Evaluating IT/IS investments: A fuzzy multi-criteria decision model approach

IT/IS represents a substantial financial investment for many organizations. Whether or not to invest in new IT/IS is, therefore, a difficult decision. Simply considering human resource cost saving criteria is not enough, especially when a corporation has had many information systems. What kind of cr...

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Bibliographic Details
Published in:European journal of operational research 2006-09, Vol.173 (3), p.1026-1046
Main Authors: Chou, Tzy-Yuan, Chou, Seng-cho T., Tzeng, Gwo-Hshiung
Format: Article
Language:English
Subjects:
Decision making models
Fuzzy logic
Fuzzy theory
Information systems
Information technology
IS evaluation
IT evaluation
IT portfolio
Multi-criteria decision making
Multiple criteria decision making
Project evaluation
Studies
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Summary:IT/IS represents a substantial financial investment for many organizations. Whether or not to invest in new IT/IS is, therefore, a difficult decision. Simply considering human resource cost saving criteria is not enough, especially when a corporation has had many information systems. What kind of criteria should we consider when we evaluate IT/IS? How can a new IT/IS project be evaluated in an easy, cost-effective, and collective manner? We need a tool that will help decision-makers evaluate potential new investment projects. Apart from evaluating the new project per se, its compatibility and ability to integrate with an existing IT portfolio must also be considered. Hence, we propose a new approach based on the fuzzy multi-criteria decision model (FMCDM), featuring a 2-stage evaluation process with 26 criteria for IT/IS investment. All stakeholders in a corporation can decide the relative weights they give to the criteria when they evaluate a new IT/IS project by using linguistic values. Experts can also use linguistic values to evaluate all candidates easily. Only an Excel worksheet is needed to obtain an evaluation result. It is cost-effective and efficient. We conduct a case study to show how this model can be used and discuss the results.
ISSN:0377-2217
1872-6860
DOI:10.1016/j.ejor.2005.07.003