The question of whether the ends justify the means is more than an esoteric philosophical issue; in business, the question has resulted in the development of cost-benefit analysis, which determines whether the ends--benefits--are justified by the means--costs--through a simple comparison. However, the comparison is often never simple since there can be factors involved which are difficult to quantify. Cost-benefit analysis gained particular popularity with the increase in the capabilities of information technology that made it possible to evaluate many different variables. In the last quarter of the twentieth century, cost-benefit analysis was found in many different organizations from the public sector to the private sector. This research considers an article outlining the use of cost-benefit analysis (CBA) in the field of information technology itself, the role of CBA in business research and considers the appropriate--and inappropriate use--of cost-benefit analysis.
David Lewis interviews chief information officers (CIOs) at major organizations and determines to what degree they use cost benefit analysis in their organizations. Increasingly, and particularly since the dot-com bubble burst, information technology executives are being held accountable for their expenditures, and CBA is often used to enforce that accountability. When CIOs have projects that they want to fund, they must now present CBA in order to justify the expenditure. In some cases, the IT proposal is weighed against other proposals, and in many cases, the CIO is expected to include the company's overall strategy in the IT planning process. The end result is that CIOs can no longer expect funding to occur simply because they have discovered an exciting new technology; instead, research--including CBA--must be done to justify the expenditure (Lewis, 2001).
Cost-benefit analysis is based on the principle that the value of the output associated with an ex...