Wednesday, April 4, 2012

IT Investments Deliver Profits, Study Finds

Thibodeau. Patrick. "IT Investments Deliver Profits, Study Finds." Computerworld, April 3, 2012.

From the article: "Investing in IT departments can have a big impact on a firm's profits, more so than similar spending on R&D and some marketing endeavors, according to a team of university researchers.

The researchers reached their conclusions after examining the IT investments and financial data of about 450 companies in an effort to draw a link between IT spending and profits.

The work, published in the journal, MIS Quarterly, led to several key conclusions.

First, IT investments are "positively associated with profitability," according to the research paper.

The researchers said they were able to look deep enough at these unidentified global firms to draw insights into the type of IT investments that are most helpful. They found that companies are better off spending on projects that create revenue instead of reducing costs.

For instance, a company that builds or buys a business intelligence system that helps sell products will see more bottom line benefits than a company that spends IT dollars to automate internal processes to trim expenses, said the paper's lead author, Sunil Mithas, an associate professor Robert H. Smith School of Business at the University of Maryland." Read more

See Also
Mithas, Sunil, A.Tafti, I. Bardhan and J.M. Goh. "The Impact of IT Investments on Profits." MIT Sloan Management Review, March 20, 2012.

John Dodge, March 30, 2012, "IT Investments Have Greater Impact on Profitability Than R&D or Advertising, MIT Reports," CIO blog.