TABLE OF CONTENTS After completing this chapter, you should be able to:
Describe different types of IT investment decisions manager face.
Briefly describe some of the methodologies that are used in IT investment decision-making.
Explain why IT investment decision-making is important as a subject to study.
Explain some of the limitations that should be considered when using IT investment methodologies.
Explain the role of IT investment decision-making within organizational planning.
The Productivity paradox refers to the absence of a positive relationship between spending on information technology or IT and its resulting contribution to productivity or profitability (Lucas, 1999). Robert Solow, the 1987 Noble Prize winning economist felt there was a singular absence of measured productivity from the use of computers when looking for it at the industry or economy level of analysis. Other researchers seeking to find a connection between capital investments in IT and productivity at the company or business firm level of analysis have been equally surprised to confirm the lack of a relationship between investment on IT and firm performance (Brynjolfsson, 1993; Landauer, 1995; Qing and Plant, 2001). However, several other researchers have found that there is a positive relationship between IT investments and firm productivity and performance (Bhatt, 2000; Dewan and Min, 1997; Stratopoulos and Dehning, 2000; Swierczek and Shrestha, 2003).
The inconsistency in the research results...
