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Analysis of Links Between IT Investments and Financial Performance
1. Analysis of Links Between IT
Investments and Financial
Performance
By Antoine Chaya
2. Introduction
• Antoine Chaya, PhD, is a recognized expert in the field of
Information Technology (IT). In 1996, Antoine Chaya
copresented a paper with Sabyasachi Mitra at the 29th
Annual Hawaii Conference on Systems Sciences. The
study focused on the relationship between IT
investments and organizational performance, based on
analysis of more than 600 U.S. companies.
At the time of the presentation, there was little research
evidence that a firm’s IT investments were connected to
its financial performance. The 1996 study examined how
IT spending related to two key performance indicators:
operating expenses and operating margin.
3. Analysis of Links
• Analysis showed a strong inverse relationship
between operating expenses and IT investment. In
addition, findings suggested a lag between when
firms make IT investments and realize benefits from
them.
Today’s IT executives continue to strive to
understand the return on investment (ROI) of their
technology projects. IT leaders can seek measurable
financial benefits, such as revenue enhancement or
cost reduction, to assess the value of IT
expenditures.