IDENTIFYING BUSINESS VALUE LINKAGES FOR INFORMATION TECHNOLOGY: AN EXPLORATORY APPLICATION TO TREASURY WORKSTATIONS

Abstract

Pervasive and costly automation of information handling activities continues to put pressure on senior managers to quantify the contributions of information technology IT to the strategic goals of the firm. This paper proposes the use of "business value linkage BVL" correlation tests to provide evidence that investments in IT create the desired higher order, economic impacts. We argue that managers should carry out econometric tests which are specialized to capturing primal, 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 results for managers.Information Systems Working Papers Serie