To Invest Or Not Invest? : Factors affecting IT investment decisions

University essay from Högskolan i Jönköping/IHH, Informatik; Högskolan i Jönköping/IHH, Informatik

Abstract:   Introduction Many studies indicate that there are numerous factors that promote or hamper the adoption of IT applications and are a prime concern for many researchers and practitioners (Abrahamson, 1991). Two main factors which need to be examined closely when making decisions about IT investments are the internal and external factors. Since these factors play a great role in decision making of IT investments, it is imperative to study their impact on the strategic planning because this forms the founding blocks for IT decision making. Problem As the business environment keeps on changing, managers need to thoroughly scan the environment before investing in an Information technology system. The reason is to identify the major factors that can be detrimental to the organization from reaping the potential rewards from their IT investments. Sutton, (1998) views the process of environment scanning as a technique to identify threats and opportunities while improving long and short- term planning. With the current financial crisis that started in 2007, there seems to be a pandemic concern in the massive. Inevitably, this has lead to a risen concern for organizations to carefully study this particular factor when deciding on investing in new information technology. Purpose The aim of this thesis is to establish and evaluate the internal and external factors affecting the decision making in IT investments, in particular ERP systems. It also seeks to contribute to literature on the impact of the current financial crisis on making IT investment decisions. Method Our research study took a deductive approach with the use of qualitative data that was collected from semi-structured interviews of three respondents. The interviewed companies were Fagerhult Belysning, Sogeti and Professor Mats-Åke Hugosson. Conclusion The evaluation of the internal and external factors affecting the decision making was analyzed with the SWOT analysis. Each potential factor was categorized under internal, strengths or weakness and external, opportunities or threats and then assisted in reducing the weaknesses in the organization and mitigating the potential threat in order to understand these factors influence on ERP adoption in Fagerhult. An advice for organizations is despite the financial crisis, the question they ought to ponder over is firstly the obvious which is, do we have the available resources? And if that is not a constraint, the next issue is how we can get the optimal value from our IT investments and our correspondents laid it out clearly; organizations need to plan ahead and continue making IT investments that aims at creating a suitable balance/ fit or harmonization between their IT and business strategy.

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