Value Delivery of Information Technology Investment: A Conceptual Framework

Abstract

Abstract-Organizations, be it private or public, are making huge spending on information technology (IT). These spending, whether for productivity or strategic reasons, become the fundamentals and tools on how organizations evaluate their IT investment. Evaluating every investment, before and after being made, is very crucial for organizations in determining successful decision that has or will be set. Especially when decision to invest is onset, the expectation of values or benefits from the investment become substantial to arrive at such decision to invest. This study reviews and analyzes eight pertinent studies that model IT investment values and benefits and propose a model to describe the value delivery of an IT investment evaluation. Based on two-staged filtration method, 110 variables are narrowed and converge into 23 variables which categorized into five factors. In this paper, the five factors of IT investments value delivery are discussed which are financial, operational, organizational, strategic, and service.

Measurement of IS/IT Investment on the Implementation of ERP and the Effect on company productivity

“…For example, improving the process of planning, improvement of decision making, and so on. Benefit analysis of the quasi using the calculation of Value Acceleration (VA), Value Linking (VL), Value Restructuring(VR), and Innovation Value (IV): Tangible benefits and quasi tangible benefits using enhanced ROI financial approach, where the results of the assessment results in a monetary value measured by the following formula [9]: Enhanced ROI = Traditional ROI + VL + VA + VR + IV.…”

“…The project value of IS / IT is measured by the following formula [9]: Score Project = Enhanced ROI + weight of Business Domain + weight Technology Domain.…”

“…According to the above phenomenon, IT investment requires development to make measurements and evaluate investments in various factors not only in terms of finance, but several related factors must also be involved, such as factors related to IT investment, tangible factors, intangible factors and the risk of IT implementation that has been invested [7]. And these measurements must have several criteria that are measured so that the results of the measurement are more valid and viewed from various aspects [9]. Information Economic is the development of Cost Benefit Analysis that uses multi-criteria aspects in evaluating information technology (IT) investments in terms of tangible and intangible benefits [10].…”

Comparative Study from Several Business Cases and Methodologies for ICT Project Evaluation

“…An alternative which can deal with non-financial benefits include financial return as well. Portfolio management techniques are a kind of approach used for building pre-investment systematic project specific metrics to target the expected list of benefits to be achieved from investments as discussed in a different article found in literature review [1], [19], [24], [47] . Giga Information Group is one of the pioneers in this area developed by IT portfolio management to analyze and plan IT decisions prior to the investment [48].…”

“…It"s a pre-evaluation method, which enables analyzing several possible alternatives using graphical methods. The optimal project can be selected by visually comparing and analyzing projects [1]. The proposal-based techniques focus on business and technology domains and they make possible analysis using risk and sensitivity analysis based on previously implemented projects [2].…”