Because the benefits of IT investments are realizable only after much time has passed, measuring the successes and failures of them can be quite difficult. Mahmood & Mann (2000) look into the efforts of (8) different groups or individual researchers’ findings regarding the relationship between IT investment and organizational performance and productivity, and note the following:
Studies are incomplete
Proving causation is difficult within short time periods and when using conventional statistical techniques
IT investment alone will not provide high organizational benefit
Studies are incomplete
The first research effort involved interviewing fifty business managers in IT, from various industries, regarding how social subsystem costs related to IT decisions. Another research effort was done to view the qualitative measures of IT investment in an organization versus the traditional quantitative ones. Both prove the points of the authors that studies to prove the benefits of IT investment are incomplete. Human-related, and other hidden costs are traditionally not measured, rendering studies incomplete.
Researchers argue that multivariate and nonparametric methods must be used in lieu of traditional correlation and regression analyses to effectively prove causation. They found that large database statistics were needed to form an accurate assessment of causation, as well, to ensure that extremes were neutralized and allow a better understanding of the underlying relationship between IT investment and organizational structure. Another researching team found through 19 years of hospital data, that efficiency needed to be measured to analyze how inputs are factored into decision making during allocation. The results from the efficiency studies were also used to show causation between the level of IT investment and process engineering.
Needing More than IT Investment for Organizational Benefit
A research effort involving eight hospitals over a 3-year period proved that IT investments alone were insufficient for organizational benefit. The same study also found that business process reengineering (BPR) was insufficient for organizational benefit, but combined with the IT investment, it (benefit) could be proven. Several of the other studies mentioned were in agreement with this finding.
Another study confirmed this information by combing over previous research findings of the impacts of IT investment and furthering the studies by analyzing a large database with canonical correlation to prove empirical validity that IT investments combined with other factors was the best determinant for organizational benefit, versus investment in IT alone. A study done by yet another set of researchers found that sophisticated electronic data interchange networks (EDI’s) were needed in combination with IT investment to ensure organizational benefit.
In conclusion, this journal article sets out to prove that conflict exists among researchers as to how and when research should be performed to determine if IT investments provide organizational benefit. In studying the research of various groups and individuals both globally and locally, Mahmood and Mann (2000) present the various theories and the results of the research done to confirm or disprove them. The general conclusions are that 1). Studies are so inconsistent in variables and methods that conclusions must be found incomplete. 2). Proving causation between IT investment and organizational benefit is as difficult as the aforementioned, and 3). More than IT investment alone must be done to enrich organizational benefit. A combination of factors or well-managed reengineering always provides a better benefit to the organization than simply investing in IT.
Mahmood, M., & Mann, G. (2000, Spring2000). Special Issue: Impacts of Information Technology Investment on Organizational Performance.
Journal of Management Information Systems, 16(4), 3-10. Retrieved September 26, 2008, from Business Source Premier database.