Abstract

We examine how the cost control strategy at portfolio-level can influence the risk/return performance of IT investment. We view a portfolio of IT initiatives as our IT investment target, and use the optimality of IT investment choice to measure the performance. By employing a method of combining computational modeling with simulation, we show that even if a firm takes the strategy of largely reducing the cost for its IT initiative portfolio, it still can have a chance of about 29% to capture a high-risk-high-return IT investment. This finding implicates that, even when facing a very limited budget, a firm would still be able to achieve a better investment performance by carefully selecting its IT initiative portfolio.

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