A Multi-Objective, Multi-Criteria Approach for Evaluating IT Investments: Results from Two Case Studies

While information technology investments have the potential for providing competitive advantage, actual returns on such investments have varied widely and a majority of CEOs rank IT investments as disappointing. Numerous methods exist for investment evaluation, but traditional methods do not adequately account for the intangible benefits that characterize strategic investments and lack other features of portfolio selection. This paper describes a model based upon the analytic hierarchy process, combined with integer programming, to overcome the deficiencies associated with traditional approaches to economic evaluation of IT investments. It also presents results of two case studies in which the model was used successfully and important contextual factors were observed. The multi-objective, multi-criteria approach was found to reflect both tangible and intangible benefits, link the investment to business strategies, increase management participation in the evaluation process, and provide important features of portfolio selection.

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