Today, it is important for every organization to make viable decision when it comes to information technology investments. When making decision on the best criteria necessary for this investment, measures in carefully and exclusively analyzing the process for selecting, prioritizing, controlling, and evaluating these investments ought to be set.
According to research, this helps in expressing and enumerating the right values derived from any investment made in a new information technology system. One big problem that occurs when an organization flops to validate the scope of its investment in information system is incompetence to articulate the value of information system within a specific organization.
Investment selection
Selection process involves creating an investment portfolio that helps in improving overall performance of the organization. This will help in combining executive management business knowledge, priorities, directions and various projects technical evaluations. There are key elements of this phase of IT investment that the agency ought to focus on. These include consistent and uniform decision making that help in successfully compare cost, benefits, risks and the returns of the investment.
They are four key steps that will help the agency in their selection process. These include screening the proposals of the IT project, analyzing all the costs, benefits and risks of the investment, prioritizing the investment project based on the determined risks and returns of the project and, lastly, determining the right mix of investment projects.
Investment evaluation
Once the selection process is done, the agency should carry out a detailed evaluation of all supporting analyses of the investment. This will help the top management in examining various compromises of the proposed IT investment project. In other word, the technical staffs should carry out an evaluation on the soundness of benefit-cost and risks analysis of the project. Precisely, the team should examine the expectations of the project in improving operational performance measures that will be used to monitor all the expected versus actual results of the investment.
Investment prioritization
When it comes to prioritization of the IT investment, the agency should come up with a categorized listing of the projects. This listing is to be used in the anticipated benefits and risks to ascertain necessary projects that have the utmost chances of successfully and resourcefully support the key operation objectives of the proposed budget restraints. A key approach that can help in devising a categorized listing of the investment projects is a scoring mechanism. This will help in providing various values related to the projects strength and weakness for risks and return issues.
Funding the investment
The last phase of IT investment cycle is determining and controlling the right mix of the project to fund. The top management should consider the following elements before arriving at a final stage of resource allocation. Strategic improvement versus current operations maintenance, new IT investment projects versus ongoing, high versus low risks, budget constraints, opportunity costs and other complicating factors.
The management should regularly carry out monitoring of the ongoing IT investment against the projected costs, performance, schedule and the delivered benefits. Controlling will help in accentuating accountability of the management through creating pre-arranged checked points for the projects. If the project is not been developed based on the IT expectations, then the top management should make decision on whether to go on with the plans, modify or cancel the entire investment.