CHAPTER 2 THEORETICAL BASIS 2.1 Information Technology Investment According to Schniederjans (2004, p.8), investment in information technology Information is an investment decision in the allocation of all types of information systems management, including humans. Meanwhile, the definition of investment is the activity of using capital to create added value from the invested funds, either through income-generating activities or other activities involving risks. According to Fitzpatrick (2005, p. 28), investment in information technology consists of. The total life cycle costs of all projects or parts of projects involving IT include the post-project operating costs of the systems that have been implemented. Investments will end when they have been replaced or eliminated for various reasons. 2.1.1 Types of Investments in Information Technology (IT) According to Fitzpatrick (2005, p. 28), the types of investments in IT include: 1. Hardware refers to all the machinery and equipment of a computer system. Examples: PC, mouse, keyboard, etc. Software is step-by-step electronic instructions that tell computer hardware how to perform a task. Examples: operating system, utility software, application software.3. A network is a communication system that connects two or more computers, the Internet is the largest network. Example, LAN, WAN, MAN.4. Brainware is a computer user or person who operates a computer (user), because no matter how sophisticated a computer is, if there is no one to operate it (user), then the computer cannot be used. Examples: operator, programmer, systems analyst, database administrator. 2.1.2 Objectives and benefits of investment in information technology...... middle of document ......ky achieve.1. ROI, derived from traditional cost-benefit analysis, reflects propositions put forward in describing the effects of finance (both costs and benefits) and information technology.2. Strategic fit is the value achieved and the current strategy of the business unit that is directly supported.3. Competitive advantage is the value obtained and creates new business strategies, new products or new approaches to deal with competitive pressures.4. Management information support, is the value obtained and the information support for the critical success factors (CSF) of the company or the sectors of activity of the company.5. Competitive response, reflects information technology projects that aim to pursue competition.6. The Strategic Architecture of the IS is an investment that allows other projects to emerge.