Using Conventional Financial Methods to Perform Cost-Benefit Analysis (CBA) on Proposed Information System (IS) Projects: An Australian Study

Abstract

This paper discusses the necessity of performing CBA in the proposed IS project evaluation. A survey has been conducted in Australia and is aimed at investigating how industrial practitioners perform CBA. The results of this survey have shed light on the popularity of employing conventional financial methods and other methods available for proposed IS project evaluation, as well as on how organizations convert costs and benefits into cash flows. Special emphasis has been focused on the availability of formal guidelines to assist IS professionals in performing CBA and limitations of these conventional financial methods. Finally, this paper also examines if the surveyed organizations will fund and develop those IS projects that are not cost-justified and are not particularly strategic in nature.