Exploring the relationships between IT investments and organizational performance: preliminary empirical evidence

Businesses invested around a trillion dollars in information technology (IT) in the 1980s, and the trend continues into the nineties. Although investments in IT have reached 50% of capital expenditures, their impact on the bottom line has not been clearly established. The pay off from information technology (IT) has eluded both managers and researchers. The paper reports some preliminary results of an on going research effort to better understand the relationship between a firm´s investments in IT and its financial performance. The study covers a period of 5 years, with sporadic IT and financial data on 609 large US companies. The results show a strong inverse relationship between investments in IT and the operating expenses of a firm. They also support the notion that there is a lag between the time IT investments are made by an organization and when the benefits are derived from them