A comprehensive analysis of it/is indirect costs: Enhancing the evaluation of information systems investments

The level of Information Technology (IT) expenditure within organizations continues toincrease over the years in an attempt to gain a competitive advantage in their respectiveindustries. Nonetheless, IT projects still experience budget overruns taking into account thecontinual fall of hardware costs. This phenomenon presents a dilemma to managers whostruggle to evaluate their investments in IT. Adding to the difficulty is the peculiar nature ofsuch investments having Human and Organizational dimensions. Such dimensions are latertranslated into indirect costs that are both difficult to identify and quantify hence are ignoredby managers which hinders the evaluation process. The lack of knowledge of managers aboutIT/IS indirect costs affect their ability to determine the true costs of deploying IT. It is closingthe gap that this paper strives to explore a new method for identifying, managing andcontrolling IT indirect costs through a case study enquiry of a leading gold producingcompany. The research establishes a rational that goes beyond the traditional quantificationappraisal of costs which is inadequate in the case of indirect costs. It proposes a solution thathelps to thoroughly identify the indirect costs, mitigate their effect and achieve the desiredcontrol while enhancing the evaluation process through their inclusion.