Sumit Sircar

A framework for assessing the relationship between information technology investments and firm performance

Abstract: There have been several attempts in the past to assess the impact of information technology on firm performance that have yielded conflicting results. Researchers have been unable to conclude that IT spending by an organization results in increases in key performance indicators. Two major recent studies have attempted to address the issue by putting greater emphasis on the theoretical underpinnings of the solution to the problem, although they chose different theoretical frameworks. The present study extends that work to yield a framework that shows the relationship between firm performance and both IT and corporate investments. The data used to validate the framework exceeds that used in previous analyses in both quality and quantity, thereby permitting appropriate statistical analyses. A large database consisting of over 2,000 observations of 624 firms was constructed, using data provided by the International Data Corporation, Standard & Poor’s Compustat, and Moody’s. This allowed us to pose the following research questions: (a) Can the relationship between sets of investment measures and firm performance be demonstrated (as opposed to individual measures)? (b) How are IT investments related to a firm’s market value, market share, sales, and assets? and (c) Is there a difference in the effect of computer capital and noncomputer capital? Seven measures of firm performance were initially incorporated as outputs in the framework, related to sales, assets, and market value. Similarly, seven input measures of IT and corporate investments were initially included. Two output measures and one input were eventually eliminated to formulate a refined framework with strong explanatory power. After careful editing, canonical analyses were performed, resulting in several important findings. Both IT and corporate investments have a strong positive relationship with sales, assets, and equity, but not with net income. Spending on IS staff and staff training is positively correlated with firm performance, even more so than computer capital.

Revolution or evolution?: a comparison of object-oriented and structured systems development methods

This paper examines the changes engendered when moving from a structured to an object-oriented systems development approach and reconciles the differing views concerning whether this represents an evolutionary or revolutionary change. Author co-citation analysis is used to elucidate the ideational and conceptual relationships between the two approaches. The difference in conceptual distance at the analysis and design level compared to that at the programming level is explained using Hendersons framework for organizational change. The conceptual shift during analysis and design is considered architectural, whereas for programming it is deemed merely incremental. The managerial implications of these findings are discussed and suggestions for improving the likelihood of success in the adoption of object-oriented systems development methods are provided.

A study of the impact of information technology on firm performance: a flexible production function approach

Most previous studies of the impact of information technology (IT) on firm performance have relied on the Cobb–Douglas production function, which makes unrealistic assumptions. These include assuming that (1) the scale elasticity, i.e. returns to scale, is constant throughout the entire output range; (2) the elasticity of substitution between inputs is one, whereas it can be anywhere from zero to infinity in practice; and (3) there are no complex interrelationships between inputs, i.e. no squared or product terms. The translog production function (used in two previous studies) does not make these assumptions and is therefore more accurate. However, the two previous studies found no significant difference between the two. This research has extended previous work on the impact of IT investments by providing more accurate results in some areas and new findings in others. ITs importance is shown to be much greater than previously thought. The translog function is used to demonstrate that the productivity paradox does not hold (i.e. both IT labor and capital indeed have a significant impact on firm revenues), but with considerably different results, i.e. the impact of IT is markedly more significant than that obtained from the Cobb–Douglas. Another interesting finding is that of scale elasticity. Our results show that this is less than 1, implying decreasing returns to scale of output. Finally, the substitutability between inputs was determined, which is not possible with the Cobb–Douglas. It was found that the partial elasticities of substitution for IT labor with IT capital and non‐IT labor were quite substantial.

The relationship between benchmark tests and microcomputer price

A highly accurate model predicts microcomputer price based on benchmark performance by analyzing the impact on predicted price of fluctuations in system configuration and benchmark results.

Quantitative Literacy for Undergraduate Business Students in the 21st Century.

The current business environment is awash in vast amounts of data that ongoing transactions continually generate. Leading-edge corporations are using business analytics to achieve competitive advantage. However, educators are not adequately preparing business school students in quantitative methods to meet this challenge. For more than half a century, business schools have relied mostly on a course in calculus and a course in statistics to meet the needs of their students despite an information-based business climate that has changed significantly. The authors propose that educators prepare students in the areas of mathematical modeling and risk management and quantitative skills, teaching them in the context of meaningful business problems.

An approach to estimating work effort for enterprise systems software projects

A major factor in the decision to develop enterprise software applications is the size of the project, which determines the amount of work necessary, which in turn will give decision makers some idea about the time required and the estimated cost. Two of the major approaches for such estimation—the Use Case Points (UCP) and COSMIC-FFP methods – are compared in this paper. The accuracy and reliability of each method are evaluated through the measurement of 50 use case studies. These were collected from the Customer Relationship Management systems development project of a major enterprise service institution. The results show that the UCP method is more accurate and reliable than the COSMIC-FFP in determining work effort.

Merchandise compatibility: an exploratory study of its measurement and effect on department store performance

This paper proposes two measures of merchandise compatibility and calibrates them with classification-level sales data from customer survey research at several large department store chains. Compatibility indices have possible applications in the positioning of stores, the allocation of retail space, the design of promotional displays of advertisements, and the diagnosis and rewarding of sales performance which deviates from sales targets. In an empirical model which controls for pricing differences and other standard retail-related factors (e.g. household income, charge card ownership, fashion consciousness, etc.), a merchandise compatibility index is shown to be a significant positive determinant of sales per square foot performance across thirty-nine department stores. The systematic calculation of compatibility indices will make it possible for a retailer to create important new decision tools including: (i) a new kind of market share; (ii) a rough measure of sales ‘lost’ from present customers; and (...

Complex document search for decision making

Abstract Professionals are often faced with ill-structured and complex decision situations, and they must make choices on the basis of limited information and problem clarity. These decisions are especially difficult when extensive document search is required. Thus, decision makers often satisfice rather than select an optimal alternative. The research reported here applies a cascading index, logical views, hypertext, notation capability, and case-based reasoning to a conceptual design and the prototyping of an electronic retrieval document system (ERDS) that may serve as a valuable tool for decision makers faced with an ill-structured problem and the task of extensive searching. The ERDS prototype was applied to the problem domain of public accounting professional conduct. It was developed using a portion of the AICPA Professional Standards , which served as the electronic document text. The text was linked by hypertext to real and prototypical cases. A panel of industry experts validated the prototype. The results of analysis and evaluation produced ideas for the extension and wider application of the system.

Effect of computer characteristics on price in the US computer industry

Abstract The relationship between the cost of a computer and its power is analyzed. Previous work by Grosch, Knight, and Cale et al. has been thoroughly revised. A highly reliable model is developed, with cost as the dependent variable and memory size, millions of instructions per second, (MIPS) memory cycle time and year of introduction as independent variables. This is done for four computer classes: IBM machines, IBM plug-compatible machines, IBM competitor machines, and super-minicomputers. MIPS energes as the single most important predictor of price. Pricing strategies for different computer classes are discerned. The model can be used by both users and manufacturers to determine appropriate computer system prices.

Relational or Object‐oriented or Hybrid?

The relational model and relational database management systems have been the de facto industry standard for organizing and managing data in most computer‐integrated manufacturing environments. In recent years, however, some new database technologies have emerged – namely, object‐oriented and hybrid or extended relational – making the job of the CIM managers more difficult with regard to selecting a database technology that would be most appropriate for their operations. Presents a framework for selecting an appropriate DBMS type in a CIM setting depending on a company′s ENTITY and DATA needs. It is hoped that the presented framework would prove useful to practising managers.