Information technology investments is a very broad category. It includes purchase of a computer hardware, software, development of a computer network and implementation of an ERP system. Business value of an IT investments can vary depending on a type of the investment. It may be a cost reduction, cost avoidance, real-time management information support, better customer service or competitive advantage. Same of the benefits are very hard to measure because they are intangible. The paper presents different measures that can be used to evaluate an IT investment: return period, average return of book value, net present value, internal rate of return, return on management, cost-benefit analysis, MOMC approach and information economics. Advantages and disadvantages of the methods are discussed as well as their ability to measure intangibles and applicability to evaluation on different stages of an investment process.
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The article contains a review of research on productivity paradox of information technology. It highlights the key findings and essential research references. The aim of the article is to present diversity of opinions among researches and some of the premises of the diversification. Presented ideas indicate a need for better measures of production output to properly evaluate IT investments' impact on organization.
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