Abstract
Information systems/information technology (IS/IT) represents substantial financial investment for many organizations (Lin, Huang, & Tseng, 2007; Standing, Guilfoyle, Lin, & Love, 2006). However, IS/IT managers have found it increasingly difficult to justify rising IS/IT expenditures (Lin & Pervan, 2003; Serafeimidis, & Smithson, 2003) and are often under immense pressure to find a way to measure the contribution of their organizations’ IS/IT investments to business performance, as well as to find reliable ways to ensure that the business benefits from IS/IT investments are actually realized (Luftman, Kempaiah, & Nash, 2006). This problem has become more complex as the nature of IS/IT investments and the benefits they can deliver have changed rapidly (Murphy & Simon, 2002). Furthermore, evaluation of these IS/IT investments is an extremely complicated process, and it is often avoided or dealt with ineffectively, especially in the public sector (Cilek, Fanko, Koch, Mild, & Taudes, 2004). Given the complexity of the decisions and the large expenditure involved, a better understanding of the basis and practice of IS/IT investment and evaluation in the public sector organizations is essential. The difficulties of evaluation and benefits realization processes are often the determining factors in the application of any formal methodology, and must be addressed if the processes are to be understood (Counihan, Finnegan, & Sammon, 2002; Love, Irani, Standing, Lin, & Burn, 2005). bacKground The IS/IT investment evaluation and benefits realization process is a complex but critical function in both private and public organizations. The need to justify expenditure, to assess the effectiveness of a project, and to ensure that expected benefits are eventually delivered are crucial elements in the IS/IT investment evaluation and benefits realization process. The main purpose of IS/IT evaluation is an important factor in determining how the process should be carried out. However, the IS/IT investment evaluation and benefits realization process itself is an extremely complicated and difficult process, and is not often carried out by both private and public organizations.
TopBackground
The IS/IT investment evaluation and benefits realization process is a complex but critical function in both private and public organizations. The need to justify expenditure, to assess the effectiveness of a project, and to ensure that expected benefits are eventually delivered are crucial elements in the IS/IT investment evaluation and benefits realization process. The main purpose of IS/IT evaluation is an important factor in determining how the process should be carried out. However, the IS/IT investment evaluation and benefits realization process itself is an extremely complicated and difficult process, and is not often carried out by both private and public organizations.
Key Terms in this Chapter
Information technology (IT): Any computer-based tool used to work with information and support the information needs of an organization.
Benefits Management: A managed and controlled process of checking, implementing, and adjusting expected results, and continuously adjusting the path leading from investments to expected business benefits.
IS/IT Benefits Realization Methodologies: Approaches used to ensure that benefits expected in the IS/IT investments by organizations are realized or delivered.
IS/IT Investment Evaluation: The weighing up process to rationally assess the value of any acquisition of software or hardware that is expected to improve the business value of an organization’s information systems.
Productivity Paradox: Despite large investments in IS/IT over many years, there have been conflicting reports as to whether or not IS/IT benefits have actually occurred.
Systems Development Process: A structured step-by-step approach for developing IS/IT.
IS/IT Investment Evaluation Methodologies: Approaches used to evaluate organizations’ IS/IT investments.