MEASURING THE BUSINESS VALUE OF INFORMATION TECHNOLOGYPractical Strategies for IT and Business Managers

8/8/2019 MEASURING THE BUSINESS VALUE OF INFORMATION TECHNOLOGYPractical Strategies for IT and Business Managers

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MEASURING THE BUSINESS VALUE

OF INFORMATION TECHNOLOGY

Practical Strategies for IT and Business

Managers

BY:

DEEPALI KHANNA (09609019)ANKIT GOYAL (09609025)

NITIN MAHESHWARI (06503866)


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Information technology, often loses its significance as a major

contributing success factor in an organizations strategic

objectives because it is not considered an integral function

within an organization.

IT organizations inevitability drift towards the cost center

perception.

INTRODUCTION

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Human Factors Engineering is an

applied discipline that seeks to

optimize human interaction and

safe operation with technology by

applying what is known about

human capabilities and limitations

to the design, use, maintenance,

and removal of both simple and

complex systems.

HUMAN FACTORS ENGINEERING

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TARGET AUDIENCE



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IT is often viewed as a cost center, and a result of this

perspective is sustained focus on total cost of ownership

(TCO).

ITs budgets are squeezed year over year as competition

continually erodes budgetary resources.

As a result, it is difficult for IT organizations to enable thelong-term competitive advantage

IT COST VS. IT BENEFIT



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INFORMATION TECHNOLOGY AND

BUSINESS VALUE

In the last 20 years there have been incredible

changes in information technology.

It is assumed that IT increases productivity.

Researchers have devised an approach to compare business-

value outputs with the inputs.

The degree of alignment between the IT strategy and the firms

business strategy is important and investment alone is notenough.

In addition to investing in IT, the enterprise must also manage

the business process.



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INTELS IT BUSINESS VALUE

Intels IT organization implemented the IT Business Valueprogram to access the forecasted value of IT solution and the

actual value delivered.

A standard set of financial measurements of business value

was established.

A standard measurement methodology to determine the

impact of IT solutions.

A common valuation process with finance acting as

independent auditors.

Before the program, Intel measured success in terms of

network availability, server uptime and so forth.



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RESULTS OF INTELS IT BUSINESS

VALUE PROGRAM

In 2002, the ITBV Program set a goal of $100 million

and success-fully documented over $180 million

in new business value.

In 2003, the goal was raised to $250 million, andthe program documented $419 million.

It is critical for IT organizations to adopt metrics and

measures of information technology's value.

Focusing on data and keeping the customer involved

encourages the line-of-business owners to invest the time to

evaluate their projects impact.



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MANAGING IT

Information Technology Capability Maturity Framework

suggests that as the IT discipline continues to coalesce, it will

continue to develop systematic approaches to managing and

measuring business value.

A fundamental idea within the IT CMF is that investment

decisions require repeatable processes describing practicesthat an IT organization should use to effectively manage

information technology to maximize the business value

delivered to the company.



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IT CAPABILITY MATURITY FRAMEWORK

IT Budget provides the essential input to the productionprocess. The budget drives IT Capability which, in turn,

produces IT Value as the output.

Managing IT Like a Business is the feedback mechanism for

adjusting the budget, capability, and value to optimize theoutputs. The entire production system describes IT governance,

which is the overall management, decision making, and

accountability needed to maximize value within given

constraints.

IT budget is used to not only fund the envisioning,development, operations, and provisioning of IT solutions, but

also to develop the IT capability, the underlying assets, and to

strengthen the IT value chain.



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THE FIVE MATURITY STAGES



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1st STAGE

2nd STAGE

3rd STAGE4th STAGE

5th STAGE

The IT

organization

is barely

managed at

all.

Stage basic

processes

have been

identified

and can be

repeated.

The

attention

shifts from

total cost of

ownership

to return on

investment.

Organizatio

n provides

more thantechnology

and

becomes a

strategic

business

partner.

The IT

budget is

sustainable, it

deals in core

competency

and the IT

organization

is viewed as

a value

center



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Implementing innovative approach to determine the business

value of information technology is an enormous task, but the

payoff for is worth the effort.

The tools and methodologies produced by an ITBV program

easily fit within other common management practices. ITBV

process improvement is well supported by capability maturity

frameworks as IT organizations uncover and define processes,

measure and optimize metrics, and build sustainableexcellence in four management domains, IT budget, IT

capability, IT business value, and IT as a business.

CONCLUSION



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To create a world-class IT organization that clearly

demonstrates bottom-line impact for the company, the

culture must shift from techno-centric to user-centric

thinking.

An ITBV perspective is often a new mind set for IT

professionals and the corporation. Measured results instill a

belief that IT can and should help create a competitive

advantage and increase shareholder value by not justdeploying information technology, but deploying the right

information technology.

CONCLUSION



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THANK YOU !


MEASURING THE BUSINESS VALUE OF INFORMATION TECHNOLOGYPractical Strategies for IT and Business Managers

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