Is ROI King In Evaluating IT Investments? Part 1. Should We Make the Investment?
William Friend and Olin Thompson - July 23, 2002

Introduction

Companies have retrenched from their previously typical IT investment pattern. Behind the change is an increasing reliance on financial measures to justify IT investment. IT investments are not well suited to traditional financial analysis. Nevertheless, IT managers should recognize that cash flow measurements are being increasingly used to evaluate IT investments. Initial estimates of cash flows from IT projects are often hard to determine because underlying business assumptions can change. One way for IT managers to meet financial analysis requirements is to develop Key Performance Indicators (KPIs) for IT projects that can logically be associated with the original cash flow assumptions...