About the authors xi
How to use this book xiii
Preface to the first edition xv
Preface to the second edition xvii
Preface to the third edition xix
Foreword xxi
Acknowledgem ents xxiii
1 The evaluation of ICT investment - a 50 year odyssey 1
1.1 Introduction 3
1.2 The nature of evaluation 3
1.3 Evaluation in business performance 4
1.4 ICT evaluation 5
1.5 The first era in business computing 6
1.6 The second era in business computing 7
1.7 The third era in business computing 9
1.8 Some non-accounting approaches 11
1.9 The turn of the millennium 14
1.10 Some other ICT evaluation issues 15
1.11 Examining the timeline in more detail 16
1.12 Lessons learnt 20
1.13 Summary 21
2 The elusive nature of ICT benefits 23
2.1 Introduction 25
2.2 Economics of information 25
2.3 The problems with CT benefit measurement and management 26
2.4 Investment, value and economics 30
2.5 ICT investment as an asset 33
2.6 Processes, practices and people 34
2.7 People make ICT work 35
2.8 Primary stakeholders 35
2.9 The locus of responsibility 36
2.10 Summary 39
3 The role of instinct in ICT benefits assessment 41
"3.1 Introduction 43
3.2 A question of perspective 44
3.3 Some aspects of value 46
3.4 A taxonomy of techniques 48
3.5 Summary and conclusion 54
4 The total ICT investment 57
4.1 Introduction 59
4.2 Why is it difficult to account for ICT equipment? 60
4.3 The importance of knowing what has been spent 61
4.4 The total cost of ownership (TCO) 62
4.5 Establishing a framework 62
4.6 The amount invested in software assets 65
4.7 The amount invested in data assets 67
4,8 Intellectual capital 69
4.9 Summary and conclusion 72
5 Costing ICT 75
5.1 Introduction 77
5.2 Background - a gap in understanding 78
5.3 A framework for looking at cost issues 79
5.4 Conceptual problems in ICT costing 80
5.5 Costing system weaknesses 86
5.6 Accounting policies 90
5.7 An ICT cost reference model 93
5.8 Summary 97
6 Issues and techniques for ICT evaluation 99
6.1 Measuring business performance 101
6.2 When is performance measured or not? 103
6.3 The assessment of IT effectiveness 105
6.4 Purpose of the IT investment 107
6.5 Matching assessment to strategy 107
6.6 Different approaches to measurement 108
6.7 Intangible benefits 109
6.8 Specific methodologies 111
6.9 Classification of methodologies 118
6.10 Choice of evaluation methodology 121
"6.11 Summary and conclusions 122
7 ICT cost control 123
7. Introduction 125
7.2 An IT or IS department budget 125
7.3 Assumptions underpinning IS management 128
7,4 Situational audit 129
7.5 Future requirements - a strategic information systems plan 130
7.6 Methods for cost improvement 131
7.7 The commercialization of the IT department 133
7.8 Summary 134
8 ICT business case accounting 135
8.1 Introduction 137
8.2 Concepts required for business case accounting 137
8.3 Pattern of costs 139
8.4 Sources of cost estimates 140
8.5 Business case accounting in practice 141
8.6 Cost displacement 141
8.7 Cost avoidance 145
8.8 Decision analysis - the value of information 146
8.9 Impact or time release analysis 148
8.10 Putting a financial estimate to intangible benefits 150
8.11 Transformate analysis 151
8.12 Ex-post investment evaluation 151
8.13 Processes for business case accounting or financial analysis 153
8.14 Deterministic analysis 154
8,.15 Summary 156
9 Risk analysis 157
9.1 Introduction 159
9.2 Using spreadsheets for risk analysis 162
9.3 Worked examples 166
9.4 Financial risk review process 173
9,5 Summary 174
10 Ev.;alvuation of the IT function 175
10.1 A holistic approach to IT function evaluation 177
10.2 Goal-centred vs systems' resources 178
10.3 Tangible vs intangible benefits 179
10.4 User information satisfaction (UIS) 180
10.5 A gap approach to measurement 180
10.6 A gap model applied to an office automation system 185
10.7 Basic results 190
10.8 Some implications arising from the analysis 190
10.9 Performance analysis 194
10.10 Factor analysis 197
10.11 Summary of findings 203
10.12 Analysing qualitative information 203
10.13 A multiple gap approach to measuring UIS 210
10.14 Using a questionnaire approach to measure IT effectiveness 221
10.15 Summary 222
11 Ranking and scoring 223
11.1 Introduction 225
11.2 Five steps to evaluation 225
11.3 A spreadsheet system for overview evaluation 227
11.4 Summary 229
12 Value for money and health checks 231
12,1 Efficiency and effectiveness studies 233
"12,2 A value for money study 233
12.3 Setting up a value for money study 234
12.4 Detailed planning of the study 236
12.5 Analysing the results 239
12.6 A list of action points 242
12.7 A health check review (HCR) study 242
12.8 NCC HCR study 242
12.9 Summary 246
13 Designing IT surveys for benefit measurement 247
13.1 Introduction 249
13,2 What is a survey? 249
13.3 Approaches to data collection 250
13.4 Sampling 252
13.5 Questionnaire design 259
13.6 Measurement scales 267
13.7 A guide to conducting a survey 269
13.8 Summary 271
14 Evaluation and ABR project management 273
"14.1 Introduction 275
14.2 The traditional approach 276
14.3 Moving away from the traditional approach 278
14.4 Active benefit realization 279
14,5 The evaluation process 279
14 6 The ABR pictures 284
14.7 Using the pictures 292
14.8 Summary 294
15 Final thoughts 295
15.1 Introduction 297
15.2 No obvious methodology 298
15,3 Start with the high-level view 299
15.4 Know the purpose of the evaluation 300
15.5 Evaluation is never trivial or inexpensive 300
15,6 A tool kit 301
15.7 A change in culture 302
15.8 Summary and conclusion 302
Appendices
A Glossary of terms 305
B Acronyms 315
C Financial measures used in cost benefit analysis 321
D Factor analysis 327
E Sample sizing scenarios 335
F Measurement of IS effectiveness - a questionnaire 343
G Active benefit realization - a questionnaire 351
H Issues addressed in effectiveness surveys 359
I Bibliography and reading list 363