Evaluationg IT investments a business process simulation approach

Abstract: Information technology (IT) is becoming the primary factordetermining the survival of most organizations. The differenttypes of systems and the wide range of objectives suggest thatdiverse evaluation methods are needed. There is a critical needfor a new approach to managing IT investments, and solving theinformation paradox should be a business imperative for allmanagers today.Evaluating IT investments introduces different types ofproblems that investment in traditional assets does notconsider. The focal point shifts from measuring hard andquantifiable benefits that appear on a firm?s incomestatement to measuring soft, diffuse, and qualitativeimpact.The decision to acquire new information technology poses anumber of serious evaluation problems for managers because theavailable methods for IT investment evaluation are mostlystatic and they do not consider dynamism in decision-makingprocesses.Common problems with the methods for evaluating ITinvestments are related to their inability to take account ofthe full range of potential benefits. There is a gap betweentheory and practice in relation to the use of any method formaking decisions and for continuous evaluation of ITinvestments.This thesis presents a new approach to evaluating benefitsof IT investments in a dynamic way, an approach consisting of acombination of dynamic information workflow models and businessprocess simulation techniques. The proposed approach givesmanagers and organizations the possibility of implementingother models for measuring different metrics and aspects of ITinvestments.A dynamic information workflow model of an electric utilityandsimulation essays are presented in order to show how theproposed approach is applied. The performance measure selectedfor running experiments was efficiency, which was characterizedby the following selected performance indicators: cycle time,resource utilization, and activity costs. Empirical data wascollected from case studies of different utilities in CentralAmerican countries.Key words:Business Process Modeling and Simulation,Evaluating IT Investments, Dynamic Information Workflow Model,Electric Utilities.