The use and importance of financial appraisal techniques in the is/it investment decision-making process—recent uk evidence

Abstract

Although the literature on capital investment appraisal techniques (CIAT) acknowledges a heterogeneity in appraisal methods, it fails to consider adequately the possible implications of the heterogeneity of the objects of appraisal. Here the use of CIAT is examined for appraising a particular type of investment—information systems/information technology (IS/IT). The results of a survey investigating appraisal practices of a sample of the top 1000 UK companies are presented and discussed. The extent to which CIAT are used to appraise the financial feasibility of IS/IT investments is determined, while drawing comparisons with findings in the accounting and finance, and IS/IT literature. The importance of the techniques is identified, and the particular problems associated with their use in IS/IT investments, including those related to knowledge and information problems. © 1995 Taylor & Francis Group, LLC.