The Use of Decision Criteria in Selecting Information Systems/Technology Investments

Abstract

In a competitive environment, selecting and effectively pursuing the right information systems/technology (IST) investments can be key factor in sustaining corporate viability and prosperity. This study examines the criteria used by 80 organizations in allocating strategic IST resources. Senior executives were asked to indicate which of 15 criteria they use in deciding among competing projects. They also identified how frequently the criteria are used and ranked them by importance. The results indicate that criteria such as the support of explicit business objectives and response to competitive systems are now important in selecting IST investments. Although financial criteria are used by most organizations, the extent of analysis and application appears to leave room for improvement.

Approaching information system evaluation methodology and techniques: a comprehensive review

“…2 an invalid pretence that all contributions from IT (both good and bad) can be quantified, expressed in monetary terms and measured by financial criteria 3 failure to account for organisational and behavioural factors (Bacon, 1992).…”

Approaching information system evaluation methodology and techniques: a comprehensive review

“…Bacon (1992) contends that the most widespread approach to IT/IS investment evaluation is the traditional approach, which relies on positivist and financial methods and the evaluation of cash flows based on the time value of money, using discounted cash flow techniques. The IT/IS evaluation field is apparently dominated by these appraisal techniques and this paradigm (Serafeimidis and Smithson, 2000).…”

“…Among the many studies which suggest the use of rational models in the IT/IS evaluation process are those of Bacon (1992), Barua et al (2001), Clemons (1991), Hogbin and Thomas (1994), Lederer and Sethi (1996), Lee (1998), Parker and Trainor (1990), Quaddus (1997), Santhanam and Kyparisis (1995) and Schwartz and Zozaya-Gorostiza (2003). Walsham and Sahay (1999) agree with this view and assert that attention has been given to formal, quantitative and prescriptive methods where organisations have undertaken IS evaluation.…”

A Framework for Identifying the Intangible Capital Value of ICT Investments

“…The traditional evaluation techniques identified included: Discounted Cash Flow Analysis (DCF) (Clemons et al 1990;Dos Santos 1991), Net Present Value (NPV) (Ballintine et al 1998;Dos Santos 1991); Internal Rate of Return (IRR) (Bacon 1992); Payback Method (Murphy et al 2001); Return on Investment (ROI) (Ballintine et al 1998;Farbey et al 1999); Cost Benefit Analysis (CBA) (Farbey et al 1999;Murphy et al 2001); Real Options Theory (Dos Santos 1994); Return on Management (ROM) (Farbey et al 1999). …”