The NPV (expected payoffs) of a technology investment depends on the assumptions made by managers involved in the adoption of the new technology. These assumptions reflect their expectations regarding implementation (budget, time, and functionality), expectations regarding users’ ability to extract value from the new technology (increase sales or contain cost), as well as expectations regarding reactions of competitors and trading partners.
In previous chapters, we focused on factors that may affect these assumptions, such as business and IT strategy, IT capability, stage of technology adoption, and industry structure. This week, we shift our focus to implications of failure to meet these assumptions (risk analysis) on NPV. We will use this risk analysis to make recommendation on how to monitor the progress during implementation and value extraction. The aim of the monitoring process is to introduce an element of accountability and ensure that proper action would be taken to ensure the maximization of the value of the technology investment.
Topics and Readings for Week 11
Theory: We will focus on Chapter 8 (monitoring IT investments). The primary focus of this chapter is on the idea of causality (cause and effect) as the foundation for the creation of a balanced scorecard for technology implementation and use.
Seminar: We will use the mini-case of BlueBikes to perform a risk analysis (sensitivity analysis). We will try to estimate the expected effect of a failure to meet an assumption on NPV. In parallel, we will look at the statistical analysis for the team project.
Assignments for Week 11
The online quiz will be a based on chapters 8 and material covered in the seminar (this includes material related to the team project). The quiz will be available on Friday at 12:30 pm.
The team project is due on Friday at 8:30 am. Please follow instructions to upload your project in the Learn dropbox.
