How to evaluate IT/IS investments - The criteria used depending on the underlying needs

Abstract

Efforts to find appropriate criteria, which are used to evaluate IT/IS-investments, are intensified by researchers and practitioners due to the increasing impact of IT. The difficulties when measuring IT/IS investments using financial terms triggers the development of a plethora of models, criteria and measurements.

This thesis study the reasons why investments in IT/IS are performed and what criteria are used when evaluatin IT/IS investments ents depending on its reason.

This thesis suggests that different criteria are used depending on the underlying need for the IT/IS investment. This suggestion is based on an empirical study where members of IT/IS investment decision processes in Sweden participates. The results shows that the most common underlying needs for IT/IS investments are rationalization, increased production, reliable system, support/service/equipment and process development. The most common criteria to evalutate these investments are savings, operational cost, needs and wants from the organization, Future support/debugging/repair time, initial cost of investment, strategic alignment, easy to handle and time.

Many researchers claim that there has been a change of the purpose of IT/IS-investments from only being a tool for production improvement to also become a strategic tool. Our reslults show that there is still a focus on the production, rationalizing and simplification of the operational day to day work. One explanation could be the fact that the study is carried out in cooperation with respondents primarily located at the operational level in their organizations. Although, there are signs of awareness among the respondents of other purposes with IT/IS investments than production improvement.