Research On Information Technology Investment Evaluation And Decision-making

In era of knowledge-based economy, high-tech industry is gradually becoming the core power of economic development, and information technology, which is the roll booster of high-tech corporations'development, is more and more concerned about its investment evaluation. By the rising of information technology investment, the investment evaluation and investment decision-making of IT project received quite great development all over the world. In China, the IT industry is also confronted with huge opportunities and challenges.This paper, by synthesizing strategy management theory, information economics theory, evaluation theory and statistics decision theory, analyses the value constitutes of investing information technology. After comparing traditional project investment with information technology, the value model of information technology investment is educed, which can offer decision-making support about exactly know the value of IT investment and how to invest IT. When the characteristics of IT investment were fully analyzed, based on the value structure of information technology investment, The approach of Real Option and Balanced Scorecard Decision Model based on Strategies integrates in a unified IT project management decision framework the best elements of real option theory, strategic balanced scorecards, Monte Carlo simulations and analytical network processes to fully analyzes the effect of uncertainty and risk in the IT investment decisions. Finally, through case study on SCINET e-government project, which are successful cases about investment evaluation, it is showed that IT investment should completely analyze, diagnose and program according to the situation of companies based on long-term view and strategic thought, then establish a system of managing, supervising and implementing IT investment and ensure that IT investment can acquire good economic and social benefit by logical mechanism.The objective of this research was to develop a more comprehensive approach for the analysis of ROI and selection of strategic information technology (SIT) systems in the presence of risk and considering business goal interrelations. During this research, a Real Option and Balanced Scorecard Decision Model based on Strategies decision framework was implemented and proposed as a better alternative for the project evaluation of SIT projects.The research provides value to practitioners by providing a generic model for ROI analysis and project evaluation of complex decisions and to researchers for demonstrating a new and novel hybrid application of real option and balanced scorecard to the analysis of IT strategic decisions. The Real Option and Balanced Scorecard Decision Model based on Strategies decision framework optimizes the ROI analysis and selection of projects in the presence of risk, allowing managers to better compare and rank projects in the IT portfolio.