Return on investment in information technology in the South African Post Office

Abstract

The South African Post Office is investing large amounts of money in IT. Organisations were encouraged by the notion that investing in IT correlates with higher returns and the delivery of expected results by replacing the human component in organisations. The employment of IT within business has often resulted in the replacement of old problems with new and the expected business benefits of IT not realised. The primary research objective was to determine the relationship between IT expenditure and the financial performance of a firm. The secondary research objective was to explore the perceived value of IT investment in SAPO. The study followed an exploratory case study approach. In addressing the primary research objective, statistical techniques were employed to determine the relationship between IT expenditure and the financial performance of the firm. The secondary research objective was addressed using survey research to explore the perceived value of IT investment amongst a sample of management within SAPO. Results indicated that a significant positive relationship existed between IT expenditure and net profit at a lag of around six to eight months. This suggests that IT expenditure does in fact have a positive effect on the financial performance of the SAPO, but as was found in similar other studies, only after a time period. The findings suggested that IT is considered a strategic and tactical component within SAPO and therefore a necessary business expense. It is also perceived by the majority to be efficient. However, the findings also suggested that respondents were not convinced that IT is able to increase sales, reduce cost or meet customer requirements. In the light of the above, it is recommended that the value of IT, both on a financial basis and perceived basis, be measured regularly. It should be incorporated into review reports such as the Balanced Scorecard, to ensure that personnel and management takes cognisance of IT expenditure and that real effort should be made to evaluate its effect on the business at all levels.