Measuring gains in operational efficiency from information technology: A study of the positran deployment at Hardee's Inc.

Abstract

This paper presents a new approach to measuring the input productivity gains from information technology (IT) in complex managerial environments. The approach is illustrated in the context of a study of a pilot deployment at Hardee's Inc. of a new cash register point-of-sale and order-coordination technology called "Posi-tran." The method employs data envelopment analysis (DEA) and nonparametric production frontier hypothesis testing to determine whether the performance of restaurants that have deployed Positran is better, on average, than for those that have not. The design of the study is of special interest, because it approximates a controlled experiment Our results show that Positran helped to reduce input materials costs, since restaurants that deployed the technology were less likely to be inefficient. It is further possible to characterize the class of restaurants for which the relationship holds. Operational efficiency measures such as the ones we have developed provide managers with the opportunity to implement deployment strategies for new ITS in order to maximize value. © 1990 M. E. Sharpe. Inc.