For IT performance measures to assess effectively the contribution of IT investments to mission objectives, the IT investments need to be linked closely to business priorities. In a shrinking budget environment, it is essential the IT projects that are selected produce the greatest value with the resources available.
Value consists of the contribution of IT to business performance in addition to discrete benefits.
Discrete benefits include cost reduction, cost avoidance, productivity improvement, and increased capacity that results when a particular program area employs technology. This step will describe how to use value as the basis to select IT investments. The major stakeholders determine the value of IT projects Select IT Projects based upon value and risks Traditionally, Federal and private organizations customarily conduct a cost-benefit analysis to evaluate and select large IT projects. The NPV method accounts for the time value of money to determine the present value of the costs and benefits through the use of a discount rate. The benefits to cost ratio is an NPV technique for comparing the present value of benefits to the present value of costs.