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CHAPTER 5
Evaluating IT Investments--
A Common Decision Tool
5.1 A Process for Valuing IT Systems
Evaluating the value of proposed systems is one of the more difficult tasks airport executives
undertake. Executives often make investment decisions based on incomplete data. For example,
total costs of the system may be underestimated, potential funding sources may be overlooked,
or benefits may not be properly quantified. The solution is to have a consistent methodology for
evaluating systems and a scoring mechanism for valuing them individually or against one
another to make objective investment decisions.
Evaluating and deciding on IT investments is done during the system planning phase of the
IT system lifecycle. (See Chapter 4 for information about all the activities performed during the
system planning phase.)
This chapter outlines a four-step methodology for making these tough investment decisions:
· Documenting system benefits.
· Determining TLC.
· Performing a costbenefit analysis.
· Scoring system values objectively.
5.2 Documenting System Benefits
The system benefits are the most important component when evaluating the value of a sys-
tem. Without benefits there would be no reason to invest in the system. The IT department must
take the lead on collaborating with stakeholders so that the benefits of a proposed system are
described effectively. It's important for stakeholders to agree on the expected benefits so that they
will support the value that is assigned.
Benefits are difficult to define. Some have financial value and others have intangible value that
cannot be expressed in monetary terms. Table 5-1 gives examples of both financial and nonfinan-
cial benefits to look for.
Clearly, the easier path to funding a project is to establish that the financial value outweighs
the capital costs. Make every effort to find the hidden financial value in nonfinancial benefits.
Following is an example.
In a project such as installing common use kiosks, a nonfinancial benefit, "enhances passenger
satisfaction," can be converted to a financial benefit by doing a little research. Calls to other airports
might reveal that this technology and the improved passenger experience have translated into a small
increase (1% or 2%) of passengers using the airport--which could mean 20,000 more passengers
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