Evaluating Strategic IT Investments

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bachelor_Torasvirta_Sini_2023.pdf (345.9 KB)

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School of Business | Bachelor's thesis
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Date

2023

Department

Laskentatoimen laitos

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Mcode

Degree programme

Laskentatoimi

Language

en

Pages

26+3

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Abstract

The purpose of this thesis is to investigate how a strategic IT investment can be evaluated, and how the special characteristics of a strategic IT investment can be taken into account in evaluation and decision-making. Companies spend a lot of resources on strategic IT investments, since they are often necessary for the company’s survival and well-being (Hallikainen, et al., 2002). Companies can also gain significant competitive advantage by making strategic investments (Adler, 2000). Because of the large scope of these investments, it is crucial for firms to make informed investment decisions. However, this is often difficult due to the intangible nature, long time frame, uncertainty, and risks associated with strategic IT investments. Findings of this thesis show that it is often impossible to accurately forecast all benefits and costs of a strategic IT investment beforehand and plans often need to be adjusted during the project. In addition to this, findings show that even if the evaluation is primarily based on financial measures, other aspects that are more difficult to quantify can also be taken into account with different methods that combine traditional evaluation methods and softer methods, that are based on managerial goals.

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Thesis advisor

Taussi, Thomas

Keywords

IT investments, strategic investments, strategic IT investments, investment analysis

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https://urn.fi/URN:NBN:fi:aalto-202307094466

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[kand] Kauppakorkeakoulu / BIZ (Open Access)