IT vs. Marketing: Efficiency and Effectiveness Evaluation

Owing to budget constraints, managers should balance the expenditure requirement of IT and marketing department. This paper offers a new method to evaluate the importance of IT department and marketing department. It introduces the triangular three-stage DEA model to measure the expenditure efficiency and effectiveness. Using the data of the hotel industry of Macao, it shows that IT and marketing effectiveness is both positively correlated to productivity while efficiency is not significantly correlated to effectiveness. That means hotel managers need to more carefully and proactively examine the related budgets to be allocated to IT and marketing. The correlation coefficient of marketing effectiveness (coefficient=0.44) is higher than that of IT effectiveness (coefficient=0.41), which shows that in the sample period marketing expenses are somewhat a little more contributive to the business value than IT. This new way can be a reference for managers to set up the budget.