IT-Value Mapping: Justifying Investment in IT (A Study Conducted In NCR)

“IT is still considered more of expenditure rather than an investment” Nowadays, we can't expect CFOs to easily get agreed on allocating a certain proportion of their finances to IT investments. In present timings, IT Managers need to give strong justifications for IT spending than ever. Top management requires being ensured systematically, and their decisive buy-in requirements to be taken before scheduled IT investment. This is where Return on Investment (ROI) analysis comes into existence and plays an important function. Another area where ROI analysis can be used is to analyze an investment after it has been made so as to measure whether IT rupees are being spent intelligently or not. Conventionally, ROI is calculated by dividing net profits (after taxes) by total assets. Though, the above principle is not appropriate for IT investments. When IT executives talk about ROI, they are really looking for answers to the following queries: ? What will be the return against my investment on IT? ? After how much time I will be able to start harvesting the benefits of the investment I am making? ? Are the profits tangible and quantifiable? [5] In other words, ROI analysis estimates the investment by balancing the degree and timing of predictable gain to the investment costs. As IT moved to this position of importance, so did IT budgets to a size that attracts attention. In most organizations, IT budgets are the single biggest expenditure. It is but normal to ask: what am I getting for this huge spending?