Introduction There are two primary reasons why IS/IT investment appraisal is important. First, organizations are devoting high levels of resources on IS/IT investments. Expenditure in the UK and the US on IS/IT invest- ments is such that it now represents a substantial element of capital expenditure. According to Willcocks (1996), IT spend in the UK in 1995 was 33.6 billion pounds, and expected to rise by 8.2%, 7% and 6.2% in subsequent years, representing an average of over 2% of turnover, or, in the public sector, an average of £3546 per employee. Even by the early 1990s the com- parative spend in the USA was larger. For example, Maglitta and Sullivan-Trainor (1991) quote a ®gure of 2.7% of corporate turnover being spent on IS/IT invest- ments, while government statistics suggested that, by 1994, computers and other IT amounted to half of all business spending on equipment ± not including the billions spent on software and programmers each year (Sager and Gleckman, 1994). However, actual spend- ing levels are likely to be higher than those actually reported (Keen, 1991), given that the total organiza- tional costs associated with IS/IT investments (for example, staff training, organizational restructuring costs, employee time and so forth) are unlikely to be included in reported costs. Secondly, along with increasing IS/IT spending levels and the global economic and competitive climate which organizations face today, concerns have been voiced over IS effectiveness measurement, cost justi®- cation and cost containment. Between 1984 and 1997 these latter problems ranked among some of the top key IS issues in studies conducted in the US, the UK, the Gulf and the Republic of China, (Dickson et al. and Nechis, 1984; Niederman et al ., 1991; Badri, 1992; Clark, 1992; Price Waterhouse, 1992; Galliers, 1993; Wang and Turban, 1994; Pollard and Hayne, 1996; Pervan, 1997). There is a considerable body of literature that has addressed the issue of IS/IT appraisal (see for example, Lucas and Moore, 1976; King and Schrems, 1978; Ginzberg, 1979; Hamilton and Chervancy, 1981; Chandler, 1982; Klein and Beck, 1987; Hawgood and Land, 1988; Hirschheim and Smithson, 1988; Parker et al., 1989; Willcocks, 1994), and there appears to be general agreement that appraisal of IS/IT investments is a task which most organizations feel they have a responsibility to perform (Carlson, 1974). However, despite the existence of this wealth of literature, even as at 1997 the IS community appears to be no nearer a solution to many of the problems associated with IS/IT appraisal. Whilst we discuss some of these inherent problems later, it is worthwhile at this point to consider why organizations appraise IS/IT investments. Farbey et al. (1992) suggest that IS/IT appraisal serves various objectives. These are: (1) to justify investments; (2) to enable organizations to decide between com- peting projects, especially if capital rationing is an issue; (3) to act as a control mechanism over expenditure, bene®ts and the development and implemen- tation of projects; (4) to act as a learning device enabling improved appraisal and systems development to take place in the future. Journal of Information Technology (1998) 13, 3± 14 Financial appraisal and the IS/IT investment decision making process JOAN BALLANTINE AND STEPHANIE STRAY Warwick Business School, University of Warwick, Coventry, CV4 7AL, UK This paper explores the techniques used by organizations to appraise Information Systems (IS)/Information Technology (IT) investments, and concentrates, in particular, on techniques of capital investment appraisal. We draw on relevant studies reported in both the accounting and ®nance, and the IS literature, which have addressed their usage. Where possible comparisons are drawn between both sets of literatures. The results of a survey that speci®cally examined IS/IT investment appraisal practices of a sample of UK companies is also presented. Among the issues discussed include the extent to which capital investment appraisal techniques are used to appraisal investments, the importance of the techniques used and the problems attendant on the decision making process.