Value-based Management of IT projects

• Applicants: Professor Dr. Hans Ulrich Buhl; Professor Dr. Gilbert Fridgen
• Subject Area: Accounting and Finance
• Term: from 2014 to 2017
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 258382375

According to a recent study of the IT Governance Institute (ITGI 2011), about one out of five investments into information technology (IT) is terminated before implementation. Major reasons for those high termination rates are risks that emerge during the runtime of projects and cause budget and time overruns. Those risks lead to the late conclusion that - in contrast to prior expectations - anticipated results cannot be achieved (ITGI 2011). The insolvency of the German company Schiesser in 2009 is one of many prominent examples for the economic damages that failing IT-projects can cause: A major reason for the insolvency was the Go-Live of a new enterprise resource planning (ERP)-system leading to erroneous orders for goods (Kessler 2009). To cope with this challenge, scientific literature primarily focused on the development of methods for the ex-ante-valuation of IT-projects. However, empirical studies reveal that a lot of risk factors emerge during the runtime of projects. Therefore, conducting ex-ante-valuations of IT-projects is insufficient. In order to be able to identify emerging risks early and to counteract reasonably, methods for a continuous IT-project-steering are necessary. Those are - to the best of our knowledge - missing in today's scientific literature. Thus, within the scope of this proposal for a research grant, we pursue the objective to develop methods that allow for a continuous value-based steering of IT-projects based on a capable ex ante valuation. The results of prior granted research projects like e.g. 'IT-Portfolio Management' provide the ideal basis for this undertaking: The objective of this specific project was the development of methods for the valuation of IT-projects and IT-portfolios considering both risk and return. The fact that a large number of articles written by the applicants could be published proves both the sound basis for this undertaking as well as the scientific relevance of this subject. By applying methods for continuous project-steering companies can avoid economic damages caused by failing IT-projects. At the same time, a continuous steering of IT-projects offers the possibility to continuously readjust IT-projects in order to - given underlying circumstances - achieve the highest possible yield.

• DFG Programme: Research Grants