Identification and Calculation Method of the Financial Benefits of IT Projects for Better Financial Evaluation
ABSTRACT
To financially evaluate an IT projects is to assess its financial feasibility, while the financial benefits are the core parameters of financial evaluation of IT projects. Therefore, correctly identifying the financial benefits of IT projects is the precondition to ensure the validity of the financial evaluation. Essentially, IT projects can be divided into productive IT projects and supportive IT projects. The paper analyzes the importance of identifying the financial benefits and introduces the meaning, characteristics and classification of financial benefits of IT projects. On this basis, the paper identifies the financial benefits of both productive IT projects and supportive IT projects and emphasizes the formation and specific calculation method of the two types of IT projects. For productive IT projects and supportive IT projects, the calculation of financial benefits should employ different methods.
To financially evaluate an IT projects is to assess its financial feasibility, while the financial benefits are the core parameters of financial evaluation of IT projects. Therefore, correctly identifying the financial benefits of IT projects is the precondition to ensure the validity of the financial evaluation. Essentially, IT projects can be divided into productive IT projects and supportive IT projects. The paper analyzes the importance of identifying the financial benefits and introduces the meaning, characteristics and classification of financial benefits of IT projects. On this basis, the paper identifies the financial benefits of both productive IT projects and supportive IT projects and emphasizes the formation and specific calculation method of the two types of IT projects. For productive IT projects and supportive IT projects, the calculation of financial benefits should employ different methods.
KEYWORDS
Productive IT Projects, Supportive IT Projects, Financial Evaluation, Financial Benefits, Benefit Identification
Productive IT Projects, Supportive IT Projects, Financial Evaluation, Financial Benefits, Benefit Identification
Cite this paper
nullJ. Feng, F. Zhang and L. Li, "Identification and Calculation Method of the Financial Benefits of IT Projects for Better Financial Evaluation," Intelligent Information Management, Vol. 2 No. 9, 2010, pp. 552-558. doi: 10.4236/iim.2010.29063.
nullJ. Feng, F. Zhang and L. Li, "Identification and Calculation Method of the Financial Benefits of IT Projects for Better Financial Evaluation," Intelligent Information Management, Vol. 2 No. 9, 2010, pp. 552-558. doi: 10.4236/iim.2010.29063.
References
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[1] M. Li and N. Yang, “Research on the Evaluation Sy- stem of IT Projects,” Proceedings of International Confe- rence on Computational Intelligence and Software Engineering (CiSE), Wuhan, China, December 2009, pp. 1-4. [2] B. C. Esty, “Why Study Large Projects? An Introduction to Research on Project Finance,” European Financial Management, Vol. 2, No. 10, 2004, pp. 213-224. [3] National Development and Reform Commission, Ministry of Housing and Urban-Rural Development of the Peo- ple’s Republic of China, “Economic assessment Method and Parameters for Construction Project,” 3rd Version, China Planning Press, Beijing, 2006. [4] H. Pesaran, D. Pettenuzzo and A. Timmermann, “Learning, Structural Instability, and Present Value Calculations,” Econometric Reviews, Vol. 2-4, No. 26, 2007, pp. 253-288. [5] B. H. Reich, A. Gemino and C. Sauer. “Modeling the Knowledge Perspective of IT Projects,” Project Management Journal, Vol. 39, 2008, pp. S4-S14. [6] J. C. Feng, M. Li, D. C. Huang and Y. Wang, “Theories and Methods of IT Projects Management,” China Water Power Press, Beijing, 2009. [7] V. Pareja and Ignacio, “The Correct Definition for the Cash Flows to Value a Firm (Free Cash Flow and Cash Flow to Equity),” 2005. http://ssrn.com/abstract=597681. [8] Q. W. Wang, X.G. Cao, T. Zhong, Q. F. Jin and B. Wang, “China Telecom Operators: Applications Platform Overview,” Bell Labs Technical Journal, Vol. 13, No. 2, 2008, pp. 223-235. [9] G. Boyd, “Editorial: Quatts, Virtual Currency for Gaming and Bartering Education on the Web,” British Journal of Educational Technology, Vol. 33, No. 4, 2002, pp. 361- 363. [10] L. J. L. Kaouthar and J. T. Mahoney, “Revisiting Age- ncy and Transaction Costs Theory Predictions on Vertical Financial Ownership and Contracting: Electronic Integration as an Organizational form Choice,” Managerial and Decision Economics, Vol. 27, No. 7, 2006, pp. 573- 586. [11] S. Shenghui, “Costs and Benefits Analysis of Enterprise Information,” ESAS World, No. 9, 2000, pp. 43-44. [12] Y. Z. Liu, “Problems and Solutions in Enterprise Information Construction in China,” Master dissertation, Taiyuan University of Technology, Taiyuan, 2006. [13] N. P. Napier, M. Keil and F. B. Tan, “IT Projects Managers’ Construction of Successful Project Management Practice: A Repertory Grid Investigation,” Information Systems Journal, Vol. 19, No. 3, 2009, pp. 255-282. [14] Y. Z. Xu and D. Q. Li, “How Do Enterprises Make Cost-Benefit Analysis with the Application of Information Technology,” Market and computer, No. 7, 1999, pp. 19-22. [15] J. C. Gower and G. J. S. Ross, “Minimum Spanning Trees and Single Linkage Cluster Analysis,” Journal of the Royal Statistical Society. Series C (Applied Statistics), Vol. 18, No. 1, 1969, pp. 54-64.