Acts of Faith: Instinct, Value and it Investment Decisions

Abstract

Although well over 1000 journal articles, conference papers, books, technical notes and theses have been written on the subject of information technology (IT) evaluation, only a relatively small subset of this literature has been concerned with the core issues of what precisely is meant by the term ‘value’ and with the process of making (specifically) IT investment decisions. All too often, the problem and highly complex issue of value is either simplified, ignored or assumed away. Instead the focus of much of the research to date has been on evaluation methodologies and, within this literature, there are different strands of thought which can be classified as partisan, composite and meta approaches to evaluation. Research shows that a small number of partisan techniques are used by most decision makers with a minority using a single technique and a majority using a mixture of such techniques of whom a substantial minority use a formal composite approach. It is argued that, in mapping the set of evaluation methodologies on to what is termed the investment opportunity space, that there is a limit to what can be achieved by formal rational evaluation methods. This limit becomes evident when decision makers fall back on ‘gut feel’ and other non-formal/rigorous ways of making decisions. It is suggested that an understanding of these more complex processes and decision making, in IT as elsewhere, needs tools drawn from philosophy and psychology.