Towards a framework for evaluating investments in data warehousing
Data warehousing technology offers organizations the potential for much greater exploitation of informational assets. However, the evaluation of potential investments in this technology poses problems for organizations as traditional evaluation methods are constrained when dealing with strategic IT applications. Nevertheless, many organizations are procedurally obliged to use such methods for evaluating data warehousing investments. This paper identifies five problems with using such methods in these circumstances: evaluating intangible benefits; making the relationship between IT and profitability explicit; dealing with the vanishing status quo; dealing with the extended investment time frame; and evaluating infrastructural investments. The authors studied how four organizations in the UK and Ireland attempted to overcome these problems when introducing data warehousing, and propose a framework for evaluating data warehousing investments. This framework consists of a high-level analysis of the economic environment and of the information intensity of the relationship between the organization and its customers. Based on the outcome of this analysis, the authors propose four factors that have to be managed during the evaluation process in order to ensure that the limitations of the traditional evaluation techniques do not adversely affect the evaluation process. These factors are: commitment and sponsorship; the approach to evaluation; the time scale of benefits; and the appraisal techniques used.
data warehousing appraisal techniques investment evaluation case research