Maximizing the Value of Information Technology Investment based on Strategic Alignment, Risk Control and Real OptionsA Case Study of Enterprise System Implementation at PT. Pegadaian (Persero)
| Main Authors: | Mulyana, Rahmat, Wiryono, Sudarso Kaderi |
|---|---|
| Format: | Article info application/pdf eJournal |
| Bahasa: | eng |
| Terbitan: |
The Indonesian Journal of Business Administration
, 2012
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| Online Access: |
http://journal.sbm.itb.ac.id/index.php/IJBA/article/view/456 http://journal.sbm.itb.ac.id/index.php/IJBA/article/view/456/402 |
Daftar Isi:
- The world of IT market has experienced fast growth by9.7% worth US$ 527.9 billion (Rp 5.015,1 trillion) in 1995, but still IT value realization is questioned with the advent of IT Productivity Paradox phenomenon. In 2002, Gartner survey stated that 20 to 70% IT investment worth US$ 600 billion (Rp6,315.8 trillion) was wasted. However, the phenomenon was fading with the rise of IT governance and management field, including IT investment management best-practice. Latest research from PwC and ITGI in 2011 has shown that the practice brought 27.1% increased value and 28.1% improved business competitiveness. Recently, PT. Pegadaian (Persero) has planned to invest on a new centralized real-time online Enterprise System. Considering this is a large scale IT investment which estimated TCO is around Rp 1.1 trillion (16% of Total Gross Revenue and 1100% of Total Investment in 2011), while the world historical data has shown many of its failures, in fact Pegadaian itself has experienced ES implementation failure in 2009-2011 which has wasted significant resources, therefore the management is very concerned about how to prevent project failures while maximizing the value from it. The author has proposed the combination use of strategic alignment, risk control and real options valuation methods which enhanced the conventional investment analysis methods such as IRR, NPV, ROI and Payback Period to solve Pegadaian’s problem. This paper result showed that the combination of those methods has maximized the value of IT investment by making sure that the investment is aligned with business objectives, able to control its risks and offered managerial flexibility through viable investment option configurations which maximizing the value. Keywords: IT investment, strategic alignment, risk, real options, enterprise systems, IT governance and management