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A Multi-Objective, Multi-Criteria Approach for Evaluating IT Investments: Results from Two Case Studies

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  • Grover S. Kearns

    (University of South Florida, USA)

Abstract

While information technology investments have the potential for providing competitive advantage, actual returns on such investments have varied widely and a majority of CEOs rank IT investments as disappointing. Numerous methods exist for investment evaluation, but traditional methods do not adequately account for the intangible benefits that characterize strategic investments and lack other features of portfolio selection. This paper describes a model based upon the analytic hierarchy process, combined with integer programming, to overcome the deficiencies associated with traditional approaches to economic evaluation of IT investments. It also presents results of two case studies in which the model was used successfully and important contextual factors were observed. The multi-objective, multi-criteria approach was found to reflect both tangible and intangible benefits, link the investment to business strategies, increase management participation in the evaluation process, and provide important features of portfolio selection.

Suggested Citation

  • Grover S. Kearns, 2004. "A Multi-Objective, Multi-Criteria Approach for Evaluating IT Investments: Results from Two Case Studies," Information Resources Management Journal (IRMJ), IGI Global, vol. 17(1), pages 37-62, January.
    • Handle: RePEc:igg:rmj000:v:17:y:2004:i:1:p:37-62
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    Cited by:

    1. Ali, Syaiful & Green, Peter & Robb, Alastair, 2015. "Information technology investment governance: What is it and does it matter?," International Journal of Accounting Information Systems, Elsevier, vol. 18(C), pages 1-25.
    2. Francesca Maria Cesaroni & Domenico Consoli, 2015. "ICT e piccole imprese. Il Cubo della Predisposizione Tecnologica Aziendale," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2015(1), pages 73-100.
    3. Caetani, Alberto Pavlick & Ferreira, Luciano & Borenstein, Denis, 2016. "Development of an integrated decision-making method for an oil refinery restructuring in Brazil," Energy, Elsevier, vol. 111(C), pages 197-210.
    4. Ho, William, 2008. "Integrated analytic hierarchy process and its applications - A literature review," European Journal of Operational Research, Elsevier, vol. 186(1), pages 211-228, April.
    5. Panagiotis Liargovas & Nikolaos Apostolopoulos, 2016. "Investment scenarios and regional factors in the solar energy sector," Economics and Business Letters, Oviedo University Press, vol. 5(3), pages 95-104.
    6. Karanik, Marcelo & Wanderer, Leonardo & Gomez-Ruiz, Jose Antonio & Pelaez, Jose Ignacio, 2016. "Reconstruction methods for AHP pairwise matrices: How reliable are they?," Applied Mathematics and Computation, Elsevier, vol. 279(C), pages 103-124.
    7. Jitendar Kumar Khatri & Bhimaraya Metri, 2016. "SWOT-AHP Approach for Sustainable Manufacturing Strategy Selection: A Case of Indian SME," Global Business Review, International Management Institute, vol. 17(5), pages 1211-1226, October.

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