IT Project Evaluation

our everyday lives. This fact is even more so for corporations. IT now is not considered a supporting cast for a particular company anymore. In some companies, IT is the major component in which those cannot exist without. Can you imagine Google or Microsoft survive without IT? However, sometimes it is difficult to see or capture the concrete contribution of IT to companies because some of benefits are intangible such as increasing employee goodwill or better corporate image. And although IT projects can result in firm benefits, such as profitability and productivity, some or all of the benefits can go directly to the customer in the form of lower prices or more reliable services [1]. In business environment today where a manager wants to squeeze out every bit of benefit from an investment, he or she needs to prove that IT project investment, which considered a high investment cost for a firm, is worth to put money in. The manager needs to answer this big question: Does a particular IT project investment produce sufficient returns to justify its costs? This article will introduce capital budgeting models [2] to evaluate a particular IT project investment. The capital budgeting models are one of several techniques used to measure the value of investing in long-term capital investment projects. We can apply this technique to IT project since IT project is considered a long-term investment project. There are six capital budgeting models used to evaluate capital projects: 1. The payback period 2. The accounting rate of return on investment (ROI