Early Research on Link between IT Investment and Financial Performance

Antoine Chaya leverages his extensive expertise in information technology to serve as the senior director of strategic accounts for Oracle Corporation in Redwood Shores, California. While working on his PhD at the Georgia Institute of Technology, Antoine Chaya co-authored a paper for the 29th Hawaii International Conference on System Sciences, which was titled Exploring the Relationships between IT Investments and Organizational Performance: Preliminary Empirical Evidence.

As noted in the paper’s abstract, businesses invested nearly a trillion dollars, or 50 percent of capital expenditures, into their IT capabilities during the 1980s. Firms made these outlays despite the fact that there were no data quantifying the return on investment (ROI) for doing so. The researchers attempted to determine whether there was a connection between a company’s information technology (IT) expenditures and its financial performance.

The study evaluated five years of financial and IT data from more than 600 large and mid-sized U.S. businesses. The researchers determined that greater IT investments were linked with lower average total costs and production costs, but higher average overhead expenses. Additionally, the authors concluded there was generally a delay between IT-related spending and ROI. A subsequent publication on the topic by Antoine Chaya and his co-investigator found that larger corporations typically allocate a greater percentage of their revenue to IT than smaller companies.

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