Identifying Business Value Linkages for Information Technology: An Exploratory Application to Treasury Workstations
33 Pages Posted: 31 Oct 2008
Date Written: April 1988
Pervasive and costly automation of information handling activities continues to put pressure onsenior managers to quantify the contributions of information technology IT to the strategicgoals of the firm. This paper proposes the use of "business value linkage BVL" correlation teststo provide evidence that investments in IT create the desired higher order, economic impacts. Weargue that managers should carry out econometric tests which are specialized to capturingprimal, revenue-enhancing impacts, as opposed to dual, cost-reducing impacts. As an illustration,a sample BVL correlation test is constructed to quantify the impact of a "treasury workstation"system on a large commercial bank's ability to increase demand balances from corporate customers.We conclude with some thoughts about where BVL correlation will provide the bt resultsfor managers.
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