A Socio-Technical Heuristic for Analysis of IT Investments: Results from Two Case Studies

Abstract

A majority of CEOs have experienced failed information technology (IT) investments. While such investments have the potential for providing competitive advantage, actual returns have varied widely. Numerous methods exist for investment evaluation, but traditional methods do not adequately account for the intangible benefits that characterize strategic investments and lack other features of portfolio selection. This chapter presents a framework based upon the analytic hierarchy process, combined with integer programming, to overcome the deficiencies associated with traditional approaches to economic evaluation of IT investments. Based on socio-technical theory and observations from two case studies in which the framework was applied successfully, a heuristic is developed for the investment process. Findings and implications are discussed.