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)?

 

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