Abstract
Substantial business resources are being dedicated to information technology (IT) but little is known about the effects of these investments on the performance of firms. This paper reports the results of a study of 33 manufacturing firms' investments in IT and their subsequent performance. The study analysed six years' data collected from three senior officers of each firm. Three types of IT investment were studied: strategic, informational and transactional. While firms which invested heavily in transactional IT were consistently better performers, this effect was not apparent with the other types of IT. These results have policy implications for the methods used to appraise future IT investments. Standard discounted cashflow methods are not suited to all types of IT investments. This article suggests different approaches to IT appraisal for different types of IT investment.
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