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Nov.
18, 2002 |
Lally School Researcher Discovers Secret to
IT Investing
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Thomas Griffin
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At a time when many companies are losing money
on their investments in information systems and technology, one
Rensselaer researcher has discovered the key to making IT initiatives
pay off.
Thiagarajan Ravichandran, associate professor
in Rensselaer's Lally School of Management and Technology, has
found that organizations that invested in IT to enhance their
core competencies (the areas where they are already strong) have
been successful. Those that have spent broadly on IT have not
seen significant returns.
Ravichandran also determined that funneling money
into developing internal information systems capabilities and
improving the "intangible aspects" related to IT —
such as management skills or supplier relationships — are
just as critical to implementing IT as purchasing the hardware
to do the work.
But it takes a while for a corporation to experience
the benefits of pumping up its IT systems, Ravichandran said.
That's why companies must think long-term when investing in the
area.
"These findings based on a study of more
than 120 large companies in the U.S. are critical today when firms
are seriously thinking of cutting down costs and reducing their
IT budgets," he explained. "Our results can guide organizations
on how to allocate their scarce IT dollars."
Ravichandran will present the full paper on his
findings, titled "Impact of Information Systems Resources
and Capabilities on Firm Performance: A Resource-Based Perspective,"
on Wednesday, Dec. 13 at the International Conference on Information
Systems in Barcelona, Spain.
The paper is co-authored by Chalermsak Lertwongsatien
'00, of Thailand's Ministry of Finance. Lertwongsatien earned
a Ph.D. in management from Rensselaer's Lally School in 2000.
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