Question

In your opinion, does the Total Cost of Ownership incurred by companies that
implement AI meet the needs of implementing information systems? Give advice on
cost and benefit analysis for organizations/companies in adopting information
systems.

Answer 1

In my opinion, the Total cost of ownership for the implementation of AI (Artificial Intelligence) as an integral part of the information system does justify and meets the need for a robust information system. The primary objective of an organization's information system is to create a seamless flow of information with an enhanced level of security to improve the decision making capability at the organization. AI supports the flow and security component of the information system and it helps in increasing the speed of information flow with all the security requirements.

It is very difficult to do a complete cost and benefit analysis of the implementation of the information system at the beginning as most of the benefits of an information system can be measured and realized only post-implementation phase. However, the below framework can be adopted for the estimation of benefits in monetary terms in order to be compared with the cost attached to it.

Cost Analysis:

a. As a first step, a thorough analysis of the current situation and future requirement needs to be done, because the information system must be implemented while considering the future requirements as well otherwise it will become obsolete before its time.

b. Analyze the alternatives and their conformance level to the requirements which need to be delivered by the information system.

c. Estimate the investment cost for each of the alternatives.

d. Estimate the operation and maintenance of the system.

e. One more important hidden cost need to be considered is the transition cost and all the related losses which can be attributed to the transition of the new information system.

Benefit Analysis:

Quantitative benefits and the qualitative benefits both need to be captured for all the proposed as well as alternate information systems shortlisted.

a. Quantitative benefits: Benefits such as savings in terms of operation and maintenance cost, increase in productivity, increase in the magnitude of the operation, decrease in failure and downtime, etc. need to be considered as quantitative benefits and it should be converted in monetary form.

Moreover, the lifetime cost and investment of current, as well as the proposed system, should also be determined and compared.

b. Qualitative benefits: Qualitative benefits like the multidisciplinary application of the new information system, its Compatability and ability to incorporate the flexible architecture and changes, the capability to improve the productivity, capacity and control need to be considered as qualitative benefits. The enhanced level of security should also be considered as one of the biggest qualitative advantages.

Based on the above consideration a detailed analysis needs to be carried out and based on the satisfactory cost-benefit analysis the decision for implementation of a new information system should be taken.