Valuing IT Investments
Soft benefits, such as the ability to make future decisions, make it difficult to measure the payback of IT investment
First, IT can be a significant part of the annual budget, thus under close scrutiny.
Second, the systems themselves are complex, and calculating the costs is an art, not a science.
Third, because many IT investments are for infrastructure, the payback period is much longer than other types of capital investments.
Fourth, many times the payback cannot be calculated because the investment is a necessity rather than a choice, and there is no tangible payback
Figure 10.6 show the valuation methods used.
Fig 10.5 shows how these benefits are identified.
Valuation Methods