Measuring the Organizational Impact of Information Technology Investment: An Exploratory Study.

Author List: Mahmood, Mo Adam; Mann, Gary J.;
Journal of Management Information Systems, 1993, Volume 10, Issue 1, Page 97-122.
Organizations are investing ever-increasing amounts in information technology (IT). However, the existing literature provides little evidence of a relationship between IT investment and organizational strategic and economic performance. The exploratory research reported here appears to be the first to relate comprehensive sets of IT investment measures to organizational strategic and economic performance measures. Although the individual IT investment variables were found to be only weakly related to organizational strategic and economic performance, they were significantly related to performance when grouped and analyzed by means of canonical correlation. More specifically, canonical results suggest that organizational strategic and economic performance measures such as sales by employee, return on sales, sales by total assets, return on investment, and market to book value are affected by IT investment measures such as IT budget as percentage of revenue, the percentage of IT budget spent on training of employees, number of PCs per employee, and IT value as a percentage of revenue. The organizational performance measure growth in revenue and IT investment measure percentage of IT budget spent on staff were not significantly related to other measures and therefore were not indicated to be useful for investigating possible effects of IT investment on organizational strategic and economic performance. Finally, a model based on these results is suggested. The model depicts a framework for management evaluation of the relationship between IT investment and organizational performance.
Keywords: information technology investment; investment-performance analysis; organizational strategic and economic performance
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#271 0.195 technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#114 0.143 performance firm measures metrics value relationship firms results objective relationships firm's organizational traffic measure market study improve accounting measuring aggregate
#182 0.121 percent sales average economic growth increasing total using number million percentage evidence analyze approximately does business flow annual book daily
#198 0.110 factors success information critical management implementation study factor successful systems support quality variables related results key model csf importance determinants
#246 0.096 strategic benefits economic benefit potential systems technology long-term applications competitive company suggest additional companies industry operating costs difficult substantial total
#292 0.096 information research literature systems framework review paper theoretical based potential future implications practice discussed current concept propositions findings provided extant
#276 0.091 satisfaction information systems study characteristics data results using user related field survey empirical quality hypotheses important success various indicate tested
#1 0.079 organizational organizations effectiveness factors managers model associated context characteristics variables paper relationships level attention environmental technological based maturity organization's relationship