Information technology project evaluation: An integrated data envelopment analysis and balanced scorecard approach

Information technology (IT) is a tool crucial for enterprises to achieve a competitive advantage and organizational innovation. A critical aspect of IT management is the decision whereby the best set of IT projects is selected from many competing proposals. The optimal selection process is a significant strategic resource allocation decision that can engage an organization in substantial long-term commitments. However, making such decisions is difficult because there are lots of quantitative and qualitative factors to be considered in evaluation process. This paper has two main contributions. Firstly, it combines two well-established managerial methodologies, balanced scorecard (BSC) and data envelopment analysis (DEA), and proposes a new approach for IT project selection. This approach uses BSC as a comprehensive framework for defining IT projects evaluation criteria and uses DEA as a nonparametric technique for ranking IT projects. Secondly, this paper introduces a new integrated DEA model which identifies most efficient IT project by considering cardinal and ordinal data. Applicability of proposed approach is illustrated by using real world data of Iran Ministry of Science, Research and Technology.