What is Cost-Benefit Analysis

Public-sector organizations are one of the top spenders in information technology (IBM, 2006). According to an IDC report, global public-sector IT spending will exceed $138 billion in 2006, representing 12.2% of overall IT spending (IBM). In the United States, public-sector IT spending is likely to grow to $92 billion in 2010 from $71 billion in 2005 (Pulliam, 2005). Despite the huge and growing IT spending by public-sector organizations, the resulting benefits from these IT spending are still not clearly understood (Gunasekaran, 2005). This is often due to the poor IT investment evaluation process implemented by these public-sector organizations (Hall, 1998). In other words, there is a lack of understanding of the impact of the proper IT investment evaluation processes of IT projects in the public-sector organizations. The IT investment evaluation is an ongoing process that seeks to identify best practice and use it as a basis for evaluating public-sector IT project performance in order to set up clear goals and identify areas for improvement (Gunasekaran, 2005). For example, without undertaking proper IT investment evaluation processes, organizations are at the risk of failing to establish clear IT project goals and design. Therefore, research in the public-sector organizations is becoming critical, especially in how these organizations evaluate their IT projects and ensure that benefits expected from these projects are eventually delivered.