• WisBusiness

Monday, October 4, 2010

Stop trying to measure IT value



By Tom Burzinski
A number of business and technology surveys this year indicate that companies are once again increasing their investment in Information Technology (IT) as a way of streamlining operations and enhancing business performance. One survey conducted last month by Skyline Technologies of Green Bay (WI) and the St. Norbert College Survey Center polled several hundred Wisconsin business and technology executives (from mid- and large-size Wisconsin companies) on the value that IT provides their firms.

This survey reported that 65 percent of the respondents are putting substantial and increasing resources towards IT in the next twelve months; with a whopping 91 percent of the respondents calling out IT as a key contributor of improved top- and bottom-line business performance. This same group also sees IT as critical for improved customer service, effective internal and external collaboration, cost control, and in running a quality operation.

The survey respondents (74 percent) believe that while there is considerable perceived value from their IT investments, there is also uncertainty about the actual return on investment (ROI) that IT provides. The survey respondents say they would like to find ways to substantiate IT’s value proposition so they can ensure that additional IT spending is appropriately targeted.

Trying to answer the question “What value does IT brings to my organization?” has been a goal of CEOs going back to the time when computers had vacuum tubes and programmers used punch cards. At one time or another, most CIOs have had to spend late nights and long weekends fabricating elaborate ROI justifications in the hope of convincing their CEOs or CFOs to sign-off on an IT project or next year's IT budget without first having to first sacrifice large parts of it on the altar of IT value.

The problem with trying to answer the IT value question is that it is essentially an unanswerable question. As the CIO-turned-business writer, Bob Lewis, says in his practical and very readable book, A Manifesto for 21st Century Information Technology, “There are no IT projects and there never were. IT doesn’t deliver value, it enables it.”

According to Lewis, all IT projects – yes, even IT infrastructure projects – are really business projects, in that they are about delivering business value. Specifically, three types of business value: increased revenue, decreased cost, or better-managed risk. That is it!

Lewis goes on to say, “In the same way that a hardware store provides you with tools to remodel your house but doesn’t do the remodeling, all IT can do is provide the tools business managers and end-users need to deliver value.”

Because there are no IT projects, only business projects, the role of the CIO is focused solely on providing the business with reliable estimates of the IT costs required to get the project done. Although the CIO must collaborate with his/her business partners in establishing a project’s value, it is the business’ responsibility to estimate, and then commit to, the business value of any IT-enabled project.

This is not to say that the CIO is off the hook when it comes to determining and then realizing the business value of an IT-enabled project. The CIO is still responsible for running the IT function in such a way as to deliver high-quality, agile, and cost effective IT services so that any IT-enabled project can return the highest possible value for the money invested. This, as anyone who has done it successfully will attest, is a major leadership challenge in itself.

Nor is the CIO a passive player when it comes to business governance. As a member of a firm’s executive team – which the CIO must be – the CIO participates with the other members of the executive decision-making team in determining the company’s project priorities.

Besides giving advice on how not to get dragged through the glass trying to justify IT’s value to your CEO, Lewis also challenges conventional IT wisdom concerning the need to embrace best practices, why relationships precede process, and the importance of establishing the right IT metrics for an organization.

A Manifesto for 21st Century Information Technology is an enjoyable read and I highly recommend it to CIOs or others involved, in any way, with their company’s IT function. Besides, now that you know that you don’t have to work so hard to justify IT’s value, you should have plenty of time to catch up on your reading!

-- Burzinski is a an IT executive and senior consultant specializing in business intelligence and IT/business alignment. In his 25-year career he has worked for several Fortune 500 companies headquartered in Wisconsin. Burzinski and his family live in Green Bay.

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