Strategic information technology investment decision making in corporate organizations' perspective.

Abstract

This study was conducted in three corporate organizations based in Nairobi namely, Standard Chartered Bank, Access Kenya and Institute of Advanced Technology. It was guided by Credit Union Return on Technology (CURT), the Garbage Can models and conducted survey and case study methodology. One of the plaguing issues in making strategic information Technology (IT) investment decisions is the difficulty in making the right kind of IT to invest in and the best way to evaluate the IT investments. Literature indicates that most organizations use traditional and budgeting tools such as the Return on Investment (ROI) Net Present Value (NPV) and Cost Benefit Analysis (CBA) which do no measure the true value organizations. Despite the advent of new evaluations tools for IT investment such as Real Option Analysis (ROA) most IT executives are gathering anecdotal information and over rely on their experience, intuition and use of traditional capital budgeting tools to make key decisions on IT investments. This makes them unable to effectively make informed decisions regarding IT resources and investments. Therefore, this duty aims at proposing a general framework that combines both the traditional and modern methods in IT investment evaluation for strategic IT investment decision making. The study found out that IT plays more of supportive and strategic role (33.3%) rather than innovative role (16.7% with CEO, CFO and CIO being the key decision makers 55.6% who applied more economic based techniques with NPV being the most valuable technique (41.4%) rather than the analytic based techniques such as ROA which was (1005) not applicable in making IT investment decisions. Despite being aware of modern theories and concepts (43.3%), IT investment decision making was being hampered by factors such as lack of knowledge of existing theories and techniques that help in IT investment decision making and the over reliance of traditional financial techniques. In conclusion, the research findings highlight the importance of use of IT investment evaluation techniques in corporate organizations. It further proposes a general conceptual framework that combines both the traditional and current information Technology evaluation techniques to help make better strategic IT investment decisions.