IT Cost-Benefit Analysis Tool

Author(s): Curtis Gittens, Michel Hebert

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Many companies considering IT projects that carry significant business risk usually undertake some kind of evaluation process for assessing project viability. Large enterprises usually undertake a feasibility study to make an impartial assessment of the viability of their business-critical projects. Small and mid-sized enterprises (SMEs) without the staff or experience to undertake a feasibility study can use high-level requirements analysis to determine project viability.

IT managers in enterprises using high-level requirements analysis should perform a cost-benefit analysis for projects anticipated to exceed 15% of their IT capital budget. This tool gives users with the ability to:

  • Assess the organizational impact of implementing the project.
  • Assess the organizational impact of implementing project alternatives.
  • Calculate the Net Present Value (NPV), Internal Rate of Return (IRR), Return on Investment (ROI) and Payback Period for the project.
  • Generate comparative graphs that show ROI, cumulative ROI over a five-year period, NPV, and IRR for the project.

SMEs should use this tool to perform a project viability assessment and calculate their project's NPV, IRR, Payback Period, and ROI.

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