Predicting organizational performance using information technology managerial control ratios

Discriminant analysis is used to examine the usefulness of two information technology managerial control ratios as discriminating factors: the ratio of information technology expense to premium income; and the ratio of information technology expense to total operating expense. The ratios are used as predictors to differentiate organizational performance among systems technology leaders in the insurance industry. The overall classification accuracy of the discriminant model is 87.84% for the original sample (1984 firms) and 84.25% for the hold-out sample (1985-6 firms). The predictive ability of the model demonstrates that information technology managerial control ratios can be used to expose areas where a firm is weak