The perceived benefits of the industry to make IT investment are as follows: Investment in IT intrinsically provides innovative and powerful solutions to the critical problems of the organizations. Information technology investment has impact on the process and improvement in the processes to impact the performance. (Sherer, S. A. ; Ray, M. R. ; Chowdhury, N. M. ) The investment in information technology adjusts the changes in business process.
The IT technology reduces gaps in communication and enhances the ways of collaborative working, through multiple, simultaneous and remote access to single information to have shared and distributed decision making to achieve business goals in a quick and timely manner. Better quality in work, quick output better financial control, improved communication and clarity in process and simple and quick access to common data are the popular advantages in the adaptability of Information technology. In recent years the performance of the information technology investments has received attention in the organizations.
Higher IT investments are associated with lower average production costs, lower average total costs, and higher average overhead costs (Mitra, Sabyasachi and Chaya, Antoine Karim). The investment of IT improves the bottom-line of the organization. Maximizing the profits is one of the expected benefits of the IT investment by managers while making a decision. Research Question The impact of IT investment on the value of an organization Discussion Difference between IT investment and other financial decisions: The decision of IT investment is not similar to the other financial investment decisions.
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The organizations should be aware of technology before investing in IT. The financial investment gives only the returns on the investments but IT investment gives the customer satisfaction, speed in processes, also attracts new clients toward the organization. IT investment raises productivity via expanding capital. IT investment is different from traditional capital investment. It not only computerize the process of the organization also enable the better information for decision making process. Also it provides the potentiality to improve the performance of the organization with positive impact on production techniques and methods.
The improvement in production yields higher levels of output without increasing the levels of capital and labor inputs. Prioritization to investment in IT: Information Technology plays an important role in almost every business venture. In the early days of business computing, managers had to decide whether a certain process should be “automated” or not. But today, the problem is not whether a process should use information technology as to how information technology can be appropriated use for that process because of availability of many technologies.
(Stallings, 2001) sated this problem as “too many choices” as the “manager’s dilemma”. The long-established investments are limiting the investment in IT because of the difficulty in quantifying the benefits of technology innovation (Brynjolfson, 1993) (Ives, 1994). As information technologies become more widely recognized as a necessary to the process, management focused on choosing right information technology that support the overall corporate strategy. (Ahituv, Neumann, & Riley, 1994) stated that most of the criteria for prioritizing IT projects are probably indefinable.
They also suggested that both the planned and investment perspectives must be considered when deciding the priority to give different IT projects. Organizational leaders are considering large number of factors when prioritizing IT projects. The managers face the problems in deciding the technology platform, relevant application and suitable plug in and sourcing of HR resources to adopt and to invest in within the time frame. Organization leader’s responsibility also include fiscal responsibility, strategic direction, and resource availability in prioritizing IT projects and investments.
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