Original Research
A viability criterion for computer system development projects
South African Journal of Business Management | Vol 15, No 3 | a1119 |
DOI: https://doi.org/10.4102/sajbm.v15i3.1119
| © 2018 J. Mende
| This work is licensed under CC Attribution 4.0
Submitted: 24 October 2018 | Published: 30 September 1984
Submitted: 24 October 2018 | Published: 30 September 1984
About the author(s)
J. Mende, Department of Accounting, University of the Witwatersrand, South AfricaFull Text:
PDF (764KB)Abstract
A manager facing the decision whether to proceed with a proposed computer system development project needs to determine whether its benefits are worth more than its costs. This can be done by applying a simple mathematical formula to calculate the project's 'net worth', as the sum of the annual benefits obtainable during the system's life span, less its development costs. The formula recognizes that a system's annual benefit, comprising enhanced informational value plus reduction In data processing cost, will change as a result of obsolescence, cost of capital, organizational growth and learning.
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