovic and Cicic, 2013, p.1288). The
study concludes by stating that in this study, it is confirmed that the perceived ease of use has a
significant impact on the perceived usefulness, and further on, that the perceived usefulness has a
significant direct impact and indirect through satisfaction on IS continuance intention (Halilovic
and Cicic, 2013, p.1289). In this study budgeting software was used to analyze the users
behavior, and analyze the challenge of having users continuously use IS in their daily workplace.
The findings show connections between the ease of use and perceived usefulness, meaning that

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

with the proper organization, perceived usefulness can be monitored and accounted for, which
would reflect on the amount of usage of the software.
Third Article
Solomon et al. present a brief article on the growing problems with spreadsheet budgeting
and how software is now being developed or being used to ease such process. They state that
unlike a fragmented set of spread sheets, budget software houses all the data in a single
repository and allows user changes and calculations to flow with speed and integrity throughout
the entire budget (Solomon et al., 2010, p.24). The mammoth task of budgeting, as Solomon et
al. (2010) calls it, is a challenge all in itself for organizations, and spreadsheets can become
outdated with growing organizations. Fortunately, the software that Solomon et al. discusses is
already in place at a school district, and the differences are noticeable. For instance, data can be
transferred between the budget software and other databases, resulting in reduced time
requirements and fewer errors (Solomon et al., 2010, p.25). This improvement to the budgeting
system also serves as an example of the ease of usage and the perceived usefulness discussed in
the previous study. Taking these concepts from Halilovic and Cicic (2013), one could argue that
the ease of usage of the budgeting software most likely would improve the perceived usefulness,
and thus result in better or more frequent usage of the software. Solomon et al. (2010) supports
this idea by stating that the use of software can dramatically change time lines around the
budget process (p.25). The challenge of using spreadsheets for budgeting is reduced to almost
nothing thanks to the software in place. Lastly, Solomon et al. (2010) discusses the effect that the
software has on human resources and states that the use of budget software can promote
increased accountability in staffing and an increased level of information (p.26). Any

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

improvements of technology that reflect positively on the staff members also reflects positively
on the organization overall and results in overall success.
Fourth Article
A final article by Thouin, Hoffman, and Ford (2008) researches the effect of information
technology investment on firm-level performance in the health care industry. This article relates
to budgeting by analyzing how investing in the overall IT budget reflects on the overall
performance of the organization, in this case in the health care industry (Thouin, Hoffman, and
Ford, 2008). The researchers make the statement that information technology (IT) usage in the
health care industry has the potential to improve quality of care and dramatically reduce the cost
of providing health-care-related services (Thouin, Hoffman, and Ford, 2008, p.60).
Additionally, IT has the potential to dramatically reduce the cost of providing health care by
streamlining back office operations (Thouin, Hoffman, and Ford, 22008, p.60). In order to test
their hypothesis, the researchers obtained their data from the Dorenfest Institute for Health
Information Research and Education (Thouin, Hoffman, and Ford, 2008). They used the annual
surveys that Dorenfest conducts and measured the dependent variable of financial performance
and the independent variables of the total IT budget and the level of IT outsourcing. One result
the researchers found was that the relationship between the total number of IT services
outsourced and financial performance is positive and significant such that IDHSs with more IT
services outsourced have better financial performance (Thouin, Hoffman, and Ford, 2008, p.
66). The interpretation of this finding is that organizations with IT services outsourced have a
better financial performance than those who do not. Additionally, Thouin, Hoffman, and Ford
(2008) argue that distinguishing between internal investments in IT versus outsourcing has the
potential to dramatically alter the direction of future investments (p.66). In other words, taking a

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

closer look at the investments and budgeting when planning for the future of an organization
improves the possible outcomes and success of the organization in the future. In this article
budgeting is seen as a challenge along with investments in the health care industry. By analyzing
more closely the differences in IT investments within the organization and also outside the
organization, the challenge of budgeting is handled in a more structured manner.
Conclusion
All the articles presented about related to IS and budgeting to a certain extent. Some used
it as part of their study through the use of budgeting software, while others analyzed the effects
on those in the organization involved with budgeting. It should be noted that these articles did
not discuss specifically the budgeting styles of organizations, but rather observed how budgeting
affects the organization and those within it. As previously mentioned, technology is only part of
the success of an organization; the other part lies in the hands of the employees, the staff, and all
the members involved in the organization. Additionally, budgeting for technology is a
continuously challenging factor for organizations, since technology rapidly changes and so do its
costs. Members of organizations have to learn to adapt and the ease of usage of the technology
will affect their perceived usefulness, which also reflects on the organizations performance. IS,
IT, and budgeting are continuously evolving concepts that affect many organizations and
industries, and how they handle them will reflect in their performance and success.

Running Head: DIFFERENT IS AND BUDGETING CHALLENGES: FINAL PAPER

References
Halilovic, S., & Cicic, M. (2013). Understanding determinants of information systems users
behaviour: a comparison of two models in the context of integrated accounting and
budgeting software. Behaviour & Information Technology, 32(12), 1280-1291.
doi:10.1080/0144929X.2012.708784
Langer, S. (2009). Sustainable IT budgeting: a method to determine not to exceed values for
annual infrastructure purchases. Journal Of Digital Imaging, 22(4), 400-404.
doi:10.1007/s10278-008-9126-z
Lee, J., Keil, M., & Kasi, V. (2012). The Effect of an Initial Budget and Schedule Goal on
Software Project Escalation. Journal Of Management Information Systems, 29(1), 53-78
Solomon, J., et al. (2010). The Growing Problems with Spreadsheet Budgeting. School Business
Affairs, 76(7), 24-26.
Thouin, M., Hoffman, J., & Ford, E. (2008). The effect of information technology investment on
firm-level performance in the health care industry. Health Care Management Review,
33(1), 60-68.