Seabelo Mathswenyego, Rembrandt Klopper and Sam Lubbe
noted that the return on ICT assets recorded by the SAPO during the period under review was relatively high, with an average of 35.3 %.
Figure 1: Relationship between the computerisation index and return on IT assets( ROI)
4.2 Relationship between ICT investment and business performance indicators
Figure 2 below compares CI, operating expense ratio and % turnover growth. It shows that as the level of computerisation for the SAPO during the period 2005‐2010 increased, the operating expense ratio also increased. These two indicators( level of computerisation and operating expense ratio) exhibited a high positive correlation, with a correlation coefficient of 0.81.
Figure 2: Relationship between ICT investment and business performance indicators
However, this contradicts Hu and Quan’ s( 2005) theory, which states that ICT provides competitive advantages to firms by improving operational performance, thereby reducing costs. At the SAPO, the increase in operational cost after investing in ICT could be attributed to an inefficient operational environment and cost control management techniques. The SAPO’ s turnover growth rate showed an increase in the first two years and then decreased up to the end of the five‐year period. Consequently, the level of ICT investment and turnover growth rate were negatively correlated, with a correlation coefficient of minus 0.7.
5. Relationship between CI and profitability performance indicators
Figure 3 below illustrates the relationship between the computerisation Index( CI) and profitability indicators such as operating income, operating expenses and net profit. It can be observed from this figure that operating income increased during the 5 year period under review. Nevertheless, the computerisation index was
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