A framework for assessing the cost of IT investments

Assessing life cycle costs of IT is a difficult endeavor. There are several factors that contribute to the life cycle costs of IT. Many of these factors are of a technical nature, such as development costs or integration costs. A substantial part of the costs are, however, caused by organizational factors such as the changes the introduction of an IT-system impose on business processes and the temporary loss of productivity this causes, or the cost of training system users before taking the system into operation. This paper proposes a framework for IT investment cost assessment. The framework integrates factors as proposed by already existing IT cost estimation frameworks and literature on the subject to be able to take into account both technical and organizational factors and cost drivers related to IT life cycle costs. The framework assists in quantifying these factors together with the costs they influence thereby providing more complete and accurate decision-support to executives faced with having to make investment decisions. The paper also describes how the framework´s usefulness has been validated in two case studies at a large Nordic power company.