He has worked on several projects for companies examining the impact ofthe technological environment, justin-time manufacturing, work teams, and perfonnance evaluation systems on manufacturing performance. He has also studied the impact of technology investments and technology usage in the health-care industry. In the field of service quality, Dr. Devaraj conducts research on consumers' perception of service and product quality in the automotive industry. He teaches courses in management of technology, operations management, and business statistics. ABSTRACT: With the enormous investments in Information Technology (IT), the question of payoffs from IT has become increasingly important. Organizations continue to question the benefits from IT investments especially in conjunction with corporate initiatives such as business process reengineering (BPR). Furthermore, the impact of technology on nonfmancial outcomes such as customer satisfaction and quality is gaining interest.
RAJIV KOHLI is the ProjectHowever, studies examining the IT-^erformance relationship have been far from conclusive. The difficulty in identifying impacts from technology has been the isolation of benefits of IT from other factors that may also contribute to organizational performance. Furthermore, benefits from technology investments may be realized over an extended period of time. Finally, IT benefits may accrue when they are done in concert with other organizational initiatives such as business process reengineering. This calls for studies that take into account control variables as well as data that span time periods.In this study, we examine monthly data collected from eight hospitals over a recent three-year time period. We specify propositions that relate investments in IT to performance, and the combined effect of technology and BPR on performance. We draw
DEVARAJ AND KOHLIupon the literature in health-care management to incorporate appropriate control variables in the analyses. Our results provide support for the IT-^erfonnance relationship that is observed after certain time lags. Such a relationship may not be evident in cross-sectional or snapshot data analyses. Also, results indicate support for the impact of technology contingent on BPR practiced by hospitals.KEY WORDS AND PHRASES: business process reengheering, health-care infonnation systems, infonnation technology payoff, information technology productivity.
CHANGES IN THE HEALTH-CARE BUSINESS RESULTING FROM CAPITATION and de-clining reimbursement have led to cost-cutting measures through improved operations. In some cases, failure to cut costs threatens the fmancial viability of healthcare organizations. While on the one hand investment in IT is seen as an enabler of efficiency and competitiveness, it is also a significant fmancial investment that, if not linked to improved organizational performance, can hasten the decline of an organization. Given this scenario, the issue of IT payoff has come under close scmtiny.While IT payoff has long been a subject of research and intens...