Modeling vs. forecasting: The case of information systems spending

  • Gurbaxani V
  • Mendelson H
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Abstract

Collopy, Adya and Armstrong (1994)(CAA) advocate the use of atheoretical "black box" extrapolation techniques to forecast information systems spending. In this paper, we contrast this approach with the positive modeling approach of Gurbaxani and Mendelson (1990), where the primary focus is on explanation based on economics and innovation diffusion theory. We argue that the objectives and premises of extrapolation techniques are so fundamentally different from those of positive modeling that evaluation of positive models using the criteria of "black box" forecasting approaches is inadequate. We further show that even if one were to accept CAA's premises, their results are still inferior. Our results refute CAA's claim that linear trend extrapolations are appropriate for forecasting future IS spending and demonstrate the risks of ignoring the guidance of theory.

Author-supplied keywords

  • Exponential smoothing
  • Forecasting
  • Information systems spending
  • Positive models

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Authors

  • Vijay Gurbaxani

  • Haim Mendelson

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