Explain the three types of arguments commonly made in the business case for an information system. Give an example for each

Question

What will be an ideal response?

Answer 1

People make a variety of arguments in their business cases for information systems. When managers make the business case for an information system, they typically base their arguments on faith, fear, and/or facts.

Business case arguments based on faith: In some situations, arguments based on faith can be the most compelling and can drive the decision to invest in an information system despite the lack of any hard data on system costs, or even in the face of some data that say that the dollar cost for the system will be high. Arguments based on faith often hold that an information system must be implemented in order to achieve the organization's strategy effectively and to gain or sustain a competitive advantage over rivals. Successful business case arguments based on faith should clearly describe the firm's mission and objectives, the strategy for achieving them, and the types of information systems that are needed in order to enact the strategy. For example, a person making a business case based on faith might say: "I'm convinced that having this customer relationship management system will enable us to serve our customers significantly better than our competitors do."

Business case arguments based on fear: These arguments are based on fear that if the system is not implemented, the firm will lose out to the competition or, worse, go out of business. The argument for the business case here would be something like, "If we do not implement this system, we run the risk of being sued or, worse, being thrown in jail."

Business case arguments based on fact: Many people, including most chief financial officers, want to see the business case for an information system based on some convincing, quantitative analysis that proves beyond the shadow of a doubt that the benefits of the system will outweigh the costs. The most common way to prove this is to provide a detailed cost-benefit analysis of the information system. Arguments are based on data, quantitative analysis, and/or indisputable factors. An example of a business case based on facts is, "This analysis shows that implementing the inventory control system will help us reduce errors by 50 percent, reduce operating costs by 15 percent a year, increase production by 5 percent a year, and will pay for itself within eighteen months."