Measure by Measure
Consultants are offering a variety of methods for evaluating the return on investment in e-business systems. Each emphasizes different processes and outcomes within the company.
Economic Value Added
Stern Stewart & Co. measures periodic performance in terms of the change in long-term yield on shareholders' investment, which is defined by the sum total of all revenues minus costs, including cost of capital.
Economic Value Sourced
Meta Group focuses on four areas of value impact for IT investments: increasing revenue, improving productivity, decreasing cycle time and decreasing risk.
eStrategy Balanced Scorecard
Mainspring Inc. and the Balanced Scorecard Cooperative, derived from Kaplan and Norton's Balanced Scorecard, evaluates the value of IT across a scorecard that includes financial indicators, customer perspectives, internal business processes and organizational growth.
The Customer Index
Accenture brings revenue, cost and profit down to a per customer basis in order to evaluate the impact of a particular IT investment.
Real Option Valuation
PricewaterhouseCoopers, based on merger and acquisition methodology, views IT investments as options where the value of the investment is determined by the future range of opportunities the technology represents.
This article was originally published on 05-01-2001