Several methodologies have been formulated to measure IT business valuation. The biggest disadvantage of the analytical methods is that they lack the mechanism for quantifying the total value of IT investments, therefore, it is not easy to determine the components of the IT business valuation.
Although IT accounts a larger share of total investment and plays key role in creating value, but till date, it is measuring or maximising that value is indefinable. Tangible items such, as software and hardware are the main assets of value, whereas other benefits include IT organisation’s skill and processes.
Hence a business’s priorities will determine the value in use that is, whether it prefers for operational excellence or organisational transformation.
An organisation preferring organisational transformation will measure the valuation through improvement in cost-to-revenue ratio. However, an organisation preferring operational excellence will measure value in terms of the key of performance indicators.