| Our research examined the effects of Information Technology (IT) Investment and IT Management effectiveness on overall enterprise performance in five federal agencies. Our study included the Social Security Administration (SSA), Federal Aviation Administration (FAA), Environmental Protection Agency (EPA), Internal Revenue Service (IRS) and Immigration and Naturalization Service (INS). It compared the IT Investment and IT Management effectiveness with overall agency performance to characterize the relationship between these variables.; IT Investment data for each agency was obtained from the Office of Management and Budget (OMB) and normalized by dividing the IT expenses by the overall budget authority. Concepts for IT Management effectiveness were developed using the methods and principles found in Murphy's (2002), The Business Value of IT. Information to conduct the IT Management effectiveness evaluation was obtained from public data, websites, General Accounting Office (GAO) studies, trade press, and the OMB. Specific, detailed issues and criteria were developed for the methods and principles from Murphy (2002). These issues and criteria are quite similar to the Capability Maturity Model of the Software Engineering Institute in their tone, but they focus on the larger issue of IT Management effectiveness instead of the more restricted area of software engineering. While the IT Management effectiveness criteria were applied to the public sector organizations, they should be applicable to other organizations in the public sector as well as in the private sector. Data for overall enterprise performance was used from a Government Executive report completed in 2002 that relied on customer survey and peer reviews to determine an overall performance score for each agency. IT Investment and IT Management effectiveness were then regressed against overall performance to characterize and determine the relationship between variables.; Our research shows that overall enterprise performance of the five federal agencies is much more highly correlated with IT Management effectiveness than IT Investment. Managing IT is much more important to federal agency value than IT Investment. This conclusion also explains the contradictions in existing IT investment studies that do not account for the contributions of IT Management effectiveness to overall enterprise performance. |
