Economics of Computer-Based Information Systems
Although it is usually a requirement that computer systems be justified at the proposal stage on cost grounds, savings are not necessarily the main reason for deciding to introduce a computer, nor the sole criterion for cost effectiveness. Where a computer project is likely to involve substantial financial commitment, it is proper that it be subjected to evaluation against normal investment appraisal criteria and that the proposal be rejected unless there is a prospect of acceptable risk and reasonable return. To make a financial appraisal, it is necessary that some value be placed on the costs and benefits expected throughout the life of the system. However, there is often a special difficulty with computer-based information systems in that cost and (particularly) benefits cannot be quantified with any accuracy. There always will be some elements susceptible to subjective evaluation which tend to be interpreted more favourably at the proposal stage than proves justifiable in the outcome. For the system analyst there is the personal risk that a desire to ‘sell’ a computer project may overcome professional objectivity in evaluating imponderables; for the computer project there is the certainty that, of these imponderables, it is the unfavourable factors which will always be felt.
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