This study investigates the impact of IT investments and several contextual variables on the volatility of future earnings. We find evidence that IT investments strongly increases the volatility of future earnings and that four contextual factors - industry concentration, sales growth, diversification, and leverage - strongly moderate IT's effect on earnings volatility. It is notable that while the main effect of IT spending on earnings volatility is strongly positive, not all of the moderators are. This suggests that there are conditions under which the positive risk-return relation can be either offset or even reversed. Taken together, these results suggest an explanation for what has recently been termed the "new productivity paradox", i.e. the apparent under-investment in information technology despite evidence of highly positive returns for doing so.

There has been a lot of research addressing the relationship between Information Technology (IT) investments and productivity. Most of the work has been based on firm-level metrics such as total IT investment. We present what we believe is one of the first attempts to create a systematic methodology to assess the impact of IT in business process performance metrics. Our approach builds on the MIT Process Handbook as a basis to both guide the analysis and capture the resulting knowledge for future use. We will present preliminary results on how to use such methodology to analyze the impact of a given IT technology, namely RFID (radio frequency identification devices), in performance metrics of a consumer packaged goods company. We are interested in looking at how IT may impact performance metrics such as productivity, cost and value. We believe our methodology can help CPG companies prioritize their investments. We show results on how the specialization features of the MIT Process Handbook can incorporate performance metrics to help assess such investments in RFID

<p>Information technology (IT) is becoming the primary factordetermining the survival of most organizations. The differenttypes of systems and the wide range of objectives suggest thatdiverse evaluation methods are needed. There is a critical needfor a new approach to managing IT investments, and solving theinformation paradox should be a business imperative for allmanagers today.</p><p>Evaluating IT investments introduces different types ofproblems that investment in traditional assets does notconsider. The focal point shifts from measuring hard andquantifiable benefits that appear on a firm’s incomestatement to measuring soft, diffuse, and qualitativeimpact.</p><p>The decision to acquire new information technology poses anumber of serious evaluation problems for managers because theavailable methods for IT investment evaluation are mostlystatic and they do not consider dynamism in decision-makingprocesses.</p><p>Common problems with the methods for evaluating ITinvestments are related to their inability to take account ofthe full range of potential benefits. There is a gap betweentheory and practice in relation to the use of any method formaking decisions and for continuous evaluation of ITinvestments.</p><p>This thesis presents a new approach to evaluating benefitsof IT investments in a dynamic way, an approach consisting of acombination of dynamic information workflow models and businessprocess simulation techniques. The proposed approach givesmanagers and organizations the possibility of implementingother models for measuring different metrics and aspects of ITinvestments.</p><p>A dynamic information workflow model of an electric utilityandsimulation essays are presented in order to show how theproposed approach is applied. The performance measure selectedfor running experiments was efficiency, which was characterizedby the following selected performance indicators: cycle time,resource utilization, and activity costs. Empirical data wascollected from case studies of different utilities in CentralAmerican countries.</p><p><b>Key words:</b>Business Process Modeling and Simulation,Evaluating IT Investments, Dynamic Information Workflow Model,Electric Utilities.</p>

Student Number : 0063608J - MSc(Eng) dissertation - School of Electrical and Information Engineering - Faculty of Engineering and the Built Environment / “You can see the computer age everywhere except in the productivity statistics”. This offhand remark by Robert Solow, the Nobel prize-winning economist [1] has stimulated many other economists to conduct more rigorous analyses on the impact of information technology on productivity. The research presented in this dissertation has been conducted on a large telecommunications utility. An important business process of the utility, that of collecting information on its geographically dispersed network assets, was automated using mobile computing and wireless technologies. The research compared this newly developed automated process with the current, manual, process of sourcing the field network asset data using paper-based templates, and capturing the data manually from the templates. The results of the pilot for this automated business process were encouraging and demonstrated an improvement of over 50% in the productivity of the data collection process, and its integrity. An important aspect of the research outlined in this dissertation was to design and implement the mobile computer-based electronic data collection prototype to minimise user obstruction to the technology deployed. The prototype was tested for technology acceptance by the targeted field workers. This test also proved successful. The research demonstrated that an improvement in productivity of over 50% was achievable from a well-considered investment in information technology. The results from the research also pointed the way for the deployment of this data collection solution in other utilities, e.g. electricity distribution, water reticulation, and municipalities. Through user prototype tests and a cultural intervention process on the targeted users (field workers), the research also demonstrated how the automated business process can be geared for use by low-skilled field workers, so important to improve productivity in developing economies such as those in Africa.

This thesis examines determinants of IT investments and IT penetration rate. The full sample consists of panel data for 69 countries between years 1996 and 2013.We analyze three types of IT devices: smartphones, tablets and PCs. In order to reveal cross-segment and cross-technology differences in the importance of various determinants, separate regression models are estimated on technology-segment level. Installed base per capita, which is used to measure the level of existing capital, is included among independent variables in equations estimating per capita IT investments. Results show that the effect of the level of existing capital is stronger for smartphones and tablets when compared to PCs. Another finding is that commercial segment is less price sensitive than consumer segment. This study also provides several findings regarding other determinants of IT penetration rate and IT investments such as: national wealth, human capital, openness to trade and external knowledge, and business cycles.

Marknaden för IT-system har växt kraftigt under de senaste årtiondena vilket även har lett till att olika system för transportadministration har utvecklats. Allt fler företag väljer att investera i TA-system för att underlätta den dagliga verksamheten och förenkla transportrelaterade affärsprocesser. En stor aktör på den svenska marknaden för TA-system är LogTrade, som även varit undersökningsobjektet i denna studie. Syftet med arbetet har varit att undersöka hur LogTrades kunder utvärderar sina investeringar i TA-system. Den teoretiska referensramen som ligger till grund för undersökningen berör tidigare forskning om Electronic Data Interchange (EDI), IT-investeringar samt finansiella och icke-finansiella värderingsmetoder. En kvalitativ studie har genomförts, vilken huvudsakligen bygger på en enkätundersökning som har tolkats likt en strukturerad intervju. Enkäten skickades ut till totalt 156 företag, varav 31 svar erhölls. Merparten av respondenterna angav att anledningen till investeringen i TA- systemet främst har varit för att möjliggöra tids- och kostnadsbesparingar samt för integrationsmöjlighet med ett ERP-system. Den största delen av respondenterna har gjort någon form av utvärdering för investeringen och främst har icke-finansiella mätetal använts för att beräkna investeringens nytta. Undersökningens resultat visade dock att majoriteten av LogTrades kunder inte har använt sig av någon konkret värderingsmodell för att utvärdera sin investering och häften av respondenterna upplever att de inte har kunnat beräkna investeringens totala nytta. Studien visar även att det råder en avsaknad på uppföljningar av investeringens nytta, en värdering av nyttan har främst skett innan implementeringen av TA- systemet. Trots delvis bristande värderingsmetoder och uppföljningar av investeringens nytta, upplever ändå LogTrades kunder att investeringen levt upp till deras förväntningar. / The market for IT systems has grown rapidly in recent decades, leading to the development of transportation administration systems. An increasing amount of companies choose to invest in TA-systems facilitating their day-to-day operations and transport administration. A major actor on the Swedish market for TA-systems is LogTrade, and this company has also been the investigation object for this study. The purpose of the study has been to examine how LogTrade's customers evaluate their investments in TA-systems. The theoretical framework that has built the basis for our research, concerns previous research on Electronic Data Interchange (EDI), IT investments and different financial and non-financial valuation methods. A qualitative study has been conducted which is mainly based on a survey that has been interpreted similarly to a structured interview. The survey was sent out to a total of 156 customers, resulting in 31 replies. A majority of the respondents stated that the reasons for the implementation of the TA-system has mainly been for time- and cost savings, but also for integration opportunities with their ERP-system. Most of the respondents have made some type of evaluation regarding the investment, and non-financial metrics has been most commonly used to evaluate the benefits of the investment. However, the result of the survey showed that the majority of LogTrade's customers did not use any specific valuation model for their investments and half of the respondents’ experience that they have not been able to calculate the full benefits of the investment. The study also shows that there is a lack of follow-up regarding the benefits of the investment. Despite partly inadequate evaluation methods and follow-up of the investment's benefit, LogTrade's customers felt that the investment in the TA-system lived up to their expectations.

Information technology (IT) is becoming the primary factordetermining the survival of most organizations. The differenttypes of systems and the wide range of objectives suggest thatdiverse evaluation methods are needed. There is a critical needfor a new approach to managing IT investments, and solving theinformation paradox should be a business imperative for allmanagers today. Evaluating IT investments introduces different types ofproblems that investment in traditional assets does notconsider. The focal point shifts from measuring hard andquantifiable benefits that appear on a firm’s incomestatement to measuring soft, diffuse, and qualitativeimpact. The decision to acquire new information technology poses anumber of serious evaluation problems for managers because theavailable methods for IT investment evaluation are mostlystatic and they do not consider dynamism in decision-makingprocesses. Common problems with the methods for evaluating ITinvestments are related to their inability to take account ofthe full range of potential benefits. There is a gap betweentheory and practice in relation to the use of any method formaking decisions and for continuous evaluation of ITinvestments. This thesis presents a new approach to evaluating benefitsof IT investments in a dynamic way, an approach consisting of acombination of dynamic information workflow models and businessprocess simulation techniques. The proposed approach givesmanagers and organizations the possibility of implementingother models for measuring different metrics and aspects of ITinvestments. A dynamic information workflow model of an electric utilityandsimulation essays are presented in order to show how theproposed approach is applied. The performance measure selectedfor running experiments was efficiency, which was characterizedby the following selected performance indicators: cycle time,resource utilization, and activity costs. Empirical data wascollected from case studies of different utilities in CentralAmerican countries. <b>Key words:</b>Business Process Modeling and Simulation,Evaluating IT Investments, Dynamic Information Workflow Model,Electric Utilities. / NR 20140805

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In the rapidly evolving industrial sector, companies must leverage digital technologies to enhanceoperational efficiency and maintain a competitive edge. This study investigates the economic evaluationof IT investments, focusing on the integration of digital order processing systems within the supplychain management of Tetra Pak. Driven by the need to understand the direct financial impacts andstrategic benefits of such investments, the research aims to analyze a hypothetical future implementationusing historical data to determine its financial viability. The primary problem addressed in this thesis isthe economic viability and strategic benefits of integrating digital order processing systems in a firm'ssupply chain, specifically within the context of Tetra Pak. The challenge also lies in evaluating theseinvestments when not all data is known or readily available, which necessitates an adaptable evaluationframework. The study employs a mixed-methods approach, combining qualitative and quantitativeresearch techniques. Data was collected through a literature review, semi-structured interviews, andanalysis of financial documents. Quantitative models, such as Cost/Benefit (C/B) analysis, DiscountedCash Flow (DCF), and Net Present Value (NPV), were utilized to assess the financial impact and overallvalue of the IT investment. This methodological framework was designed to provide an evaluationdespite incomplete data. The results indicate that the potential IT investment would significantlyenhance operational efficiency and reduce costs. The application of NPV and return on investment (ROI)models demonstrated a positive economic outcome, with an annual net benefit of 457 600 SEK per year,over five years, confirming that the benefits of digital system integration surpass the initial investmentcosts. The findings highlight not only cost reductions but also possible improvements in customersatisfaction and internal process efficiencies. The discussion section addresses the implications of thefindings, emphasizing the relevance of traditional financial models like NPV and DCF whileacknowledging their limitations in handling uncertainties. It suggests that, among other things,incorporating probabilistic methods and scenario analyses can enhance the accuracy and reliability offinancial evaluations. This approach ensures that investment decisions are aligned with strategic goalsand adapt to dynamic market conditions. In conclusion, the developed framework provides a solidfoundation for evaluating IT investments within firms, even when data is incomplete. By integratingC/B analysis, quantitative modeling, and advanced financial evaluation techniques, the studydemonstrates that such investments are economically viable and strategically beneficial and that thereis much future work to be done in economics to better evaluate IT-investments.

Submitted by LUCI LONGO (luci.longo@gvmail.br) on 2014-01-27T18:56:56Z No. of bitstreams: 1 TESE-2014-Luci Longo.pdf: 4266328 bytes, checksum: b7560e7b65474586eb06e6b91f5bec08 (MD5) / Approved for entry into archive by Suzinei Teles Garcia Garcia (suzinei.garcia@fgv.br) on 2014-01-27T19:18:51Z (GMT) No. of bitstreams: 1 TESE-2014-Luci Longo.pdf: 4266328 bytes, checksum: b7560e7b65474586eb06e6b91f5bec08 (MD5) / Made available in DSpace on 2014-01-27T19:22:35Z (GMT). No. of bitstreams: 1 TESE-2014-Luci Longo.pdf: 4266328 bytes, checksum: b7560e7b65474586eb06e6b91f5bec08 (MD5) Previous issue date: 2014-01-16 / The results obtained enable us to state that the industries that most invested in Information Technology (IT) in the period of 2001-2011 had higher growth in their operating revenue and more effective operating results, compared with industries that invested less in the same period. According to the proposed model for the companies studied, an increase of 7% was found within two years in operating profit for every 1% in IT investments. Noteworthy is the purpose of the research to identify and analyze the impacts of expenditures and investments in information technology on the financial performance of Brazilian industries, and for that, I used a research model that used accounting-financial metrics and indicators of IT use as well as the combination of statistical analysis techniques. Moreover, the investigation deepens and broadens the discussion on the evaluation of IT investments and how to measure its impact on the organizational performance. The study population was composed of Brazilian companies, which were publicly traded, from the industrial sector, with active stocks at BOVESPA, totaling 119 companies. Through a survey, additional data were obtained related to expenditures and investments in IT, the semi-structured questionnaires were sent directly to the Chief Information Officer (CIO). These efforts in collecting primary data, gave the possibility of obtaining a fairly significant sample, with 63 industries, namely 53% of the population. After collection, the data analysis was developed through three steps: (1) Factor Analysis (FA) for selection of performance factors, which at the end of the process resulted in twelve variables for the research model, (2) Cluster Analysis (CA) that showed three distinct groupings of companies for their features and performance, and (3) Multiple Regression Model which adopted the Generalized Method of Moments (GMM), a dynamic econometric model, satisfying the requirements of the Arellano-Bond (1991) model. It is noted that the proposed model could address in a methodologically proper way the spurious correlations and allowing the identification of ‘the lag effect', in other words, IT investments in two previous periods, (IGTIt-2) impacted in current Operating Income (ROPt). Furthermore, it was found that other variables of profitability and liquidity impacted in this result, also adopting lag variables. The main variable of IT research, IGTI is calculated through the sum of expenditures and annual IT investments (OPEX/CAPEX), divided by the annual net Operating Revenue. For future research, there is the possibility of seeking evaluation measures by types (categories) of IT investment, aiming at deepening the analysis of performance impacts by sector (in each investment) and the cluster analysis, making use of the analysis model of this research. / Os resultados obtidos possibilitam afirmar que as indústrias que mais investiram em Tecnologia de Informação (TI), no período de 2001 a 2011, obtiveram maior crescimento da sua receita operacional e resultados operacionais mais eficazes, comparadas com as indústrias que investiram menos no período. De acordo com o modelo proposto, para as empresas estudadas foi possível encontrar, no prazo de dois anos, um crescimento de 7% no resultado operacional para cada 1% a mais de investimentos em TI. Destaca-se o objetivo da pesquisa de identificar e analisar os impactos dos gastos e investimentos em tecnologia de informação no desempenho financeiro das indústrias brasileiras, para alcançá-lo, adotou-se um modelo de pesquisa que utilizou métricas contábeis-financeiras e indicadores de uso TI, bem como a combinação de técnicas estatísticas para as análises. O trabalho aprofunda e amplia as discussões existentes sobre a avaliação dos investimentos em TI e como aferir o impacto desta sobre o desempenho organizacional. O universo do estudo foi composto pelas companhias brasileiras, de capital aberto, do ramo industrial, com ações ativas na BOVESPA, totalizando 119 companhias. Por meio de uma survey obteve-se os dados complementares referentes aos gastos e investimentos em TI; os questionários semiestruturados foram encaminhados diretamente ao Gerente de TI (Chief Information Officer). Estes esforços na coleta de dados primários possibilitaram a obtenção de uma amostra bastante significativa, com 63 indústrias, ou seja, 53% da população estudada. Após coleta, a análise dos dados foi desenvolvida em três etapas: (1) Análise Fatorial (AF) para seleção de fatores de desempenho que resultou no final do processo em doze variáveis para o modelo da pesquisa; (2) Análise de Cluster (AC) que evidenciou três agrupamentos distintos de indústrias por suas características e desempenho e (3) Regressão Múltipla que adotou um modelo econométrico dinâmico, estimado pelo Método dos Momentos Generalizado (GMM), satisfazendo as condições do modelo de Arellano-Bond (1991). Salienta-se que o modelo proposto permitiu tratar de forma adequada metodologicamente as correlações espúrias, possibilitando identificar que os gastos e investimentos em TI, (IGTI t-2), de dois períodos anteriores impactaram no Resultado Operacional Atual, (ROPt), evidenciando o efeito tardio, ou lag effect. Além disso, foi constatado que outras variáveis de rentabilidade e liquidez impactam neste resultado, também adotando defasagem das variáveis. A principal variável de TI da pesquisa, o IGTI, é calculada pela soma de gastos e investimentos em TI anuais (OPEX/CAPEX), dividida pela Receita Operacional Líquida anual. Para pesquisas futuras, há a possibilidade de buscar medidas de avaliação por tipos (categorias) de investimento em TI, visando ao aprofundamento da análise destes impactos no desempenho setorizado (ligado a cada investimento) e da análise de clusters, adotando o modelo de análise da pesquisa.