TY - JOUR TI -

Justification of IT investments based on business drivers tree 

T2 - IS - KW - information technologies (IT) KW - investments KW - project feasibility KW - IT value KW - IT projects portfolio KW - business driver KW - IT efficiency AB - Nina L. Korovkina - Associate Professor, Department of Corporate Information Systems, Faculty of Business Informatics, National Research University Higher School of Economics. Address: 20, Myasnitskaya Street, Moscow, 101000, Russian Federation.E-mail: nkorovkina@hse.ruMaria S. Fay - Student, Hasso-Plattner-Institut für Softwaresystemtechnik, School of design thinkingAddress: 2-3, Prof.-Dr.-Helmert-Str., Potsdam, D-14482, Germany.E-mail: msfay@edu.hse.ru      This article presents an approach to developing a methodology for IT project investment feasibility through establishing a link to company business drivers. Representing the factors enhancing the company value, business drivers enable to identify how strategic benefits from IT project implementation influence enterprise performance indicators. A business driver tree is based on the ValIT model, displacing the hierarchy of several financial factors that increase economic value added and being complemented by several industry- and company-specific nonfinancial factors, such as "internal optimization" and "ability to innovate". Thus an underlying basis is provided to evaluate strategic feasibility of project investment.     Such method of formulating potential benefits from information technologies (IT) in business terms is regarded as a criterion for investment decision-making and complements the Value-Based Management concept. The paper argues that in a number of cases the adequate level of company business drivers coverage by a project can compensate for the negative value of expected financial benefits. The analysis of IT investment feasibility opportunities enables to build a decision-making matrix based on risk assessment, quantitative indicators and alignment with company priorities. Implementation of the recommendations formulated in the paper is intended to ensure a higher return on IT investments (and their transparency) and to achieve harmonization of business and IT. It also enables to take into account business specifics and to carry out a more comprehensive appraisal of IT investment-related effects that mitigates the risk of inaccurate cash flow estimation. The proposed approach has been successfully tested in assessment of a potential IT projects portfolio at a large Russian manufacturing company. AU - Nina Korovkina AU - Maria Fay UR - https://bijournal.hse.ru/en/2014--3 (29)/138191895.html PY - 2014 SP - 57-68 VL -