Making the decision to select and implement an integrated information system (IIS) is not a simple matter. Assistance can be provided by: software vendors with a high degree of functionality, experienced implementation consultants, and market references of the IIS vendor.
The experience of implementation consultants and ensuring a software vendor with an appropriate level of system functionality are relative concepts that do not even have an estimative character in terms of assessing the future effectiveness of the implementation. From the point of view of estimating future benefits, undoubtedly the best decision-making tool is a review of the effectiveness of previous implementations of a specific IIS. The implementation of an IIS, similar to building a warehouse, purchasing a technological line, purchasing machinery, etc., is an investment project. When making a choice, management should use methods that ensure the best decision is made.
From the point of view of investment budgeting and assessing its risk level, the basic methods are: the net present value (NPV) method and the internal rate of return (IRR) method. The further part of the article will present the possibility of applying the above-mentioned methods for an initial estimation of the future effects of an IIS implementation.
The article comes from the magazine “Logistyka” 2001/1.