Matakuliah
Tahun
: A0304 - Evaluasi Efektivitas Sistem Informasi
: 2006
Aspects of IT investment decision
process
Pertemuan 05-06
1
Introduction
• Are IT investment decisions fundamentally
different to other investment decisions?
• Organization only invests if benefit gained
is worth the expense
• IT need only achieve some lower rate of
return
• IT risks are higher. Expected ROI needs to
be higher before investment can be
justified
2
Must do IT investment
Consider :
1. Core business
2. Prestige projects
3. IT projects
3
Core business investment decision
• Relatively few options
• Decision-makers are ‘at home’ relevant
issues
• Comparatively simple to cost and the
benefits are relatively obvious
• Cost of not undertaking the expenditure is
obvious, though probably not costed
4
Investment in prestige project
• Large number of options
• Decision-makers are probably driving the
project
• Not straightforward to cost and few
obvious financial benefits
• Cost of not undertaking the project is not
obvious
• Intangible benefits will probably carry the
case
5
Investment Matrix
High
Risk/Visibility
Low
Prestige
High Risk
High Profit
Core
Medium Risk
Medium Profit
Cornseed
Very High Risk
High Profit
Must-Do
Low Risk
Low Profit
High
Low
Profitability
6
Characteristics of IT decisions
• Large number of options
• Decision makers will not probably understand
the details of the project, but the process to
be automated
• Not straightforward to cost, low confidence in
estimates
• Difficult to estimate benefits
• Cost of not undertaking the project not
understood/accepted
• Intangible benefits will not be quantified
7
Making the decision
•
•
•
•
IT is high risk, high cost
Expenditure on IT
Rapid pace of change of technology
Trusted record
8
Modern IT
•
•
•
•
•
Overall business strategy
Position in marketplace
Financial situation
Current level of IT expertise
Analysis of current IT trends and
standards
9