Ensuring IT Value

While the need for demonstrating the value of IT is vital, measuring and evaluating the true business significance of IT remains the major challenge

Providing strategic direction and establishing control over the execution

Providing strategic direction and establishing control over the execution of the business strategy are fundamental governance responsibilities. They must include the structured oversight of IT investments.

While the need for demonstrating the value of IT is vital, measuring and evaluating the true business significance of IT remains the major challenge.

WHAT

When deciding on IT investment priorities, fundamental questions, including the intangible nature of many of the expected returns, need to be addressed before applying return on investment (ROI) techniques.

Before number crunching on IT investments, ask yourself if the:

• Initiative fits strategically


• Initiative supports business functional requirements


• Initiative includes opportunities for process improvement or synergies across the business infrastructure and information. Key issues relate to the optimisation of knowledge and infrastructure.


• Underlying technology fits the enterprise infrastructure


• Resources and skills exist so as to maximise the chances of success

HOW

Only when the answers satisfy your expectations of the final result (What?), should you consider the IT Value Economics side, ROI calculations, focussing on expenditures, risk-adjusted value and returned benefits (How?).

It is important to ensure that the figures:


• Are based on reasonable assumptions, and


• Express intangible returns in a verifiable manner.

Boards and executives need to provide the strategic direction to establish strategic fit and obtain assurance that value reporting is reliable. The business and IT need to agree on the measures to be used to verify that business benefits are returned and jointly accept responsibility for result.

IT Governance – the “enabler” for business agility?

Traditionally, IT has been viewed as the "technology provider" but the paradigm must become an agile "enabler" for business by aligning closer to business processes in order to provide the agility that business requires to compete in today's markets.

“A framework needs to be established to provide that agility”.

With the pressure to maximize on investments and ensure the highest return, and meet future business needs, companies are shifting their focus on how they utilize IT.

This refocus includes:
Focusing on driving down costs to meet lower budgets
While in today’s economic climate driving down costs involves limiting IT expenditures, it increasingly involves looking at the existing IT infrastructure and determining how it can be leveraged to offset limitations in making future IT purchases.


Centralizing IT infrastructures
We have recently witnessed a shift in IT environments away from legacy based centralized mainframes to support a geographically distributed world. Now, in an effort to gain better control over IT budgets and operations while organizing around the arrival of advanced technologies, networks, and systems, companies are once again shifting back to a centralized model of service delivery.

Leveraging infrastructure to support business processes.
The need to find new sources of revenue is pushing companies to focus on leveraging IT to support business processes and ensure that business processes are integrated more seamlessly.

Maximizing utilization of IT infrastructure
As part of centralizing IT infrastructures, companies are looking to maximize the utilization rates of these environments, whether servers, storage, or applications.

Shifting to leverage utility based on-demand services
Many firms are beginning to examine the potential of leveraging IT as part of a set of utility based capabilities and services, similar to energy and communications.


On one end of the governance spectrum (top down), you can manage to control IT spend by delivering a centrally architected set of solutions, probably on platforms (like SAP, ORACLE,) and without bringing SOA discussion into the picture, force the businesses process change to these “out-of-the-box” solutions & processes. Your IT costs can come under control, but your business change costs can sky rocket, and you may even forget about the IT department positioning as a strategic partner for the business.

On the other end (bottom up), you can empower the business by allowing the business to buy any type of solution. Business intelligence suffers and the overall cost of IT grows uncontrollably.


HOW DE PROVIDE FOR BUSINESS AGILITY?

Do we work towards a blended approach? and Allow for the freedom of projects that bring efficiencies to the business. The blended approach (Middle out) where the central group provides all key standards, communication mechanisms, monitoring infrastructure, and encourages teams to use it to build around services that can be shared.