Information Technology (IT) delivers a chance for companies to improve their productivity and efficiency, and even to gain competitive advantage. The introduction of IT is likely to cause changes in work procedures and increase computer knowledge among the employees. IT can help in controlling and reporting each single activity done by the employees and help the management to take an appropriate strategic decision. Also IT does create value that is reflected in the market value of firms and in their future profitability although it is hard to address empirically because of difficulties in obtaining data about IT investment that can be linked to firm performance (Anderson, 2006). After globalization, the world became a small country so the IT applications became mandatory to any industry for online communication as anyone nowadays can search for whatever, whenever and wherever he is through online internet connection. The aim of this research is to address the effect of investment in IT sector and the tourism firm profitability and how does it affect the growth and cost reduction in tourism sector by questionnaire and collecting finical data from a firms working that field.
Information Technology (IT) has become mandatory in the businesses, till now many of the developing countries consider the IT as a very costly sector to invest in, unlike the civilized nations whom invest much more in IT although it is still expensive but they recognize how much it important to their business. The objective of this study is to find the relation and its direction between investing in the IT sector and the effectiveness on company profitability. Keywords: Information Technology, IT, Profit, Profitability, Tourism
According to Daniel (1994), IT is the application of technology to business processes, gathering data and creating information that is valuable to managers who make business decisions, in other word IT translates symbols into a useable form.
Lai and Mahapatra (1997, P187-201) define the term IT in a broad sense as “technologies dedicated to information storage, processing and communication". These authors go on to say that “this notion of IT focuses on the hardware, software, telecommunication, and office equipment that transforms raw data to useful information, adding new value in the process”.
According to Sriram et al.(1997), while there are many inconsistent definitions of what constitutes IT, a growing consensus argues that IT should be defined broadly to encompass hardware, software, telecommunications (including voice, facsimile and e-mail), as well as the personnel and resources dedicated to supporting IT.
Pravin V. Khode (2012) described the “Computer” which is the core of the IT is the heart of any modern information system. The Computer is a truly amazing machine. Today's Computers are becoming continuously smaller, faster, chipper & more powerful.
Refer to Sriram (1997) IT is a capability or a process not bounded by the immediate definition of the boxes and switches, but a challenge to managers with insight. Also Farbey (1993, Ch.1) states that an understanding of what IT can and cannot do is necessary to avoid buying an outdated or obsolete hardware and software. Otherwise, IT investment may become disasters for the organizations.
Information systems researchers have made significant strides in relating information technology and IT-enabled capabilities to firm performance, but some critical gaps still remain (Kohli and Grover, 2008, P199-210).
Prior empirical studies, mostly based on IT investment data before the onset of the network era of computing (Hitt and Brynjolfsson, 1996; Rai, 1997), also some researchers using data from 1999 to 2002 such as Aral and Weill (2007), who show either a negative or a null effect of overall IT investments on profitability. These null findings appear to contradict evidence from other studies that show that...