Approaches to the Ex-ante Evaluation of Information Systems: A Critical Review

Diploma Thesis from the year 2003 in the subject Business economics - Investment and Finance, grade: 1,0 (A), Bielefeld University (Applied Computer Science), language: English, abstract: This paper critically reviews approaches for the evaluation of investments in informationsystems prior to their implementation. First, the ground for the review is prepared byexamining characteristics of evaluation, information systems and value. A classification of 54evaluation approaches identified in English and German literature is then presented. Examplesof each class are reviewed and their advantages and drawbacks are discussed. Their use inevaluation practice is analysed through the examination of empirical studies and directions forfuture research are given. Today, a significant share of corporate funds is spent on the implementation, upgrading andmaintenance of an information system (IS). Recent studies show that in 2001 the IS budget ofcompanies worldwide accounted for an averaged 8.8% of total corporate revenues (cf. CSC,2001). Consequently, a thorough evaluation of investments in information systems before,during and after the implementation of a project is important. However, the normativeliterature reports a great deal of difficulty in the appraisal of these investments (cf. Irani,2002:11). Although IS evaluation has been an issue for both academics and managers formore than three decades now, there are still serious concerns about how to select projects forinvestments, how to control the development and how to measure benefits after theimplementation (cf. Farbey, 1999:189). This concern has been matched by increased researchactivity which prevailed through two broad streams. The first stream aimed to directlymeasure the payoff of IS investments for companies and came to mixed conclusions (cf. Dehning and Richardson, 2002:8). The second stream addressed the question of how ISinvestments can actually be assessed by decision-makers and particularly focussed on theresearch of evaluation criteria, evaluation methods and the very nature of the evaluationprocess (cf. Avgerou, 2000:570). Of late, several deficiencies in the field of evaluation methods have induced calls for in-depthresearch. Academics have criticised the current state of the field as being immature andfragmented (cf. Mahmood and Szewczak, 1999:491) and have thus demanded an overviewof the whole panoply of evaluation methods, together with the assumptions they depend on...[in order to enable]... the identification of gaps. (Farbey, Land and Targett, 1999: 205). [...]