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The Impact of Investment Evaluation in Information Systems on the Performance

  • Date Submitted: 06/10/2012 11:08 AM
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The impact of investment evaluation in information systems on the performance
IS investments nowadays have an impact on firms performance as they can reduce costs, improve product quality; provide firms with a competitive advantage. Having such an impact on firms each investment should be carefully assessed by appraisal techniques before implementation. As these different techniques are an important determining factor of the IS performance the question arising is what is the impact of the selection of one of these different techniques on the information systems performance.
Bacon (1992) stresses the importance of selection the appropriate technique for the investment decision making, as these methods significantly impact the effectiveness of the decision making, provide consequences on the project implementation and return. Onsongo et al.   (2009) suggests that there are five important stages of an investment project in which the appraisal of an investment should be carried out: “feasibility, development, implementation, post implementation an in rerouting operations”. Renkema and Berghout (1995) provide us with the following formal appraisal techniques: “financial, multi-criteria, ratio and portfolio approach”. Whereas Farbey et. al (1992) provide information’s that make it possible to see which evaluation method is suitable in which circumstance, taking the factors that influence the investments decision into account. Several researchers complain that managers often rely on methods that do not fall within these boundaries. H1: Gut feeling has ultimately a negative impact on the information system performance. As Onsongo et al. (2009) suggests: there is not one “best” method for justifying investment projects but multiple methodologies, used to overcome the limitations of one technique. H2: Formal appraisal techniques such as ROI and CBA have a positive effect on the information system performance.
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