ICT investment effectiveness in the South African Post Office: reconsidering the approaches of the past 20 years

Abstract

Organisations have invested and continue to invest considerable resources in Information and Communication Technology (ICT). Much of this investment is made on the basis of guarantee than an expected return will occur. This study presents the results of an empirical study of the impact of ICT investment on performance at the South African Post office (SAPO). Six years of historical data, from 2005 to 2010, were obtained from the Chief Information Officer (CIO) of the SAPO and analysed. This included appropriate IT data and financial data from the organisation’s financial statements and balance sheet. ICT investments were tested against financial performance indicators such as return on ICT investment, operating leverage, turnover growth, net profit, organisational risk, IT cost efficiency ratio and IT efficiency ratio. Within the period studied, it was observed that ICT investments at SAPO were negatively correlated with most of the financial indicators such as return on ICT investment, operating leverage, turn-over growth, net profit, organisational risk and IT efficiency ratio. This study therefore suggests that ICT investments at SAPO for the mentioned period did not have desirable impact on financial performance of the organisation. In order to realise tangible financial benefits of the ICT investments at SAPO, the research results suggest that a longer period needs to be considered, and should also include like non-technological determinants such as competence and experience levels of IT personnel, alignment of IT strategy with business strategy and business process re-engineering to suit new systems needs to be considered too prior to making any investments in ICT.