A Study on Capital Budgeting Decisions towards Information Systems and Technologies of Insurance Companies in Ethiopia

Abstract

Information system investments appear to be increasing significantly, according to preliminary surveys and literature, but there doesn't seem to be any actual empirical study in the field. To ascertain the extent of this assumption, this study looks at the state of IS and technology investment and the way it is done inside Ethiopian Insurance companies. A number of theories and empirical findings were presented to explain the investment pattern, assessment techniques, and post-investment perspective of IS adopters by the study subjects. The results of the study pointed in this direction, showing that information system heads often defend their investments, with the investment pattern focusing primarily on communication systems, Decision Supporting Systems, Management information systems, and Transaction processing systems. The study also showed that simple approaches for strategic investment appraisal were widely used, but complex analytical and integrated procedures and discounted cash flow techniques were not often used. As an example, it was discovered that strategic tactics were quite popular, with technical importance and strength Weakness Opportunity Threat analysis being used by answering Insurance companies and competitive advantage and critical success factor being utilized by 90% of responding Insurance companies, respectively. In doing so, the respondents demonstrated a positive perception, as evidenced by a mean value of 4.86 and 4.43, respectively, on a 1 to 5 scale where a higher value denotes higher agreement. Based on these conclusions, suggestions for a diverse professional composition and evaluation methods for the IS and technology investment justification process were suggested.