Book reviews

here. Again I found this a particularly useful section of the book which highlighted many of the current and pertinent issues surround- ing the IT evaluation problem. However, a comparison with other historical and recent studies which have examined IT evaluation might have been added.

Chapter 6 begins to examine the methods and techniques available to the evaluator, by drawing on the ideas of other researchers from the theory of measurement, information systems research and other fields of social action. In particular, some of the ideas presented from the theory of measurement literature are useful, as is the social systems perspective of evaluation taken. Putting some of these ideas together, the authors draw up an evaluation checklist which, although initially might appear somewhat mechanistic, on closer examination provides an effect ive f r amework within which researchers could examine the IT evaluation issue in detail.

Chapters 7 and 8 follow on nicely by reviewing the range of evaluation methods both used in practice and presented in the literature. While Chapter 7 concentrates on discussing the characteristics of methods which focus on measuring the numerical costs and benefits of IT investments, Chapter 8 discusses exploratory or experi- mental methods which take into account the viewpoints of various stakeholders of the organization. Both of these chapters provide a very useful and invaluable summary of the range of evaluation methods available.

Finally, Part IV of the book demonstrates a new approach to classifying information systems which is likely to aid the process of choosing appropriate evaluation approaches and tools. Chapter 9 identifies the character- istics of a range of information systems applications which shows some resemblance to that of the stage of growth models (see, for example, Nolan, 1973, and Galliers and Sutherland, 1991), although the authors do make a distinction between them. Chapter 10 discusses further factors affecting evalua- tion, including the role of evaluation, the decision environment within which evalua- tion is carried out, systems characteristics,

etc. Using these factors, Chapter 11 matches appropriate evaluation methods to IT invest- ments. Additional work following up on this important theme can be found in Farbey et al (1994). Finally, Chapter 12 offers some concluding remarks.

Overall, I found this book very stimulat- ing and effective. The authors have tackled a very difficult issue and have discussed many of the key evaluation issues in a succinct and helpful manner. In particular, I found the mix of both theoretical and practical discussion beneficial and illuminating. In conclusion, I would recommend this book to those wishing to gain a good overview of IT evaluation issues, for example those teaching on an information systems course which considers the IT evaluation issue. In addition, I would highly recommend the book to practitioners who continually face IT evaluation problems.

Joan Ballantine Warwick Business School, UK

R e f e r e n c e s Farbey, B, Targett, D and Land, F (1994) 'Matching

an IT project with an appropriate method of evaluation: a research note on "Evaluating investments in IT"' Journal of Information Technology 9, pp 239-243

Galliers, R D and Sutherland, A R (1991) 'Information systems management and strategy formulation: the "stages of growth" model revisited' Journal of Information Systems pp 89-114

Mintzberg, H (1983) Structure in Fives: Designing Effective Organisations Prentice Hall, Engle- wood Cliffs, NJ

Nolan, R (1973) 'Managing the computer resource: a stage hypothesis' Communications of the ACM 16, 7, pp 399-405

Measuring the Value of Information Technology J Hares and D Royle Wiley Chichester (1994) 268 pp £24 .95ISBN0 4719 4307 X

This book is 'the first attempt to develop a structured method for measuring the financial value of an investment ' (p ix), which makes it apposite to review it along-

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side Farbey et al's (1993) text which does some of the same. Indeed, there must be a host of other authors who must be wondering what their books were about (for example Hogbin and Thomas, 1994). Here, the authors claim that none of the tech- niques are new but they have added the structure and the explanation. Hence the way to review a book, based 'on the ideas of others' (back cover), is to assess what value has been added in the selection and explanation of the techniques and in the structure which overarches them.

The book has 10 chapters describing what investment appraisal is, how it is investi- gated, measured, misused, information is gathered, and benefits realized.

Chapter 1 asks 'what's it all about IA?' - - IA being investment appraisal and the pun being mine. The chapter tries to set the scene, but it is repetitious of things which one is not sure need even to be said once. For example, on pages 10, 16 and 29 we are told (in various forms) 'with the recent advent of object oriented technology some 80% of the logic can also be regarded as a corporate resource, as it, like the data, is normalised to the objects/entities of the application system'. The IA method is seen to be unique 'as far as the authors are aware'. This caveat is liberally scattered throughout the text and, on one hand, might be seen as an admission of human failings, but on the other leaves a feeling that it is used as a get-out clause in the event that readers find nothing new. On page 37, we are told, 20 per cent of money spent on IT was wasted because no strategy existed, according to A T Kearney, while the same figure is attributed to the Kobler Unit on page 54. Despite the current focus on align- ment between business and IS strategy, the first module of the structured approach, business strategy, is 'empty of techniques and deliverables, but included in the method as a means of indicating that investments must be within the scope and aid the achievement of business strategy' (p 42).

Chapter 2 concerns investment investi- gation. This looks at identification and planning, presenting a number of elements

tO be considered. But, just as we get to what appears to be good, sensible, integrative work, along come phrases such as 'critical success factors are the ultimate source of all information in the company's computer systems' (p 54 and repeated on p 60 in italics and again on p 61). It would be surprising if this were the case in most organizations or, indeed, if it should be so. For those seeking 'objective' methods to identify and evaluate their systems, the use of techniques such as strategic value analysis, which 'starts by listing business objectives . . . and allocates a percentage to them according to their perceived importance' (p 65) starts to make one feel uneasy. If this is the basis, then are we not building a house of cards, a data-poor but technique-rich structure, whose founda- tions are much less firm than desired? As the authors state about another of the techniques, IT leverage, the answer is judge- mental. But we do so much of this judge- ment that perhaps, at the end of the process, we have lost sight of the origin.

Chapter 3 is the first of a clutch on investment measurement. It discards cost- benefit analysis and proposes discounted cash flows (DCF), leading to NPV calcula- tions. A lot of space is taken up with description and examples of DCFs which is all sensible stuff, though cannot be new to many people. Incidentally (p 99), I think the authors mean they are uninterested in the causes of inflation rather than disinterested. An advantage trailed in a number of chap- ters is the valuing of intangibles, 'benefits that are classified as intangible can now be quantified with an increased degree of completeness and accuracy' (p 103), and this would be a major step in the right direction if it proves to be true. This chapter moves from discounting to beta values as a measure of" risk, though we are told that beta values vary from day to day. We are also told that unique risk (unsystematic risk?) can be diversified away so that it no longer matters - - but surely not at the project level? The justification for these discussions is that 'when the techniques of IA are presented at seminars the frowns on delegates' faces gradually turn to smiles and nods of under-

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standing' (p 112). Perhaps, but would the same be experienced by a reader? Especially as later, under refinements to company discounting, we are informed 'however, for most companies the debt is negligible or non-existent' (p 123). A couple of pages later we are told that expected returns on the stock market for a particular company can be obtained from the figures available from Companies House - - well, only if you believe in random walks, but even then we are not told this. One can derive actual (p 137) past returns but how these become expected returns is unclear.

Chapter 4 looks at the pitfalls, misuse and abuse of DCF techniques, while the following chapter does discuss the, very useful and much ignored, issue of flexibility. If this book does nothing else but raise management's attention to this, then it will have done some good. However, again, the use of decision trees as a flexibility assess- ment tool is well known and a lot of the problems with them are glossed over.

Chapter 6 heralds the much anticipated measurement of intangibles. An intangible 'is anything that is difficult to measure' (p 196) and the key to intangibles is to ask 'what can you do now that you could not do before?'. Any intangible will result in: higher prices for the product or service; more sales; retention of custom; saving of money from existing products; or new business from new products. This is fine, but can any of this be estimated ex ante with any degree of confidence? The worked example of intangible calculations is interesting.

Chapter 7 looks at information gathering and rightly identifies the need for good data to feed into the techniques proposed but offers no magic solutions in how to do this. The final chapters briefly address benefits realization, give a worked example of the IA method and discuss 'the' other techniques - - there are only two, return on management and the customer resource life cycle, both of which are found wanting. The book has no conclusions.

It is difficult to find much in the book to recommend. The authors do not claim to have done more than provide a structure

within which a number of very well-known techniques are located. As such this text achieves its aims. But there are other texts which do the same despite what these authors would have us believe, and there are many books (for example Northcott, 1992) which better explain much of the central portion of this book. There is not enough here for anyone really wanting to undertake the task in practice and too much repetition and slack wording for serious students of the process. There is no doubt that the evaluation of investments in IT is prob- lematic, poorly done and a top concern of management, and that any text which seeks to enlighten the process is welcome, but this is not the text or the method I would choose. The discussion on flexibility is good and the worked example is interesting but these are not really sufficient to commend this book over alternative ones.

Dr Philip Powell Information Systems Research Unit,

Warwick Business School, UK

References Farbey, B, Land, F and Targett, D (1993) How

to Assess your IT Investment Butterworth Heinemann

Hogbin, G and Thomas, D (1994) Investing in Information Technology McGraw-Hill, Maidenhead

Northcott, D (1992) Capital Investment Decision Making Academic Press, London

Expertise and Innovation: Information Technology Strategies in the Financial Services Sector R Fincham, J Fleck, R Proctor, H Scarbrough, M Tierney and R Williams Oxford University Press (1994) 334 pp £35.00 ISBN O 19 828904 9

Five years ago, I went to carry out a consultancy assignment for the managing director of a bank. At our first meeting he told me firmly that, if I was going to work with him, I had to read two books. He took from two large piles a copy of Shoshana Zuboff 's In the Age o f the Smart Machine: The Future o f Work and Power and a copy of

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