Rapid changes or innovations in information technologies force obsolescence of installed information systems and necessitate replacement by new information systems. This is necessary in order to maintain and/or raise the competitive status of an organ...
Rapid changes or innovations in information technologies force obsolescence of installed information systems and necessitate replacement by new information systems. This is necessary in order to maintain and/or raise the competitive status of an organization. Therefore, When and how much to invest, in a new information system is an important decision. In this paper, we show a mathematical frame work of how to develop an packages and computing facilities. The major dimensions (or criteria) that play an important role in this framework are the cost of adopting information systems and the utility value from this adoption. This utility is proportional to the quality of the information systems. The higher quality an information system provides, the higher the cost user firms pay, often willingly, for the system. Organizations that adopt information systems often face multiple alternative technologies as choices and should make an adoption decision based on the costs and the expected level of quality provided by each set of the information system investment plan. From the portfolio of price and quality pairs, we can select dominant investment strategies. We have developed a loin-term investment decision model for IT investment in multiple stages. We also show that the original non-linear programming model for information systems investment can be transformed into a linear programming model which is simple and easy to use in making IT investment decisions.