Measuring the impact of information technology on organizational strategic performance: a key ratios approach

Organizations are spending increasing amounts on information technology (IT). However, the existing literature provides little evidence of a relationship between IT investment and organizational strategic performance. Based on extensive reviews of past research, the authors relate comprehensive sets of IT investment measures (independent variables) and organizational strategic performance measures (dependent variables) to answer some of the questions raised by managers with regard to the benefits of IT investment. Five ratios were used to represent investment in IT while six ratios represented organizational strategic performance. Although the individual IT investment variables were found to be only weakly related to organizational strategic performance, they became significant predictors of performance when grouped and analyzed by means of canonical correlation. The results provide important insights regarding the benefits of IT investment