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Re-Examining IT Investments: Measuring Long-Term Payback in the E-Commerce Era

Re-Examining IT Investments: Measuring Long-Term Payback in the E-Commerce Era
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Author(s): Robert C. MacGregor (University of Wollongong, Australia), Helen Hasan (University of Wollongong, Australia), Lejla Vrazalic (University of Wollongong, Australia) and George Ditsa (University of Wollongong, Australia)
Copyright: 2004
Pages: 4
Source title: Innovations Through Information Technology
Source Editor(s): Mehdi Khosrow-Pour, D.B.A. (Information Resources Management Association, USA)
DOI: 10.4018/978-1-59140-261-9.ch187
ISBN13: 9781616921255
EISBN13: 9781466665347

Abstract

Traditional return on investment (ROI) metrics have been used in organisations to evaluate the feasibility of investments in information technology (IT) during the pre electronic-commerce era. However, with the advent of e-commerce, some organisations are still utilising this formal measure while others are searching for alternative methods that will prove to be better instruments. The problem with ROI methods lies in the lack of attention paid to internal and external changes in organisations and the changing role of IT. This paper compares the key underlying factors that define pre and post e-commerce IT eras, and argues that many of the IT investment metrics still in use today are derived from the pre e-commerce era of controllable procedures, products and customer bases. It proposes that only a closer study of the strategic organisational changes brought about by e-commerce and carried out from a long term perspective will lead to the development of more pertinent methods to evaluate IT. An investment banking group case study is presented to support this view and demonstrate the importance of adopting a strategic long-term outlook in evaluating e-commerce investments.

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