The enigma of evaluation: Benefits, costs and risks of IT in Australian small-medium-sized enterprises

Abstract

The evaluation of information technology (IT) is fraught with misconception and there is a lack of understanding of appropriate IT evaluation methods and techniques. The benefits, costs and risks of IT need to be identified, managed, and controlled if businesses are to derive value from their investments. This paper presents findings from an exploratory study that used a questionnaire survey to determine the benefits, costs and risks of IT investments from 130 small-to-medium-sized enterprises (SMEs) in Australia. The analysis revealed that organizations from different industry sectors significantly differ in the amount they invest in IT but that firm size (in terms of turnover and number of employees) does not influence IT investment levels. Second, strategic benefits vary across different industry sectors. Third, the way employees adapt to change as a result of IT implementation depends on the size of the organization. Based upon the findings, a series of benchmark metrics for benefits, costs, and risks of IT are presented. It is posited that these can serve as a reference point for initiating a quality evaluation cycle in which benchmarking forms an integral component of the strategic process.