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IT Investment Decisions. Value, Uncertainty and Gut Feeling

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  • R. Mercken
Abstract
Although IT investment evaluation has been one of the core subjects of IT research since the early days of the use of computers in business and a plethora of evaluation methodologies and taxonomies have been developed, there is little doubt that IT investment evaluation still is problematic and that many crucial decisions are based on gut feeling (belief) rather than on the result of analytical tools. Obviously, there is a limit to what can be evaluated by formal methods, but all too often the switch to non formal evaluation methods or no evaluation at all is made much too soon. It is argued that the main drivers for this switch are the high level of uncertainty surrounding those IT projects, the high risk of project failure and the intangible nature of many of the expected benefits. Being unable to quantify the expected return of the project, the decision is based on gut feeling. It is our purpose to try to reconcile analytical tools to belief on the basis of a shared notion of value.

Suggested Citation

  • R. Mercken, 2005. "IT Investment Decisions. Value, Uncertainty and Gut Feeling," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(4), pages 625-650.
    • Handle: RePEc:ete:revbec:20050407
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    File URL: http://feb.kuleuven.be/rebel/jaargangen/2001-2010/2005/TEM%202005-4/TEM_4_05_Mercken.pdf
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