A comprehensive analysis of it/is indirect costs: Enhancing the evaluation of information systems investments

Abstract

The level of Information Technology (IT) expenditure within organizations continues to increase over the years in an attempt to gain a competitive advantage in their respective industries. Nonetheless, IT projects still experience budget overruns taking into account the continual fall of hardware costs. This phenomenon presents a dilemma to managers who struggle to evaluate their investments in IT. Adding to the difficulty is the peculiar nature of such investments having Human and Organizational dimensions. Such dimensions are later translated into indirect costs that are both difficult to identify and quantify hence are ignored by managers which hinders the evaluation process. The lack of knowledge of managers about IT/IS indirect costs affect their ability to determine the true costs of deploying IT. It is closing the gap that this paper strives to explore a new method for identifying, managing and controlling IT indirect costs through a case study enquiry of a leading gold producing company. The research establishes a rational that goes beyond the traditional quantification appraisal of costs which is inadequate in the case of indirect costs. It proposes a solution that helps to thoroughly identify the indirect costs, mitigate their effect and achieve the desired control while enhancing the evaluation process through their inclusion.