Fashionable IT investments don't help the bottom line, study says

            With all of the major headlines these days, there has been a frenzy of them surrounding major corporations who are constantly switching to the newest and up to date Information Technology systems.  Throughout this semester we have learned that new Information Technology Systems can dramatically improve the performance and operations of a business.  If this stands true, it would seem reasonable for every company to constantly switch over to the newest IT systems.  So the question to ask is, why not keep switching Information Technology Systems. 

             In a recent article published by Mitch Betts, he discussed and analyzed the major corporations frenzy towards obtaining the hottest systems for the company on the market along with the overall benefits of these systems.  As Mr. Betts explains, the trend in acquiring and implementing the newest systems do not necessarily correlate with an automatic boost in a company’s performance.  Studies have shown that companies who constantly switch over Information Technology systems generally see a decline in financial performance after an investment in new IT systems.  On average the study has shown a 3-year recovery period for the company to make up for profits loss due to the implementation of new systems.  So the question now is why do companies continue to implement new IT Systems that do not benefit the company.  The answer to this question is a result of public reputation and top line management compensation.  The article states, "The analysis showed that corporate reputation scores and CEO pay jumped at companies known for implementing hot technologies."

            When I first read over the article, the catchy title made me think about all that we have learned about information systems and their purpose within helping to improve an organizations performance.  It seems that instead of putting the success of the company in front, top line compensation and "system approval ratings" have been deemed first priority.  This new stride towards the hottest IT Systems goes against the three business questions that a company should ask themselves before making an technology purchase to gain a competitive advantage over competition.  Prior to this article we have discussed Hersey Co., and their negative experience to try to keep up with changing technology and thought that they were the odd balls out of the bunch.  This article shows that this unnecessary jump in newer technology for the wrong reasons, is more common than not.

“These results support a fashion explanation for the middle phase diffusion of IT innovations, illustrating that following fashion can legitimize organizations and their leaders regardless of performance improvement.”

This practice has not been around forever; in fact this practice of acquiring new technology by major corporations has been around since the early 90’s.  I believe that this process is unprofessional in not only cheating the company but also the company’s investors as well.  An information system in my mind is much like raw data.  Just like data, and new Information system is useless for a company unless it was acquired by the company for a specific purpose!

http://www.computerworld.com/s/article/347583/Study_Chasing_Fashionable_IT_Doesn_t_Pay_Off

http://www.misq.org/archivist/vol/no34/issue1/PingWang.html