Throwing good money after bad would make any manager uneasy. But then, uneasiness could be a good thing where IT investments are concerned. Few senior executives understand why their investments in IT have gone wrong or how to get them right in the future, according to recent interviews.1
One reason for their bewilderment may be that it’s difficult to calculate the absolute value of information technology to an organization. IT is simply too integrated into most businesses to be isolatable as a variable. And rare is the senior executive who possesses the knowledge and experience to make IT decisions confidently. Many end up delegating fundamental decisions about their business to IT and financial staff. All too often, the result is complex legacy systems, proliferating distributed technologies, and lax development discipline.2
We believe IT decisions must be made like other business decisions: on the basis of value. This means that the "softer," more qualitative benefits that IT can bring must be evaluated and properly factored in. Costs are not the whole story, even when they are projected over the entire life of an investment. Rather, managers need to understand the total value of ownership that an IT investment...