delone and mclean model’s reliability in...

Journal of Innovative Research and Solutions (JIRAS) ISSN: 2320 1932 Volume No.1, Issue No.1, Page No: 110 - 121, Jul – Dec 2012

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JDM-003-2012 DELONE AND MCLEAN MODEL’S RELIABILITY IN ACCESSING THE EFFICIENCY OF INFORMATION

SYSTEMS WITH REFERENCE TO INTERNAL USERS OF SBI BANKS, IN COIMBATORE

1P.Shanthi, 2Dr. A. Ramachandran 1Ph.D. Scholar in Management,Bharathiar University,Coimbatore, Tamilnadu 2Professor,SNR Institute of Management Sciences,Coimbatore, Tamilnadu,e-mail id: Email:[email protected]

ABSTRACT

Banking in India has evolved through

distinct phases to reach its current position.

Information Technology (IT) has

profoundly reshaped the landscape of

financial industries. Bank’s investment in

IT shows growth pattern, these

investments should be used to increase the

value of the Organization. Nowadays the

importance of measuring the efficiency of

IS is felt by the organizations.

This study investigates the

reliability of the DeLone and McLean

Model in assessing efficiency of

information systems in banks and

identifying the metrics with reference to

SBI banks in Coimbatore District.

Primary data has been collected from the

employees of SBI Group in Coimbatore

using questionnaire. Five-point scale was

used for this purpose. Among the total 68

SBI Group a sample of 12 branches has

been selected at Stratified Random

Sampling Method. A sample of 60

employees was selected.

Reliability analysis was applied for

all the dimensions of D and M model, the

alpha values were greater than threshold

level of 0.70 indicated that the metrics

used in this study were reliable and

consistent with each other. The D and M

model is reliable. The factor analysis for

the net benefit was done and identified that

the Critical success factors, Internal

strength and quality of service, Value

added services of IS and Customer

retention are the four major factors

supported by the IS of SBI banks group.

mailto:[email protected]�


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Key Words: Adaptability,

Documentation, Data capture, Turn around

time, System design

INTRODUCTION

The last decade has seen many

positive developments in the Indian

banking sector. For the past five decades,

banking in India has evolved through

distinct phases to reach its current position.

Namely, the recommendations of the

Narasimham Committee (1991) paved the

way for the reform phase in the banking.

Important among these have been,

introduction of new accounting and

prudential norms relating to income

recognition, provisioning and capital

adequacy, deregulation of interest rates

and easing of norms for entry in the field

of banking.

Then, Strides in technology at

greater pace was accomplished after 1993

when Dr. Rangarajan Committee

recommended a broad framework of

computerization in Indian banks.

Information Technology (IT) and

Telecommunication have profoundly

reshaped the landscape of financial

industries. Many innovative banking

strategies like internet banking, electronic

payments, and security investments were

emerged. Information processing becomes

key factor for better service.

The latest IT development

increased the information processing speed

and quality exchange of information for

timely decision making for both banks and

customers. Bank’s investment in IT shows

growth pattern and there are many

indications that these trends will continue

in future. So, than just being a user of

information system, they expect these

investments should be used to increase the

value of the Organization.

These reasons pressure the

importance of measuring the efficiency of

IS. This study investigates the D&M

Model’s reliability in measuring the

efficiently the information systems in

banks.

There are different model to assess

the efficiency of IS, DeLone and McLean

model is one which, used by many

researchers to investigate the efficiency of

IS. It has six dimensions to measure in the


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organization context as a whole and insists

the improved efficiency standards in IS.

REVIEW OF LITERATURE

The impact of information systems

on the efficiency of banks: an empirical

investigation, reported the results of an

empirical study which investigated the

contribution of IS to banks in Florida1. An

Empirical Test and Theoretical Analysis

study empirically and theoretically assess

models of information systems (IS)

success in a quasi-voluntary IS use

context2. This study clarifies core

theoretical relationships exist between

these two models. Model Of Information

Systems3 success A Ten-Year Update,

discuss many of the important IS success

research contributions of the last decade,

focusing especially on research efforts that

apply, validate, challenge, and propose

enhancements to their [D&M model]

original model4. McLean model in private

sector organizations of Kuwait5, The

Impact Of Technological Factors On

Information Systems Success In The

Electronic government., the study found

strong support on the relationship between

the IS success dimensions6. Information

Systems Success Model for e-commerce

website success. A new dimension

Relationship quality is proposed by the

researcher. Also it tries to identify the

characteristics of E-Commerce websites

that impact the user satisfaction7.

In the original model, “system quality

measures technical success; “information

quality measures semantic success; “use”,

”user satisfaction”, “individual impact”,

and “organizational impact”, measure

effectiveness success. These six

dimensions are interrelated rather than

independent. This model suggests that

when an Information system was first

created ,its features can be observed as

some degree of system quality and

information quality, then use of the system

and are either satisfied or not satisfied with

the system, and use of the system will

impact the individual’s performance and

consequently impact the organization

[either positive or negative]. In 2003, the

research findings of over 100 D&M model

studies, and presented the updated D&M

model. The major revision is the addition

of a new dimension; major revision is the

addition of a new dimension “Service

quality”. According to the author, as

Information technology evolved and


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environment changed, new challenges

emerged; thus the original model had to be

adjusted in order to perform more accurate

measurement tasks. They also indicated

that previous information system

effectiveness measures usually emphasize

the product quality tend to ignore the

importance of service quality; this may

lead to the improper measurement, and

results in inaccurate conclusions. The two

dimensions “individual impacts” and

“Organizational impacts” in the original

model were collapsed into new dimension

“Net benefits”. This new dimension was

an attempt to incorporate the “ever

growing number of entities “that will be

impacted by “Use” and “User

satisfaction”.

.

Figure 1 Updated DeLone and McLean model of information system success (2003)

The author defined this dimensions, in

order to keep the model parsimonious; in

the practical use, this dimension can be

defined differently subject to the goal of

the study. This new model measures IS

success in terms of more up-to-date

dimensions, and become more robust for

information system success evaluation. In

their opinion, although new forms of

business are emerging, Information

Technology still serves the same

fundamental purpose as before. And they

believe Information System success and its

“underlying dimensionalities” have not

changed. Thus, applying measures for

information system success Banking

Information System is viable.

D&M Model Evaluation and Design

D and M's model has gained

strong theoretical and empirical support

Service Quality

Information Quality

System Quality

User Satisfaction

Intention to Use Use

Net Benefits


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and it can be a useful model for

assessing information system success

globally if it is applied in other societies

and cultures. The study appled the the D

and M model in SBI Banks, in

Coimbatore and test the D and M

model’s (2003) reliability to measure

banking information system efficiency.

It also groups the metrics used. The

usage of metrics differs from Industry to

Industry and Organization context to

Organization context. Based on the six

dimensions D&M Model, list of metrics

was selected to measure each dimension.

Banking Sector is challenged by

the global issues and global market and

also suffered by the uniqueness of the

standards of measures the efficiency.

There are various bench marks for

accessing the efficiency. The models like

profit- cost oriented model is sufficient in

project the cost-profit efficiency of

information system. But it will be better if

the model can access the various qualities

of an information system in organizational

context. Model like Delone and Mclean

can access the over all efficiency

Information system in the organizational

context as a whole. In this context, D and

Mclean model in accessing the efficiency

of information with reference to internal

users of SBI banks, in Coimbatore may be

considered important to examine the

reliability of the D& M model and can

help full for the policy maker to identify

and trace the metrics.

OBJECTIVES OF THE STUDY

i) To identify the variables to measure the

reliability of DeLone and McLean Model

in measuring the efficiency of the

information systems reference to SBI

banks.

ii) To test the reliability of the

variables/metric used under the

dimensions of D and M model in

measuring the efficiency of the

information systems in banks.

iii) Grouping the metric into major factors

used under the dimension Net Benefit in D

and M Model and

iv) To portray the findings and offer suitable

suggestions to improve the information

systems of the selected bank groups.

MATERIALS AND METHODS


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The study is exploratory level to

test the reliability and identify the

construct for D and M Model, in

measuring the efficiency of the

information systems, with reference to SBI

banks in Coimbatore District. Primary data

has been collected from the employees of

SBI Group in Coimbatore using

questionaire. Five-point scale was for this

purpose, a list of SBI Group operating

within the Coimbatore District was

prepared with the data obtained from

Canara Bank, the Lead Bank of

Coimbatore District. There are totally 68

are SBI Group. A Sample of 12 branches

has been selected at Stratified Random

Sampling Method. Hence, the study has

totally 6 SBI banks group. The banks

having two more than two branches were

selected as sample. A list of SBI Group

banks selected.

Banks Group-wise as on March, 2011

S.No. Banks Total branches

Sample selected branch wise

No. of Respondents selected

Total

STATE BANK GROUP 1 State bank of India 50 2 10 2 State bank of Hyderabad 5 2 10 3 State bank of Mysore 4 2 10 4 State bank of Patiala 2 2 10 5 State bank of Travancore 5 2 10 6 State bank of bikaner and jaipur 2 2 10

60

For the purpose of analysis, the

data has been collected from 60 internal

users of SBI banks group in Coimbatore

District. The samples have been selected

on the basis of random sampling method.

The data has been tabulated and

statistically interpreted whenever and

wherever needed. Reliability analysis has

been used to test the reliability of the D

and M model metrics used for measuring

the banking IS efficiency. Factor analysis

has been used to identify the major factors

of net benefit dimension.

LIMITATIONS

According to the research framework

the study is prone to certain limitations in

terms of place, time, attitudinal change and

technical advancements.

1. The study is confined to SBI banks group

in Coimbatore district, it can be extended

so the other banks group to project the

elaborated scenario of the study.


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2. As the duration of the data collection

period was limited to six month period the

results exactly match with the scenario

prevail over that period.

Reliability analysis is used to test the

reliability of D and M model and the

metrics of D and M’s dimensions of

banking IS with reference to SBI banks

group. The reliability of scales used in this

study was calculated by Cronbach's

coefficient alpha, normally ranges between

0 and 1. However, there is actually no

lower limit to the coefficient. The closer

Cronbach’s alpha coefficient is to 1.0 the

greater the internal consistency of the

items in the scale.

Table – 1 RELIABILITY OF SCALES AND ITEM-CONSTRUCT LOADINGS

- FACTORS RELATED TO SYSTEM QUALITY IN SBI BANKS GROUP

S.No Variables /Metrics Scale mean if item deleted

Cronbach's alpha if item deleted

1 IS I use is very easy to use 84.95 0.968 2 IS I use is very easy to learn 85.08 0.971 3 It is easily integrating with other system 85.27 0.970 4 IS is compatible with existing system 85.15 0.971 5 Integration of IS is well achieved 85.13 0.969 6 It is convenient to access 84.95 0.970 7 IS is having good documentation 85.35 0.972 8 Quality and maintainability of program code is good 85.07 0.970 9 IS is comparatively cost effective 85.53 0.970

10 I can trust worth on the IS system 84.92 0.969 11 Better control over data & Information 84.75 0.971 12 It produce quality output 84.90 0.971 13 The reliability of IS is good? 84.75 0.970 14 IS is Helpful In Decreasing the waiting time 85.33 0.970 15 IS I use is speedy in response 84.93 0.971 16 Improvement in capturing data 85.02 0.970

17 Information retrieval is very fast It makes enquiry about the state of customer A/C faster

85.25 0.969

18 Turnaround time is short 85.20 0.969 19 IS reduced the interaction time with Customer 85.35 0.970 20 IS is designed as required by user 84.87 0.976 21 IS features are useful 85.12 0.969 22 The system have adequate storage capacity 84.93 0.969

MEAN 89.13 VARIANCE 207.64 STD. DEVIATION 14.41 CRONBACH'S ALPHA 0.97

NO OF ITEMS 22


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Reliability analysis of Information

Quality: The seventeen measurement scale

items related to Information quality

Cronbach’s alpha value is 0.966, it is

greater than the threshold level of 0.70. It’s

provided good estimates of internal

consistency and reliability. The alpha

values ranged from 0.961 to 0.966 for all

the constructs indicating that the scales

used in this study were reliable.

Reliability analysis of Service quality:

The seven measurement scale items of

Service quality Cronbach’s alpha value

is 0.879, it is greater than the threshold

level of 0.70, provided a good estimate

of internal consistency and reliability.

The alpha values ranged from 0.843 to

0.894 for all the constructs indicates that

above scale items are consistent with

each other and they are reliable measure

of opinion on service quality in SBI

group, so that it can be used for factor

analysis.

Reliability of System use: The sixteen

measurement scale items Cronbach’s

alpha value is 0.919, it is greater than the

threshold level of 0.70 indicates good

estimates of internal consistency and

reliability. The alpha values ranged from

0.909 to 0.915 for all the constructs

clearly indicates that above scale items

were reliable and consistent with each

other and they are reliable measure of

opinion on system use in SBI group, so

that it can be used for factor analysis

Reliability of user satisfaction: The

Cronbach’s alpha value of 0.831 for the

sixteen measurement scale items of user

satisfaction is reliable. It is greater than

the threshold level of 0.70 indicates a

good estimates of internal consistency

and reliability. The alpha values ranged

from 0.786 to 0.888 for all the constructs

clearly indicate that above scale items

were reliable and consistent with each

other. They are reliable measure of

opinion on user satisfaction in SBI group.

Dimensionality of the multi-scale items

(factor analysis) for net benefits of SBI

banks group: Factor Analysis is a set of

technique which by analyzing correlations

between variables reduces their numbers

into fewer factors which explain much of the

original data, more economically. Even

though a subjective interpretation can result

from a factor analysis output, the procedure

often provides an insight into relevant

psychographic variables, and results in


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economic use of data collection efforts. The

subjective element of factor analysis is

reduced by splitting the sample randomly

into two and extracting factors separately

from both parts. If similar factors result, the

analysis is assumed as reliable or stable.

Table -2

EIGEN VALUES AND PROPORTION OF TOTAL VARIANCE OF EACH UNDERLYING

FACTORS FOR SBI BANKS GROUP

The results of the table-2

regarding opinion about net benefit in

SBI banks group, have revealed that there

are four components / factors that had

Eigen value exceeding “one”. Among

those four factors, the first factor

accounted for 62.754 per cent of the

variance, the second 15.552 percent, the

third factor 8.485 percent, and the fourth

factor 5.824 per cent of the variance in

the data set. The first four factors are the

final factors solution and they all together

represent 92.614 percent of the total

variance in the scale items measuring the

net benefits in banking sector. Hence,

there four major factors for net benefit in

SBI Banks group.

In the Factor Extraction Process, it

was performed by Principal Component

Analysis to identify the number of factors

to be extracted from the data and by

specifying the most commonly used

(Malhotra, 2001) Varimax rotation

method. In the principal component

analysis, total variance in the data is

considered. Table 3 shows the factor

loadings of Net Benefit in SBI banks.

RESULTS AND DISCUSSION

Initial Eigen values

Extraction Sums of Squared Loadings

Rotation Sums of Squared loadings

Com

pon

ent Total % of Varian

ce

Cumulative

%

Total % of Varian

ce

Cumulative

%

Total % of Varian

ce

Cumulative

% 1 15.688 62.754 62.754 15.688 62.754 62.754 8.519 34.077 34.077

2 3.888 15.552 78.306 3.888 15.552 78.306 7.268 29.070 63.148

3 2.121 8.485 86.790 2.121 8.485 86.790 5.188 20.751 83.899

4 1.456 5.824 92.614 1.456 5.824 92.614 2.179 8.715 92.614


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The twenty-two measurement scale items

of System quality’s Cronbach alpha value

0.972, the seventeen measurement scale

items of Information quality’s Cronbach

alpha value 0.966, the seven measurement

scale items of Service Quality’s Cronbach

alpha value 0.879, the sixteen

measurement scale items of System use’s

Cronbach alpha value 0.879, the sixteen

measurement scale items of user

satisfaction’s Cronbach alpha value 0.831

and the twenty five measurement scale

items of Net Benefit’s Cronbach alpha

value 0.951 indicates good estimates of

internal consistency and reliability. For all

the dimensions the alpha values were

greater than the threshold level of 0.70. It

is indicating that the scales used in this

study were reliable and consistent with

each other.

Above finding indicates the DeLone and

McLean model construct for banks is

highly reliable for SBI Banks group.

It can be observed that, the variables like

X21 (IS helps to acquire and retain

customers), X12 (Return on Investment is

good), X9 (IS reduced the man power

requirement), X22 (IS increased the

customer satisfaction), X2 (Paper work has

decreased).X11(IS improves the growth of

the bank), X17 (IS help your bank to make

a first / preemptive strike against your

competitors), X10 (Increased service

volume ) and X4 (IS Improves the Bank

image) were accounted for Factor I and

grouped as the ‘Critical success factors’.

Similarly, X8 (IS decrease the service

time), X15The Range & Scope of

application is wide, X7 (IS really speed up

cashier work), X19 (IS help your bank to

match an existing competitor’s offering ),

X5 (IS enhance the internal operation ),

X18( IS help your bank in to provide

service substitutes before your

competitors do), X20 (IS helps in Problem

identification), X16(IS is a competitive

weapon for this bank ), X14 (IS is having

enough application portfolio) and X6 (IS

enhance inter Corporate Coordination) are

having a high correlation value and

contribute for factor II and named as

‘Internal strength and quality of service’.

Similarly for the factor III the variables

X24 (IS help to provide cash management

service for customers) , X3 (IS help your

bank to reduce marketing costs), X25 (Can

your bank use IS to make database

available to customers services) accounts

with high correlation value. and grouped


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as ‘Value added services of IS’ . Similarly

for the factor IV the variables X23 (IS

helps retain customers Who keep their

Money at homes instead of the bank), X1

(IS reduce the cost of Transaction), and

X13 (IS doesn’t give prompt & efficiency

service) are accounts with high correlation

value grouped as ‘Customer retention by

IS’.

As the D and M model is having a

good degree of reliability, for future

research purpose it can be utilized. Critical

success factors, Internal strength and

quality of service, Value added services of

IS and Customer retention are major value

added factors of Net benefits by the IS

used , with reference to SBI banks group.

CONCLUSION

The research results exhibit that the

D and M is reliable to measure the

efficiency of the information systems in

banking sector. The metric used are

filtered from the various past researches

and it can be modified according to

scenario of the sector which is selected.

The investments in IS is very expensive

for the financial institutions, the banks are

more concern about effective utilization of

IS resource. Hence they want to know

whether IS can provide the economic

value for the banks. Accessing the current

state of IS performance can help strive

superior performance in information

system, thus can have competitive edge

over their rivals.

REFERENCE

1. Uma G. Gupta, William Collins (1997),

‘The impact of information systems on the

efficiency of banks: An empirical

investigation”, Industrial Management &

Data Systems, Pp 10-17.

2.Arun Rai, Sandra S. Lang, Robert B.

Welker “Assessing the Validity of IS

Success Models: An Empirical Test and

Theoretical Analysis “, Information

Systems Research, Vol. 13, No. 1, March

2002, pp.50-69,

3.William h. Delone and Ephraim R.

Mclean, The DeLone And McLean Model

of Information Systems Success A Ten-

Year Update, Journal of Management

Information Systems / Spring 2003, Vol.

19, No. 4, pp. 9–30.

4.Subramanian, Girish H, An Empirical

Application of the Delone And Mclean

Model In The Kuwaiti Private Sector,


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The Journal of Computer Information

Systems , Friday, April 1 2005

5. R. Hussein H. Selamat N. S. Abdul

Karim, The Impact of Technological

Factors on Information Systems Success in

The Electronic government, The paper

Prepared for the Second International

Conference on Innovations in Information

Technology (IIT’05), 2005.

6.Dan Wang, Three essays on bank

technology, cost structure, and

performance, Feb 2007

7.William H. DeLone, Ephraim R.

McLean, Information Systems Success:

The quest for the dependent variable.

8. Kenneth C. Laudon, Jane Price Laudon,

Management Information Systems

Prentice - Hall of India, New Delhi

,2001Pg 479.

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