Justifying IT Investments   1 comment


What is often the case in decision making regarding IT investments is a focus on the cost of the investment to the exclusion of the benefits.

We focus on the licensing fees, the project management costs, the interruptions the changes will cause, and so on. But we don’t fairly assess the benefits. We don’t attempt to quantify what the positive outcomes will be. For after all, it is about wielding technology for the improvement of information flows. It is about getting better systems in dealing with the organisation’s information.

Seen in this light, IT projects should be measured with respect to the business process improvements they will make.

Alshawi, Irani and Baldwin in a 2003 study highlighted the fact that IT investment is about improvements to productivity improvement and competitive advantage. That any organisational and process gains come from the use of information technology, not from the information technology itself. And that these advances and enhancements are quantifiable through the following process:

  1. identification of benefits
  2. the changes needed to realise the benefits
  3. execution of these identified changes
  4. evaluation of the results of these changes
  5. discovery of further benefits

This benefits appraisal and management process speaks to the need for information technology projects to be aligned to the business vision to realise the full impact that these systems can bring. By including quantifications of investment outcomes using these terms, improvements in the robustness of the justifications for these IT investment decisions will ensue.

 

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Posted August 11, 2014 by terop in Architecture, ICT Strategy, Innovation

One response to “Justifying IT Investments

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  1. How companies can nurture innovation and motivate their talents to bring innovations forward?

    Each company is destined to get the results it gets. What I mean by this is that poor organization, lack of solid and sustainable innovation culture lead to poor results, and more than before, to a company’s trouble or death.
    Smart business leaders shape the culture of their company to drive innovation. Success and constant positive results come from the implementation and execution of strategies, business models, structure, processes, technologies and incentive systems that encourage innovation.
    If you would like to read more about learning innovation, you can access to my blog on: http://worldofinnovations.net/2014/08/11/7-ways-to-create-a-culture-of-innovation/

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