A Survey of IS/IT Investment Evaluation Practices in Australia: Some Preliminary Results

Abstract

In modern organizations a large portion of senior management's time is now being spent on finding ways to measure the contribution of their organizations IS/IT investments to business performance. It has been shown that IS/IT investments in many organizations are huge and increasing rapidly every year and yet there is still a lack of understanding of the impact of the proper IS/IT investment evaluation processes and practices in these organizations. At the same time, the issue of expected and actual benefits realized from IS/IT investments has also generated a significant amount of debate in the IS/IT literature amongst researchers and practitioners, though most of the published research comes from the USA and UK. This study has addressed that issue through a survey of the CIOs of Australia's largest 500 organisations. The results indicate that a variety of formal IS/IT investment evaluation processes and techniques are used, costs and budgets are of great concern, there is a strong emphasis on cost reduction and other benefits, and a reasonable level of confidence in the delivery of these benefits. Most organizations used a formal methodology or process for IS/IT investment evaluation, and financially based evaluation techniques such as NPV and ROI which, though not perfect, often do try to incorporate intangible benefits into the process. These and other results are presented in the paper, and suggestions for further work included.