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The Use of Formal IT investment Evaluation Methods in Organizations: A survey of European Countries

Conference paper
Authors Elisabeth Frisk
Published in Americas Conference on Information Systems (AMCIS)
Publication year 2006
Published at Department of Applied Information Technology (GU)
Language en
Subject categories


IT investment evaluation has been the subject of many academic studies and often rated as one of the top concerns of IT managers. While many studies have focused on the issue of how to evaluate IT projects, we are more interested in understanding why formal IT evaluation methods and techniques are used or not used in various organizations. In this paper, we present the preliminary findings of a large scale, multi-country survey on the usage of IT evaluation methods in organizations. Our results show that, despite the fact that most IT managers consider IT project evaluation as a critical issue in IT management, only about one third of IT investment projects are subjected to some formal evaluation processes. What is even more interesting is that only about 10% of the organizations surveyed claim they use formal quantitative evaluation methods such as ROI, NPV, IRR, or C/B, while over half of the companies report that their IT investment decisions are made based on experience and manager discretion. We find that the managers’ perception about the usefulness of and attitudes toward formal evaluation methods and techniques correspond well to the percentage of usage in each of the three countries we surveyed. Our findings provide an update to the state of the art of IT investment evaluation usage in organizations and raise some interesting questions for future research.

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