Quantifying IT Value Latency: The Case of the Financial Services Industry

Abstract

Both the academia and practice recognize that information technology (IT) investments may not yield immediate benefits. Nevertheless, there has been a lack of methodological developments to effectively measure IT value in the presence of value latency. We consider the sources of value latency and develop a time-series measurement methodology based on intervention analysis to measure the temporal value flows from IT investments. We apply the quantitative measurement methodology to six publicly-listed financial institutions that invest in customer relationship management (CRM) technologies to illustrate how it works. Within the bounds of our sample, we show that IT value latency exists and that firms demonstrate different patterns for the accrual of lagged value from IT investments. Our results offer new managerial thinking for IT benefits management.