IT investments had a marked positive effect on revenue growth; for example, a $1 increase in IT expenditures per employee was associated in our study with a $12.22 increase in sales per employee. However, the effect of an increase in IT expenditures on reducing overall operating expenses was negligible in our sample of companies.
The article continues:
Further analyses of our data suggest that as industries become more competitive, the effect of IT on profitability increases. IT investments also had a greater effect on profitability in the service sector than in the manufacturing sector. A possible explanation for this finding is that services allow greater IT-enabled customization and personalization.One key takeaway from their research is that executives should accord higher priority to IT projects that have the potential for revenue growth over those that focus mainly on cost savings.
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