AlphaIC

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AlphaIC is a method for assessing the value of technology investments developed by technologist Paolo Magrassi and economist Alessandro Cravera in 2003-20041.

As a research vice president at Gartner (then 'GartnerGroup') in 1992-2002, Magrassi had conducted research on, among other things, software engineering and software economics. After leaving Gartner, he continued concentrating2 on his aim of developing a methodology for assessing the value of technology expenditures, based on the observation of two ongoing trends:

  • On one side, research on the information technology (IT) 'productivity paradox’ and the quantitative assessment of IT’s impact as a general purpose technology. This was mainly stimulated by Erik Brynjolfsson’s works in 1998-2002 (e.g.: E.Brynjolfsson and L.Hitt, "Beyond the Productivity Paradox: Computers are the Catalyst for Bigger Changes", CACM, August 1998; E. Brynjolfsson, S. Yang, “The Intangible Costs and Benefits of Computer Investments: Evidence from the Financial Markets,” MIT Sloan School of Management, December 1999).
  • On the other side, research and practitioners’ work on intangible assets, a.k.a. a company’s ‘intellectual capital’ (See, e.g.: Karl-Erik Sveiby at Skandia AV in 1986 and Baruch Lev at NYU’s Stern in 1996). Magrassi was heavily influenced by the work of Alessandro Cravera, such as, e.g.: A. Cravera, M. Maglione, R. Ruggeri, “La valutazione del capitale intellettuale. Le risorse intangibili“, Edizioni Il Sole 24 Ore, Milano, 2000.

Magrassi saw that the two trends could be merged in order to develop a ‘value of IT’ assessment methodology that go beyond simple return on investment (ROI) analyses as well as other existing methodologies. The result of these efforts materialized in ‘AlphaIC’, developed with Alessandro Cravera. Subsequently, Magrassi extended the method to be applicable to all technology expenditures.

The methodology is copyrighted, however a simple and concise description, including that of its application in real-world organizations, is to be found in [1].


References

1) P.Magrassi, “The AlphaIC Method: Assessing the Business Impact of IT in the Knowledge Economy”, Proceedings 12th European Conference on Information Technology Evaluation, Turku, Finland, 29-30 September, 2005.

2) P.Magrassi, “How IT Helps Leveraging Intellectual Capital”, Gartner Strategic Analysis Report, Stamford, USA, 2002