The impact of information technology on organizational performance is more clearly illustrated by actual IT usage than by traditional measures, such as the amount invested in technology, according to University of Notre Dame researchers Rajiv Kohli and Sarv Devaraj. || ||

Higher usage of a so-called "Decision Support System" (DSS) -- a standard tool of operations researchers -- yields tangible benefits, such as lower death rates and increased hospital profitability, Kohli and Devaraj claim in their study of information technology at hospitals. Their work is published in the current issue of the journal Management Science.

To measure actual usage of strategic IT, Kohli and Devaraj examined the total number of user-executed reports; central processing unit (CPU) time, which indicates intensity of usage; and the number of records accessed for each report.

"Our findings indicate that if managers execute and use the analysis from 10 additional DSS reports per month, the hospital can increase revenues by over (US)$140 per patient," Kohli told NewsFactor. "This is one more way for managers to get value from information technology in which they have already invested."

Mortality rates, too, decrease with increased IT use, Kohli said. "Our research shows that lives are being saved."

Examining IT

Academic studies that examine IT's payoff have surged recently, reflecting attempts to justify technology spending in the private sector. Earlier IT payoff research, explained Kohli and Devaraj, focused entirely on technology investment.

"Merely examining the dollars spent may not accurately reflect the effectiveness of IT," Devaraj said. "Our study -- of eight hospitals over an extended period rather than the short term of most studies -- offers an alternative."

The Notre Dame study's conclusion that actual use of IT is a more important indicator than monetary investment is corroborated by Suzi Iacono, a program director at the National Science Foundation's Information and Intelligent Systems Division. "In this case, use of a DSS application seemed to make a difference."

Social Networks

For a similar 13-hospital study of nurse staffing issues and performance, researcher Kathleen Carley "used a DSS tool for assessing risk that helped to identify those aspects of the organization's design that promoted failures," she told NewsFactor.

"Errors due to 'group think,' blockages in information flow and critical personnel who, if they left, would reduce performance" all promote organizational failure, explained Carley, director of computational analysis of social and organizational systems at Carnegie Mellon University.

The Notre Dame team's DSS study, she added, "absolutely" supports her own organizational theories.

"The most critical networks in any organization are not necessarily the ones carrying Internet traffic," Carley said, "but the social networks among persons and groups that define an organization's process and knowledge flow."