Evaluationof IT-investments : A case study of the PENG-model

Abstract: Three senior consultants, that primary work with organisational development and project management has created a model, named PENG, specially adjusted for evaluation of IT-investments. The purpose of this model is to evaluate both the financial and the “softer” values of IT. According to IT’s major role of supporting the business concept, “soft” val-ues like; improved customer service, fewer complaints, more reliable deliveries and et cetera becomes very important. An interesting feature of the PENG-model is that it promises to, as the name indicates (PENG means coin in Swedish), transform all aspects of IT into monetary terms. This makes it possible to quantifiably measure all the aspects of IT, not just the ones that can be counted for as reduced costs. This attribute makes PENG different compared to other models that we have found. In this thesis we have chosen to study how the use of PENG affects evaluations of IT-investments, by focusing on both restricting and enabling aspects. The studies that have been performed are mainly based on qualitative methods. We have used a literature study to see which aspects that are of most importance when evaluating IT. Further on we have studied descriptions, by the originators of PENG, to see how an actual evaluation process is supposed to be done. Based on this we have performed an in-terview at Kalmar county council, who have used and are using the model in several of their IT-projects, in order to see how PENG serves in real life situations. We have found out that the PENG-model certainly has good intentions in capturing the complexity inherent in IT, by valuing “soft” and “hard” aspects and for illustrating an in-vestment from different perspectives. The model involves a working procedure consisting of ten steps that serves as a guideline for the evaluator. However, the model lacks a clear framework describing how the actual work in each step shall be performed. The model generates in a clear and easily understandable result that can be understood through out the organisation, this mostly due to the use of money as the unit of measure-ment. The quality of the result is however largely dependent on the judgements of the persons involved. Depending on how you value the benefits and costs of IT, you will end up with diverse results. From this, we can see that the model has problems in terms of trustworthiness. We believe that PENG, despite its credibility issues, can be useful when discussing IT in order to illustrate the implications of an investment. We can also see the worth of the model when comparing different kinds of IT-investments; to see where the money can be of best use. The study further shows that PENG can be used in any type of organisation, even though it may be better suited for the public sector, where “soft” bene-fits are an essential part of the business concept.