Getting value from IT investments
Published: 22 Dec 2005 16:10 GMT
...industry peers and the wider environment. To meet this requirement benchmarking is increasingly being employed as a way of ensuring that the best possible value is being realised from IT investments. The use of benchmarking can bring a number of benefits, including being a vehicle for better performance and collaboration, along with helping to identify gaps in operational effectiveness.
To enable IT management to get their message across to stakeholders and internal staff good communications are paramount. This is where methods such as Enterprise Architecture, business cases, and Balanced Scorecards come into their own. A well-prepared business case is a way of putting forward project details in a standard format, which helps purvey professional competency and makes it easier to compare projects. Balanced Scorecards can provide a mechanism for monitoring and conveying IT performance that simply encapsulates the state of the IT environment. However, it is necessary for IT management to agree a small number of metrics with stakeholders, get buy-in from staff, and instigate a regular review process.
In order to provide the required levels of transparency IT management must put in place the foundations of well-managed IT assets, comprising infrastructure, processes, and skills, along with the use of automation, which form very important enablers for successful measurement processes. Ad hoc manual methods based on spreadsheets are no longer acceptable or a practicable solution; especially as data quality for accurate and comprehensive IT reporting is now crucial. In order to reach the required level of consistency the deployment of an integrated toolset and common repository must be an area of focus, as is the setting up of feedback loops and dashboards within the IT governance framework. The implementation of a structured process to manage IT investment can provide significant benefits. Accenture has found that savings in the IT budget of 10-15 percent are possible within one year, whilst better IT decision-making can improve IT productivity by up to 20 percent.
The ability to deliver on the requirements of a strategic IT agenda will fail without well-organised execution. In order to achieve this an organisation needs to have efficient IT processes, clear roles and responsibilities, skilled people with the right incentives, and a value-focused culture. The creation of IT capability that provides flexibility, quality, and quick turnaround is challenging and needs constant focus on all the various elements. However, recent software vendor developments have made this easier by beginning to offer integrated tools to assist management in implementing the IT agenda.
In summary and to assist organisations identify the key techniques and approaches to maximise value and enable IT management to ensure that the right concepts and techniques are being used by the relevant roles within the organisation, Butler Group has designed a Measuring IT Costs and Value framework. The most important aspects of measuring IT cost and value are transparency and visibility, this is reflected in the framework by the central feedback loop connecting all the areas of the organisation and stakeholders. Communication channels are key if the IT department is to become a strategic partner and understand the value drivers of the organisation.
For those organisations unsure how to proceed, Intel's "Managing IT for Business Value Capability Maturity Framework" provides a valuable basis for ascertaining current competence and future direction. Butler Group recommends that organisations look to put in place remedial action to attain Level three as an urgent necessity, bringing definition to the measuring process. The organisation should have plans to reach Levels four and five over the medium term, evolving IT to an optimised state where the IT department is seen as a value centre, works within a sustainable economic model, and provides core competency.
Further insight can be found in Butler Group's Technology and Strategy Report on Measuring IT Costs and Value.
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