Information Technology Investment Appraisal Practices in Ethiopia with Particular Reference to the Financial Sector
No Thumbnail Available
Date
1999-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
We live in an era of information where the growth and fate of organizations, individuals and
others is determined by the degree of their access to and control over information resources. For
this reason, information technology has become a strategic and competitive weapon of the
information age. Because of their awareness of its power and potentials, therefore, more and
more organizations are spending considerable amount of resources in IT projects.
However, such expenditures many not yield the desired results unless they are evaluated in a
systematic and formal way. To this end, a number of traditional and new methods have been
designed to evaluate the viability of IT and non-IT projects and to help the concerned policy
makers arrive at the right investment decisions
Of the available methods, the traditional financial techniques have been in use for a very long
period of time but they are now being criticized for their inadequacy in evaluating [T projects.
Some of the newly proposed methods seem to be practical while others look a bit theoretical and
Incomplete
In spite of the availability of alternative evaluation methods, many organizations do not seem to
evaluate the viability of their IT investments properly.
The study addresses the foregoing issues and explores how IT projects are evaluated in the
Ethiopian financial sector - the sector which is characterized by its information-intensive
activity. It also provides a brief account of the results of the survey. The study indicates the
prevalence of less systematic, highly subjective, and informal evaluation practices. Lack of
skilled and experienced manpower in the area of IT evaluation is considered to be the most
serious problem in the sector.
The use of various techniques including the Payback Period, Net Present Value and Information
Economics are recommended. There is a need for more emphasis on and coverage of IT
evaluation in computing and information science training; for organization of workshops and
short-term training. Further research in this area is also recommended in order to improve the
overall evaluation practice in the financial sector.
Description
Keywords
Information Science