Section 1 Delivering Value with IT Chapter 1 Developing and Delivering on the IT Value Proposition Chapter 2 Developing IT Strategy for Business Value Chapter 3 Linking IT to Business Metrics Chapter 4 Building a Strong Relationship with the Business Chapter 5 Communicating with Business Managers Chapter 6 Building Better IT Leaders from the Bottom Up Mini Cases Delivering Business Value with IT at Hefty Hardware Investing in TUFS IT Planning at ModMeters

Developing and Delivering on the IT Value Proposition Chapter 1 Developing and Delivering on the IT Value Proposition © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

What Is IT Value? IT Value is the worth or desirability of a thing. (Cronk and Fitzgerald, 1999) IT Value is a subjective assessment. IT Value is based on how a business chooses to view it. IT Value is tied to the business model. IT Value can be defined by ROI or KPI’s. © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

Where Is IT Value? Decisions about IT Value may be made to optimize value to the firm even if they cause difficulty for a business unit or individual. IT Value needs to be leveraged for the benefit of the firm. © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

Who Delivers IT Value? IT Value is a function of people, process, and technology. IT Value is also a function of organizational value. Technology Pe o p l e Process © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

When Is IT Value Realized? IT Value has a temporal dimension. Initially, companies spend a considerable amount to deploy new technology with no benefit. Some value is then achieved by solving initial inefficiencies. As use increases, complexity grows and costs increase. Finally, the business is made simpler and efficiencies are achieved. © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

The “W” Effect in Delivering IT Value (Chatterjee and Seagars, 2002) © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

Best Practices in Understanding IT Value Link IT Value directly to the business model. Recognize that value is subjective, and manage perceptions accordingly. Aim for a value “Win-Win” across processes, work units, and individuals. Seek business commitment to all IT projects. Manage value over time. © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

The Three Components of the IT Value Proposition IDENTIFICATION + CONVERSION + REALIZATION = IT VALUE © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

Five Principles for Delivering Value Have a clearly defined portfolio value management process. Aim for chunks of Value. Adopt a holistic orientation for technology value. Aim for joint ownership of technology initiatives. Experiment more often. © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

Conclusion This chapter explored the concepts and activities involved in developing and delivering IT value to an organization. IT value cannot be viewed in isolation. The entire IT process must be managed from conception to cash. © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

Developing IT Strategy for Business Value Chapter 2 Developing IT Strategy for Business Value © 2015 Pearson Education, Inc.  Publishing as Prentice Hall

The Importance of IT New technologies co-evolve with new business strategies and changes to the business environment. IT and business strategies must be complimentary.

Business and IT Strategies Historical View – IT strategy should support the business strategy. IT’s contribution was inhibited by a limited understanding of the business strategy. IT’s contribution was inhibited by a limited understanding of IT’s potential by the business managers.

Business and IT Strategies (continued) Current View – IT strategy should be integrated with the business strategy. IT must be positioned for flexibility, speed and innovation to support rapidly changing business environment. Technology investments should compliment business strategy.

Business and IT Strategies (continued) Future View – IT strategy must become more dynamic and focus on developing strategic capabilities that support a variety of changing business objectives. IT and business alignment will not be point-in-time planning; it will support evolutionary change.

Four Critical Success Factors Revisit your business model. Have strategic themes. Get the right people involved. Work in partnership with the business.

Dimensions of IT Strategy Business Improvement – stress relatively low-risk investments with short- to medium-term payback. Focus is on streamlining business processes.

Dimensions of IT Strategy (continued) Business Enabling – transforms or extends how a company does business. --Typically focused on revenue growth. -- Cost-benefit is usually not as clearly established.

Dimensions of IT Strategy (continued) Business Opportunities – small-scale experimental initiatives designed to test the viability of new concepts or technologies. High risk projects that typically do not have well-defined, expected returns. These typically have a much lower success rate so funding is sometimes difficult to obtain.

Dimensions of IT Strategy (continued) Opportunity Leverage – leverages successful experiments or prototypes. Technology is easy to imitate; some initiatives may leverage the results of other companies.

Dimensions of IT Strategy (continued) Infrastructure – Operating level hardware and software must be maintained. Typically not well understood by business managers.

IT Strategy Development Best Practices Rolling Planning and Budget Cycles – plans and budgets should be updated more than once per year. An Enterprise Architecture – consisting of an integrated business and IT blueprint. It should assist in identifying duplicate solutions.

IT Strategy Development Best Practices (continued) Different Funding Buckets – allocate funding for all five types of IT projects. Account or Relationship Managers – IT account managers to identify synergies and interdependencies among lines of business and opportunities for technology to improve the business.

IT Strategy Development Best Practices (continued) A Prioritization Rubric – Adopt multiple approaches to justify project funding decisions to account for the differences in return on IT investment.

Barriers to Effective IT Strategy Development A governance structure for enterpisewide projects Enterprisewide funding models Parallel and linked resources for developing IT and business strategies Traditional budget cycles

Barriers to Effective IT Strategy Development (continued) Balancing strategic and tactical initiatives Skills in strategizing

Conclusion IT strategy is gaining attention by businesses. Most organizations are still at the early stages of integrating IT strategy with business strategy. Balancing IT solutions with business strategy will position organizations to respond to rapidly changing business environments.