To Invest or Not to Invest?
By John Helsley
That’s at the focus of research involving Taha Havakhor, a Spears School of Business assistant professor in the Department of Management Science and Information Systems. The findings were revealed in the article “Performance Consequences of Information Technology Investments: Implications of Emphasizing New or Current Information Technologies,” which was recently accepted for publication in the journal Information Systems Research.
“Congratulations on producing a fine manuscript,” wrote Paul A. Pavlou, senior editor for Information Systems Research and an MSIS professor at Temple University. “I am sure that it will be well read and cited.”
Havakhor served as the second author on the paper, along with Zach Steelman, a former assistant professor at OSU, Rajiv Sabherwal and Sanjiv Sabherwal.
“I want to congratulate Taha on getting this acceptance,” said Ramesh Sharda, vice dean of the Watson Graduate School of Management. “Top journals like ISR are extremely competitive, and we want our faculty members to target at least some of their research at the very elite journals. Such publications add to the faculty member’s personal profile as well as to Spears School of Business’ prestige. So, it is really nice that a young colleague like Taha is already hitting such top journals.”
The team studied considerations of companies and firms in financially committing to information technology.
“As they are dealing with information technology, one of the broader questions — and there are many — that any IT executive is asking: ‘We are living in a world where there is a host of new technologies coming and going. There are technologies that are trending, and those that have been around for a while. Should we invest in those trending technologies, or should we hold onto our legacy systems?’” Havakhor said.
“The question is significant, because there are certain sorts of technologies that are very costly to invest in.”
Havakhor and the team of researchers looked at different types of companies, weighing several factors, in projecting which firms may benefit best by investing in new technology, and which ones may benefit by staying with systems already in use.
“That’s the thrust of the paper, trying to understand whether there are more benefits obtained from investing in new technologies, or are there better payoffs when emphasizing investments in current technologies?” Havakhor said. “Invest in doing research on them. Doing maintenance on them. Protecting them. Updating them.
“So, we started with that broad question four or five years ago. We started to track companies that are ranked by Information Week as top IT leaders. The research focuses on IT leaders that do not procure information technology, they are a user of information technology.”
The research examined over 270 publicly-traded firms in the Information Week rankings, built on information gathered from the years 2000 to 2007.
While some companies benefit greatly by pivoting to new technology, others are not best served by making a change.
“We observe that some companies may even lose value as a result of investing in new technology,” Havakhor said. “And the losing of value is considerable, so it’s something to consider as firms delve into a market they are not ready for specifically.
“It’s like an athlete that is not warmed up. You send them to the field and they fail, they probably injure themselves and come off limping. That’s the kind of result we observe in unready companies. They are probably not getting any additional value from investing in newer technologies. As they do not have the means for committing to adoption and implementation of new technologies, such investments may only disrupt their operation.
“It’s a big topic in the field.”
Havakhor said he’s enjoyed working on this research.
“It’s my main area of research, and I am very involved in it,” he said.
The research continues as well, with the ongoing work focusing on other unexplored aspects of the business value of different kinds of technologies in public corporations.
“One of the aspects that we found is how you put IT as one of the key players in a company really affects you,” Havakhor said. “But there are discussions into how you can evaluate that.
“So we wanted to look to look at different ways we could understand.”