Information Technology Investment Evaluation Research Articles

Firm Size and Information Technology Investment Appraisal: Evidence from Commercial Banks in Kenya

Information technology expenditure in banks consumes an ever increasing portion of operating costs and revenues. As organisations continue increasing their investment in IS, the process of evaluating potential Information Technology (IT) investments becomes an important activity for an organisation‟s management. This study attempts to establish whether the choice of IT investment appraisal approaches is associated with the size of a firm using evidence from commercial banking institutions in Kenya. Results of the survey show that there is a correlation between choice of approach and firm size. Among the banking institutions in Kenya, medium-sized banks focus the most on both the strategic and analytical approaches to IT investment appraisal. Majority of small banks have adopted relatively simple economic techniques such as payback period and cost-benefit analysis, and they do not focus on the more sophisticated analytical and integrated approaches as much as the medium-sized and large banks. Finally, large banks have adopted all of the appraisal approaches explored in this study. The results of this study help to establish banking industry-wide benchmarks and best practices in IT investment evaluation, thereby assisting IT executives to make more informed decisions for future investments.

Value Delivery of Information Technology Investment: A Conceptual Framework

Organizations, be it private or public, are making huge spending on information technology (IT). These spending, whether for productivity or strategic reasons, become the fundamentals and tools on how evaluate their IT investment. Evaluating every investment, before and after being made, is very crucial for in determining successful decision that has or will be set. Especially when decision to invest is onset, the expectation of values or benefits from the investment become substantial to arrive at such decision to invest. This study reviews and analyzes eight pertinent studies that model IT investment values and benefits and propose a model to describe the value delivery of an IT investment evaluation. Based on two-staged filtration method, 110 variables are narrowed and converge into 23 variables which categorized into five factors. In this paper, the five factors of IT investments value delivery are discussed which are financial, operational, organizational, strategic, and service. in IT are reflected in the organizations strategic planning for competitiveness and survival. Strategically, implementation of IT is wisely made to align with business processes, therefore to increase firm performance (8). These reasons, whether productivity or strategic gains, become the fundamentals and tools on how evaluate their IT investment. Reasons are translated into justification which formulated into IT investment evaluations. Evaluating every investment, before and after being made, is very crucial for in determining successful decision that has or will be set. When worth of investment is identified, values or returns from the investment will be established. This paper seeks to identify the values that IT investment delivers to the organization. IT investment values delivery based on a conceptual model is developed. The discussion of the elements was based on the common ground shared among several IT evaluation models from the literature. The review has resulted in a proposed value delivery model.

Comparison of IT Investment Evaluation Frameworks Applied to the sarLAB Project

When trying to calculate the business-value of an information technology (IT) investment in small businesses, it is hard to imagine how to apply frameworks such as TOGAF, Zachman or IT Value Network (Read, 2009), in order to get that value. The following article shows the arising problems when the IT Value Network framework is being applied to a small business in order to determine the IT business-value of a specific IT project: sarLAB.

Maximizing the Appropriation of the Intangible Benefits Yielded by IT Investments in the Public Sector

These days information technology (IT) is well known for the critical role it plays in earning and sustaining competitive advantage, and also for yielding a myriad of intangible benefits that are hard to quantify. If an investment in IT is aimed at improving services in the public sector, then the chances of running into intangibles are much higher. After all, voters’ support, spontaneous media exposure, pressure-groups’ reactions, public security and people’s well-being are common concerns in the conception and deployment of government ideas and projects. This paper presents a method that facilitates the evaluation of IT investments in the public sector. The method enables public officers to maximize the appropriation of the intangible benefits yielded by the investments they make in IT.

Examining the Factors Affecting the Evaluation and Adoption of IT Investments in Pharmaceutical Organizations

Information technology (IT) holds potential for transforming business practices in important ways. For example, it can assist in setting up an infrastructure which supports complex, multiparty trading and transactions among pharmaceutical manufacturers, wholesalers, hospitals, pharmacies, medical supply importers and exporters, and other players in the healthcare system. Effective use of IT can also help these healthcare organizations to reduce costs in supplying and distributing medicines and other medical-related products to the general public. However, despite high expectations for realizing the benefits of IT investments in pharmaceutical supply chain, issues surrounding its evaluation and adoption remain poorly understood and relatively under-researched. This paper presents case study findings on key evaluation and management issues in adopting and utilizing IT investments on seven Australian pharmaceutical organizations. The main objectives of this study are to: (1) examine the IT investment evaluation and benefits realization practices and processes in the pharmaceutical organizations; and (2) identify key IT investment evaluation and adoption issues and challenges within the pharmaceutical supply chain. A key contribution of this paper is the identification and examination of key issues and challenges faced by the pharmaceutical organizations undertaking IT and supply chain systems.

The Development and Application of a Process-oriented "Thermometer" of IT Business Value

The issue of whether firms are receiving an adequate return on their investment in information technology (IT) continues to pervade managerial decision making. While productivity and other financial metrics are established hallmarks of IT investment evaluation, research has called for broader and richer metrics that can take into account the diversity of IT impacts. In this paper, we extend previous instrument development research to develop and test a process-oriented thermometer of IT business value using survey data based on executives’ perceptions of IT impacts at multiple points along the value chain. Consistent with earlier research, we find that our process measures are sensitive to differences in industry, firm size, and business strategy. Through additional analysis of post-implementation reviews of IT impacts in four firms, we find consistency of within-firm perceptual measures among teams of senior executives, highlighting the potential for our thermometer to gauge the level of IT impacts within a single firm. We conclude that process-oriented perceptual measures can offer new and useful insights into IT impacts, complementing what we already know from firm-level objective metrics.

An Approach to Evaluating E-Business Information Systems Projects

Capital investments in the e-business infrastructure add complexity to the IT payoff question because e-business interorganizational investments are deployed across multiple platforms, projects, vendors and partners. Traditional MIS research has been devoted to measuring the payoff from information technology (IT) investment without any specific focus on e-business. Flaws in the mature MIS performance measures seem to yield weak guidance for managers when evaluating IT success, thus diluting the potential for these measures to be adapted for use in the new e-business environment. A review of the conventional MIS payoff literature indicates that these measures may be incomplete, inaccurate, or inefficient for application to electronic commerce investments. This paper brings four new points to the e-business IT investment evaluation dialogue: (1) we first explore performance measurement validity flaws in our long established measuress (2) the paper discusses a two-by-two matrix delineating the gap between the quantitative versus qualitative performance measures of management information systems (MIS) initiativess (3) sample e-business payoff techniques are discussed and reviewed in light of these historical imperfections, and (4) fourth, the paper proposes and describes an innovative framework derived from production theory economics for future research in evaluating e-business MIS implementations.

Returns on Investments in Information Technology: A Research Synthesis

Understanding the return on investments in information technology (IT) is the focus of a large and growing body of research. The objective of this paper is to synthesize this research and develop a model to guide future research in the evaluation of information technology investments. We focus on archival studies that use accounting or market measures of firm performance. We emphasize those studies where accounting researchers with interest in market-level analyses of systems and technology issues may hold a competitive advantage over traditional information systems (IS) researchers. We propose numerous opportunities for future research. These include examining the relation between IT and business processes, and business processes and overall firm performance, understanding the effect of contextual factors on the IT-performance relation, examining the IT-performance relation in an international context, and examining the interactive effects of IT spending and IT management on firm performance.

Returns on Investments in Information Technology: A Research Synthesis

Understanding the return on investments in information technology is the focus of a large and growing body of research. The objective of this paper is to synthesize this research and develop a model to guide future research in the evaluation of information technology investments. We focus on archival studies that use accounting or market measures of firm performance. We emphasize those studies where accounting researchers with interest in market-level analyses of systems and technology issues may hold a competitive advantage over traditional IS researchers. We propose numerous opportunities for future research. These include examining the relation between IT and business processes, and business processes and overall firm performance, understanding the effect of contextual factors on the IT-performance relation, examining the IT-performance relation in an international context, and examining the interactive affects of IT spending and IT management on firm performance.

A conceptual framework for evaluation of information technology investments

The decision to acquire a new information technology poses a number of serious evaluation and selection problems to technology managers, because the new system must not only meet current information requirements of the organisation, but also the needs for future expansion. Tangible and intangible benefits factors, as well as risks factors, must be identified and evaluated. The paper provides a review of ten major evaluation categories and available models, which fall under each category, showing their advantages and disadvantages in handling the above difficulties. This paper describes strategic implications involved in the selection decision, and the inherent difficulties in: (1) choosing or developing a model, (2) obtaining realistic inputs for the model, and (3) making tradeoffs among the conflicting factors. It proposes a conceptual framework to help the decision maker in choosing the most appropriate methodology in the evaluation process. It also offers a new model, called GAHP, for the evaluation problem combining integer goal linear programming and Analytic Hierarchy Process (AHP) in a single hybrid multiple objective multi-criteria model. A goal programming methodology, with zero-one integer variables and mixed integer constraints, is used to set goal target values against which information technology alternatives are evaluated and selected. AHP is used to structure the evaluation process providing pairwise comparison mechanisms to quantify subjective, nonmonetary, intangible benefits and risks factors, in deriving data for the model. A case illustration is provided showing how GAHP can be formulated and solved.

Executives’ Perceptions of the Business Value of Information Technology: A Process-Oriented Approach

:Despite significant progress in evaluating the productivity payoffs from information technology (IT), the inability of traditional firm-level economic analysis to account fully for the intangible impacts of IT has led to calls for a more inclusive and comprehensive approach to measuring IT business value. In response to this call, we develop a process-oriented model to assess the impacts of IT on critical business activities within the value chain. Our model incorporates corporate goals for IT and management practices as key determinants of realized IT payoffs. Using survey data from 304 business executives worldwide, we found that corporate goals for IT can be classified into one of four types: unfocused, operations focus, market focus, and dual focus. Our analysis confirms that these goals are useful indicators of payoffs from IT in that executives in firms with more focused goals for IT perceive greater payoffs from IT across the value chain. In addition, we found that management practices such as strategic alignment and IT investment evaluation contribute to higher perceived levels of IT business value.

Research note: integrating business and network simulation models for IT investment evaluation

Although the inherent interrelationships between business processes (BP) and the underlying information technology (IT) infrastructure imply that the design of these two organisational facets should be performed in parallel, this does not seem to be the case in practice. For example, simulation is being extensively used in both the BP and IT domains, albeit in a disjointed fashion. In this paper, we investigate the potential of integrating different simulation models to facilitate concurrent engineering of business processes and information technology and to support the process of investment evaluation. Drawing on the findings of an example case, we identify a number of pertinent issues and articulate future research directions towards the integration of simulation usage in the business domain.

Information technology investment evaluation: Investments in telecommunication infrastructure

Evaluation of investments in information technology is quite a difficult task, difficulties being both conceptual and functional. The fact that the investment's performance is very much dependent on the way a certain information technology project is implemented renders the evaluation procedure even more difficult. In this paper we propose a certain methodology for evaluating investments in information technology, placing special emphasis on investments in telecommunications infrastructure. In the first place, assessment of the alternative implementations/design solutions is conducted and selection of the one best satisfying user and system requirements is selected. At a second level, the selected alternative is compared with the present situation so that the expediency and feasibility of assuming the investment is determined. Evaluation is based on both economical and technical criteria.

Information technology investment evaluation: evidence and interpretations

Structures are important to the practice of information technology (IT) evaluation. Structures, as evidenced by 14 case studies and the words of six financial directors, are defined here as organizational responses, including user committees and responsibility accounting, quantitative assessments of IT projects, such as financial appraisals, and qualitative assessments. Structures in practice seem to allow for a changing world in which projects are accepted according to business needs and subsequent actions lead accepted projects to be adapted and managed as time passes. In order to manage IT technology in this way, structures alone are important but not sufficient. Active individuals have an important role to play and credibility becomes an important factor in evaluation and implementation. The credibility of IT management is created by its selling of the project in the first place and then by its ability to manage the project in a responsive way. Credible strategists are at least as important as a strategy to the evaluation of IT.

Information Technology Investment Evaluation: Evidence and Interpretations

Structures are important to the practice of information technology (IT) evaluation. Structures, as evidenced by 14 case studies and the words of six financial directors, are defined here as organizational responses, including user committees and responsibility accounting, quantitative assessments of IT projects, such as financial appraisals, and qualitative assessments. Structures in practice seem to allow for a changing world in which projects are accepted according to business needs and subsequent actions lead accepted projects to be adapted and managed as time passes. In order to manage IT technology in this way, structures alone are important but not sufficient. Active individuals have an important role to play and credibility becomes an important factor in evaluation and implementation. The credibility of IT management is created by its selling of the project in the first place and then by its ability to manage the project in a responsive way. Credible strategists are at least as important as a strategy to the evaluation of IT.