Enterprise IT Project Investment Analysis

Global information technology (IT) industry is developing rapidly. Take Shanghai asan example, the output of software industry is increasing by over50%every year. Theoperating revenue of2005is45.5billion Yuan. In2006, operating revenue is61.67billion,which was an increase of35.5%. These figures may seem to be satisfying. However, itcan’t be denied that a lot of IT companies have closed down, some IT companies are stillstruggling to survive, and IT projects invested by many enterprises were failed or did notmeet expectations. Companies are more concerned with the company’s efficiency,profitability, risk control and cost accounting. The resources and their deployment shall beevaluated comprehensively from the entire company’s perspective and horizon. Thelimited resources shall be utilized in the place where the most profit can be generated.Unfortunately, there is usually a great budget and high risk for IT projects. Moreover, theprofit is difficult to estimate. Business leaders will question whether or not to invest in ITprojects, if IT project will be a contribution to corporate profit growth, and what is thereturn on investment rate of IT project? The purpose of this article is to provide a properanalysis of IT investment methodology and operational processes to help enterprises tosolve the above problems.The methodology used in this dissertation is: investment analysis will be made basedon system theory and SCE (selection, control, evaluation) methodology. IT project costestimate will be made using work breakdown structure methodology of projectmanagement. The balanced scorecard method will be used in IT project investment benefitanalysis and assessment. I hope that the methodology and implementation processes inthis paper can help companies to do IT project investment analysis, cost estimate andbenefit analysis. The enterprises can use these methodologies and implementationprocesses repeatedly throughout the life cycle of IT projects, undertake ongoingmanagement, tracking, controlling and improving in order to obtain data on investmentanalysis for the enterprise, so that IT projects can truly meet the need of the businessstrategic and tactical areas and become a wing of takeoff for the long term development ofenterprises.