Assessment of ICT investments

Information and Communication Technologies (ICT) as well as creating new business models and designs, along with high investment costs, investment returns are within the many uncertainties. Even more interesting case is the lack of a standard valuation method used in this type of investment. Unlike traditional production investments, in evaluation of ICT investments, except for returns, other criterias, such as strategy, hidden costs, different types of risk and performance should be taken into consideration. The aim of this study is to examine ICT investments, to determine their differences and to reveal different valuation methods used to calculate returns. For this purpose, investment figures of data warehouse and data mining of an enterprise in the media sector was used. After three most commonly used methods of traditional financial valuation, net present value and real option pricing method was evaluated in the context of the volatility of returns, the data was obtained to allow measures to be taken against potential risks before investing. Performance changes that would occur as a result of investment were measured using the Balanced-Scorecard. During adaptation of ICT to workflows and business processes, return analysis and quantification problems are encountered. At this point, the main problem with the ICT investments is the emergence of intangible returns and hidden costs and difficulties in the management of uncertainty. Although traditional methods used to evaluate the project are reference values like NPV, internal rate of return, profitability index, but deficient to cope with uncertainty and risk which is the main problem in ICT investments. Thus, decisions providing additional returns, and flexibility for the investments, it has raised the issue of determination of yields. Real options method can be used as a method taking into account the new value as a result of flexibility to invest. In addition, balanced scorecard is an appropriate valuation method for performance measurement.