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IT investment decision making – the role of intangible benefits

Stypsanelli, Maria LU and Karlsson, Erik LU (2012) INFM03 20121
Department of Informatics
Abstract (Swedish)
Investments evaluation has been considerably studied by academics. Researchers argue that decisions are based on the least expensive investment because of the commoditization of Information Technology (IT) (Carr, 2003). Nevertheless, evaluating an investment strictly from a financial perspective may be problematic because it disregards other benefits that enhance organizational performance (Lin et al., 2005). For this reason, the research has focused on the analysis of the decision making process in order to trace the importance of the overall benefits of an IT investment.

In order to better analyze the decision making process, a theoretical framework was synthesized. This framework can be used to assess the organizational objectives... (More)
Investments evaluation has been considerably studied by academics. Researchers argue that decisions are based on the least expensive investment because of the commoditization of Information Technology (IT) (Carr, 2003). Nevertheless, evaluating an investment strictly from a financial perspective may be problematic because it disregards other benefits that enhance organizational performance (Lin et al., 2005). For this reason, the research has focused on the analysis of the decision making process in order to trace the importance of the overall benefits of an IT investment.

In order to better analyze the decision making process, a theoretical framework was synthesized. This framework can be used to assess the organizational objectives which can be broken down to strategic, tactical, operational and financial considerations. Next, the actual benefits of the investment can be examined and categorized to strategic, informational and transactional dimensions. This assessment allows the effective evaluation of an IT investment in order to reach its justification. The theoretical framework was later evaluated by interviews which were conducted with senior managers.

Interestingly, the research has shown that several benefits are considered during the decision making process of the investment. These benefits are important to the final decision and overcome certain financial restrictions. Out of these benefits, customer relations and business efficiency are the ones that influence most the decision making process. However, the environmental dimension can also be added to the benefits assessment level in order to fully complement the research’s framework. (Less)
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author
Stypsanelli, Maria LU and Karlsson, Erik LU
supervisor
organization
course
INFM03 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
IT investment, decision making process, intangible benefits
report number
INF12-029
language
English
id
2798246
date added to LUP
2012-06-19 14:20:52
date last changed
2012-06-19 14:20:52
@misc{2798246,
  abstract     = {Investments evaluation has been considerably studied by academics. Researchers argue that decisions are based on the least expensive investment because of the commoditization of Information Technology (IT) (Carr, 2003). Nevertheless, evaluating an investment strictly from a financial perspective may be problematic because it disregards other benefits that enhance organizational performance (Lin et al., 2005). For this reason, the research has focused on the analysis of the decision making process in order to trace the importance of the overall benefits of an IT investment.

In order to better analyze the decision making process, a theoretical framework was synthesized. This framework can be used to assess the organizational objectives which can be broken down to strategic, tactical, operational and financial considerations. Next, the actual benefits of the investment can be examined and categorized to strategic, informational and transactional dimensions. This assessment allows the effective evaluation of an IT investment in order to reach its justification. The theoretical framework was later evaluated by interviews which were conducted with senior managers.

Interestingly, the research has shown that several benefits are considered during the decision making process of the investment. These benefits are important to the final decision and overcome certain financial restrictions. Out of these benefits, customer relations and business efficiency are the ones that influence most the decision making process. However, the environmental dimension can also be added to the benefits assessment level in order to fully complement the research’s framework.},
  author       = {Stypsanelli, Maria and Karlsson, Erik},
  keyword      = {IT investment,decision making process,intangible benefits},
  language     = {eng},
  note         = {Student Paper},
  title        = {IT investment decision making – the role of intangible benefits},
  year         = {2012},
}