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.
Published in Chapter:
The Adoption of IS/IT Evaluation Methodologies in Australian Public Sector Organizations
Chad Lin (Curtin University of Technology, Australia) and Yu-An Huang (National Chi Nan University, Taiwan)
Copyright: © 2009
|Pages: 6
DOI: 10.4018/978-1-60566-026-4.ch010
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.