Benchmarking information technology investment and benefits extraction

Despite the fact that many companies are increasing their expenditure on information technology (IT) to obtain or even sustain a competitive advantage in their respective marketplaces, many studies show that the benefits from IT systems have been considerably less than expected. Managers are often left with the quandary of how to evaluate investments and realise maximum benefits in IT. Reasons for this difficulty have been suggested in the normative literature centring around the socio‐technical (human and organisational) dimensions associated with IT deployment. The inability of managers to determine the true costs of deploying IT are considered attributable to a lack of knowledge and understanding of IT‐related costs and benefits measurements. This paper discusses from a critical point of view the evaluation of IT/IS investment and best practices in benefits extraction from such investment. The discussion is based on relevant literature and information from ongoing research by the authors involving companies in the construction, pharmaceutical and computer hardware sectors.