Chapter III: Decision Making Methodology
Economics of Infomation
Theories involving scarcity of resources, and unlimited desires in relationship with design devel manufacture and delivery.
Transaction cost theory (difference between cost of IT transaction vs size of firm).
eg transactions are very expensive for small firms; transactions are cheap for large firms
Agency theory: as the firm grows the number of people that act as agents for the firm increases. as the business grows the cost:hire ratio becomes 1:1.
Why measure IT performance?
Allow you to assess the business value.
Measures of IT Business Value
financial performance - count dollars
business performance - efficiency
strategic performance - comp advantage
Business Value
1: identify the objectives of IT investments
2: select measures to assess each objective (more than 1 is better)
Slides have measures for financial/business/strategic
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