IT investments deliver profits, study finds

03.04.2012
Investing in IT departments can have a big impact on a firm's profits, more so than similar spending on R&D and some marketing endeavors, according to a team of university reasearchers.

The researchers reached their conclusions after examining the IT investments and financial data of about 450 companies in an effort to draw a link between IT spending and profits.

The work, published in the journal, , led to several key conclusions.

First, IT investments are "positively associated with profitability," according to the .

The researchers said they were able to look deep enough at these unidentified global firms to draw insights into the type of IT investments that are most helpful. They found that companies are better off spending on projects that create revenue instead of reducing costs.

For instance, a company that builds or buys a business intelligence system that helps sell products will see more bottom line benefits than a company that spends IT dollars to automate internal processes to trim expenses, said the paper's lead author, Sunil Mithas, an associate professor Robert H. Smith School of Business at the University of Maryland.