MODELING VS FORECASTING - THE CASE OF INFORMATION-SYSTEMS SPENDING

Collopy, Adya and Armstrong (1994) (CAA) advocate the use of atheoreti cal ''black box'' extrapolation techniques to forecast information sys tems spending. In this paper, we contrast this approach with the posit ive modeling approach of Gurbaxani and Mendelson (1990), where the pri mary focus is on explanation based on economics and innovation diffusi on theory. We argue that the objectives and premises of extrapolation techniques are so fundamentally different from those of positive model ing that the evaluation of positive models using the criteria of ''bla ck box'' forecasting approaches is inadequate. We further show that ev en if one were to accept CAA's premises, their results are still infer ior. Our results refute CAA's claim that linear trend extrapolations a re appropriate for forecasting future IS spending and demonstrate the risks of ignoring the guidance of theory.