An Examination Of Risk And Control On Enterprise IT Project Performance

Enterprise informatization plays an important role in the national economics and the development of society. However, as an important part of informatization construction, enterprise information technology (IT) project implementations are also not optimistic. Thus, how to improve enterprise IT project performance and successfully manage the project in the process of development and implementation is a key problem in research and practice.Although prior literature have discussed the factors impact on IT project performance from many perspectives (e.g. risk perspective and contingency perspective), successfully controlling IT project is a prime concern for both project managers and users. Surprisingly, there is little reseach examining the important relationship between control and performance. While some research shows that risk may lead to project failure, there is still much work to do for IT project risk. Enterprise IT project risk index system has not established and little is known about how key risks affect the relationship between controls and performance. Therefore, in this study, we focus on enterprise IT project performance and therorizing a framework of how risks and controls (including formal and informal controls) interact to affect performance. Based on the data obtained from 128 IT projects, we examined how two formal control modes (i.e. behavior control and outcome control) and two informal control modes (Clan control and self control) affect IT project performance from the perspectives of project manager and users. Additionally, we use the Delphi method to identify and examine risks from the perspective of senior executives and project managers. Finally, we examine the moderating effect of requirement risk and user risk on the relationship between controls and process performance from the perspectives of both the project manager and the user liaison. The results demonstrate the rationality and effectiveness of the framework proposed above. The research work and the contributions in this study are as below.First, in order to examine the relationship between risk, control and performance, in this study we propose a theoratical framework of how risks and controls interact to affect IT project performance from the perspectives of control and risk. This framework shows that both formal controls and informal controls have positive effect on enterprise IT project performance. When there are control activities in the project, risks do not direcly affect performance. However, risks will surpress the effect of formal and informal controls on IT project performance.Second, the relationships between four control modes (i.e. behavior control, outcome control, clan control and self control) and performance and the relative importance of these four control modes are empirically examined from the perspective of the project manager and the user liaison. From the perspective of the project manager, behavior control, outcome control and clan control have a positive effect on process performance. Moreover, Process performance has a positive effect on product performance. From the perspective of the user liaison, outcome control and clan control have a positive effect on process performance. Furthermore, process performance also has a positive effect on product performance. For the importance of the control modes, the relationship between outcome control and process performance is stronger than the relationship between behavior control and process performance from the perspective of the project manager.Third, we use the Delphi method to examine Chinese enterprise IT project risks and compare the risk perceptions of Chinese senior executives and project managers. Approaches for dealing with risk factors that are seen as important by both SEs and PMs are also provided. In this study, a full list of 57 risk factors with seven categories is identified by senior executives and project managers and the Chinese enterprise IT project risk index system is established. By comparing our results with Schmidt's study, six country-specific differences that may indicate the different perceptions of managers from different countries are identified. These six factors are high power distance, low uncertainty avoidance, collectivism, long-term oriented, short history of using IT and managing IT projects and danamic business environment. The results also show that there are both agreement and disagreement of risk perceptions for senior executives and project managers. Although seven risk factors are perceived to be important for both stakeholders, project managers tend to focus on lower level risks with particular emphasis on risks associated with requirements and user involvement, whereas senior executives tend to focus on higher level risks such as those risks involving politics, organization structure, process, and culture.Fourth, the research model of how risks and controls affect performance has been established and how requirement risk and user risk moderate the effect of formal and informal controls on enterprise IT project performance has been examined. Based on the data analysis from 128 enterprise IT projects, the research hypothesis has been examined and the framework is also validated. The results show that while both formal and informal control explained a significant amount of variance in process performance, both requirement risk and user risk will suppress the effect of formal and informal controls on process performance from the perspective of the project manager and the user liaison. For project managers, formal control has a more significant role than informal control, whereas for users, informal control had a more significant role than formal control. The relationship between formal control and process performance was found to be stronger for the project manager group than for the user group.