Justifying IT investment

The fundamental question underlying any IT investment decision should be: is it worth it? A good investment is basically one...

The fundamental question underlying any IT investment decision should be: is it worth it? A good investment is basically one where the total costs involved are lower than the measurable benefits. As a rough guide, follow these steps:

 

  • It’s a CON: any argument for investing in new technology should be based on a Challenge (c), Opportunity (o) and Need (N).
  • Map out how the technology will be implemented. Who will be affected? What will be the operational impact? Are there alternative, better plans? 
  • What are the capital costs of your hardware or software, including initial purchase price and future upgrades, over a three- or five-year lifecycle? 
  • What are the costs involved in ongoing maintenance and operations, including IT staff and services, for deployment, plus the cost of supporting and training your users over the lifecycle? 
  • What are the total administrative costs involved in buying and managing the technology for your IT department? 
  • What impact will the technology have on operational processes? Will it impact the cost of relationships with your customers or suppliers? 
  • What impact will the technology have on your bottom line profitability? Look for impact on user productivity, in terms of a measured increase in your ability to produce goods or fulfil orders 
  • How will the technology allow your company to cut back resources or administrative functions
  • Will the technology enable your business to enter new markets or increase market share through improved quality?
  • Can the expected benefits to your business be expressed in SMART terms (Specific, Measurable, Achievable, Realistic and Timely)?

 

This was last published in September 2004

Read more on IT strategy

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close