Matakuliah
Tahun
: A0784 - Strategi Investasi IT
: 2009
Cost/Benefit Analysis
Pertemuan 13-14
Introduction
• Seeks to overcome some of the limitations by
combining with the benefit.
• Brings into the analysis more relevant criteria
• Most commonly used financial methodologies in IT
investment decision-making
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Cost Benefit Analysis
• Involves estimation and evaluation of net benefits
associated with alternative courses of action
• Compares PV of benefits associated with investment to
the PV of costs of the same investment
• Used to evaluate independent investment and to select
one or several set of investments
• May be used before, after, or in progress project analysis
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Stages of Cost Benefit Analysis
1.
2.
3.
4.
5.
Define problem
Identify costs and benefits
Quantify costs and benefits
Compare alternatives
Perform sensitivity
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Define Problem
• Involves in depth analysis of situation
• Investigates the needs and requirements of an IT
• Well-defined problem includes a plan to attain the
objectives
• Generates possible alternatives and eliminates the
unacceptable ones
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Tangible Costs
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•
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•
•
•
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Hardware
Software
Telecommunications
Needs specification and updates
Services
Personnel
Running cost
Furniture
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Intangible Costs
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•
•
•
•
•
•
•
Resistance to change
Inability to change
Organizational restructuring
Integration of new system into current situation
Temporary loss of productivity
Formulation of IT policy and controls
Disruption to normal work practices
Downtime
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Tangible Benefits
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•
•
•
•
•
•
•
•
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Increased productivity
Decreased operational costs
Reduced workforce
Lower computer costs
Lower outside vendor costs
Lower clerical and professional costs
Lower in-house development costs
Reduced rate of growth in expenses
Lower facility costs
Reduced software expenses
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Intangible Benefits
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•
•
•
•
•
•
•
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Improved asset utilization and resource control
Improved organizational planning and flexibility
More timely and higher quality information
Enhanced organization learning and employee goodwill
Increased job satisfaction & operation
Improved and faster decision-making
Lower error rates
Better corporate image
Improved job and customer satisfaction
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Criteria to evaluate IT investments in
cost/benefit analysis
1.
2.
3.
4.
Maximize ratio of benefits over costs
Maximize NPV of net benefits
Maximize IRR
Shortest payback period
 See Table 3-10
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Cost Effectiveness Analysis
• Considers cost and effects that are defined in different
term.
• Costs are evaluated based on monetary terms and
benefits in terms of how effective each alternative meets
common objective
• May be appropriate for evaluation and selection of IT
investments when intangibles are critically part of
analysis.
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