Question

When considering the sensitivity of estimates used to evaluate IT initiatives, which of the following are you likely to do?

Multiple Choice
Use multiple metrics to evaluate each IT initiative.
Test the impact of changes in assumptions on the various financial metrics.
Consider which groups in the organization will benefit.
Develop exact quantifications of costs and benefits.

Answer 1

To evaluate IT initiatives' sensitivity, one would test the impact of assumption changes on financial metrics and use cost/benefit analysis with multiple metrics, while factoring in marginal costs and benefits.

Step-by-step explanation:

When considering the sensitivity of estimates used to evaluate IT initiatives, one is likely to test the impact of changes in assumptions on the various financial metrics. This involves conducting a cost/benefit analysis, considering both the costs and the benefits of the initiative. Utilizing multiple metrics for evaluation and understanding the marginal costs and benefits helps ensure a comprehensive view of the initiative's potential impact.

An approach to enhance the accuracy of such evaluations could include using mathematical models to estimate costs during different phases of the project. It is vital to normalize these costs when comparing with other options, to achieve a clear cost per unit comparison. Beyond quantification, it's also necessary to consider the qualitative aspects and organizational benefits that are less obvious but equally important in decision-making.