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.
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