Evaluating Return On Information Technology Investment

Abstract

The purpose of this thesis was to develop a framework for evaluating the Return on Information Technology Investment (ROITI). The motive was to capture and measure the intangible benefits deriving from an IT investment and to contribute in making an IT project solid business case, in justifying the IT project budget and in obtaining the buy-in from the decision makers. To identify the key factors in evaluating the profitability of an IT investment, the theory section explored literature studies and articles, the concept of productivity and its relation to the Return On Investment (ROI) indicator, existing methods and metrics in the applicable area of interest. By using empirical information from a case study, a ROITI evaluation framework was constructed. Data collected in the case study was then used in the framework. Based on the results, the conclusion reached is that the intangible benefits deriving from an IT investment can be measured and need to be measured in order to have a realistic investment evaluation. The thesis further concluded that the ROI can be simply used as a financial measurement or more importantly be built-in in a framework that leads to develop a company’s IT project solid business case, to create greater budget control, to increase management and investor confidence, which are all critical elements for a successful IT project.