The paradox of cost reductions within a support department

Set against the context of the debate over the profitability of Information Technology (IT), this article is focused on the impact of IT use within support departments. It serves to introduce an efficiency variable of the support system with respect to operating departments. A formal model helps explain how to select the single-best method for these support departments. Reliance on IT leads to a drop in support department costs. As a result, the optimum is shifted towards more efficient methods, and the expenditure level at the new optimal point could paradoxically actually be higher. It will be shown how this result remains consistent with observations already forwarded by other authors with respect to the impacts of computer technology