Intangible benefits valuation in ERP projects

The development, implementation and ownership of information systems, especially large‐scale systems such as enterprise resource planning (ERP), has become progressively longer in duration and more cost intensive. As a result, IS managers are being required to justify projects financially based on their return. Historically, information systems have been difficult to quantify in monetary terms because of the intangible nature of many of the derived benefits, e.g. improved customer service. Using the case study methodology, this paper examines an attempt by a large computer manufacturer to incorporate intangibles into traditional cost–benefit analysis in an ERP project. The paper reviews the importance of intangibles, lists intangible benefits that are important in ERP projects and demonstrates the use of a scheme through which they can be incorporated into traditional evaluation techniques.