Jamie L. Hamaker

Information Technology Investment: Decision-Making Methodology

From the individual to the largest organization, everyone today has to make investments in IT. Making a smart investment that will best satisfy all the necessary decision-making criteria requires careful and inclusive analysis. This textbook provides an up-to-date, in-depth understanding of the methodologies available to aid in this complex process of multi-criteria decision-making. It guides readers on the process of technology acquisition — what methods to use to make IT investment decisions, how to choose the technology and justify its selection, and how the decision will impact the organization.

A new strategic information technology investment model

Many of the financial instruments used in classic investment analysis do not apply to typical information technology investment decision making because of the multi‐criteria and multi‐objective nature of the problem. This is particularly true when integrating strategic, tactical, and operations planning objectives in the decision. One approach for making IT investment decisions is a multi‐objective goal programming (GP) model proposed by Talluri in 2000. The purpose of our paper is twofold: to demonstrate how a simple ranking/scoring method can be used in place of the more involved Talluri GP modeling approach if only a solution is required; and, in decision situations where solution justification is desired, to explain how GP extension methodologies can be incorporated into the analysis to generate information to determine a solution’s reliability and identify economic tradeoffs that can be used to improve an existing solution.