Chapter © 2012 Pearson Education, Inc. Publishing as Prentice Hall

IT Value is the worth or desirability of a thing (Cronk and Fitzgerald, 1999) IT Value is a subjective assessment IT Value based on how business chooses to view it IT Value is tied to the business model IT Value can be defined by ROI or KPI’s 1-2 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Decisions about IT Value may be made to optimize value to the firm even if they cause difficulty for business unit or individual IT Value needs to be leveraged for the benefit of the firm 1-3 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

IT Value is a function of people, process technology Also function of organizational value PeoplePeople Process Technology 1-4 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

IT Value has a temporal dimension Initially, companies spend considerable amount to deploy new technology with no benefit Some value then achieved by solving initial inefficiencies As use increases, complexity grows & costs increase Finally, business is made simpler & efficiencies achieved 1-5 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

1-6 © 2012 Pearson Education, Inc. Publishing as Prentice Hall Figure 1.2

Link IT Value directly to business model Recognize that value is subjective and manage perceptions accordingly Aim for a value “Win-Win” across processes, work units & with individuals Seek business commitment to all IT projects Manage value over time 1-7 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

IDENTIFICATION + CONVERSION + REALIZATION = IT VALUE 1-8 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Joint IT-Business mechanisms should be established identify business & technical opportunities where IT can add value Establish formal process for project prioritization Recognize and evaluate opportunities through a joint business-IT structure Develop means to compare value across projects Utilize a portfolio approach to project selection Establish funding mechanism for infrastructure 1-9 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Transformation of ideas & opportunities into IT value propositions Excellent project management, effective execution & reliable IT operations critical to IT value creation Conversion issues: More projects than resources Insufficient time to complete all projects Training limitations Inadequate technical or business resources Implementation of IT may require significant business process redesign 1-10 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Availability of adequate & qualified IT & business resources Training in business goals & processes Multifunctional change management Emphasis on higher-level learning & knowledge management 1-11 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

IT Value realization is long-term process To deliver Value, technology must be used extensively Measurement is key component [Does Expected Value = Actual Value?] 1-12 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Plan value-realization phase for all IT projects Measure outcomes against expected results Look for & eliminate root causes of problems Assess value realization at all levels in organization Have provision for acting on new opportunities to leverage value 1-13 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

1. Have clearly defined portfolio value management process 2. Aim for chunks of Value 3. Adopt holistic orientation for technology value 4. Aim for joint ownership of technology initiatives 5. Experiment more often 1-14 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Track projects as developed Revisit portfolio decisions to determine if projects should be changed Invest in strategic & infrastructure projects Develop ongoing means to ensure value realized 1-15 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Focus on key areas Deliver Value through series of small focused projects Balance short-term & long-term strategic goals 1-16 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Manage & use people, process & technology Anticipate impact of technology Incorporate technology changes into business changes 1-17 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Ensure executive sponsorship for all IT projects Develop culture of joint responsibility & mutual trust between IT & business 1-18 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Experiment with new technologies on small scale to minimize risk Experimentation enables technology investments to be made in smaller chunks Experimentation enables IT Value to be realized sooner 1-19 © 2012 Pearson Education, Inc. Publishing as Prentice Hall

IT value cannot be viewed in isolation The entire IT process must be managed from conception to cash 1-20 © 2012 Pearson Education, Inc. Publishing as Prentice Hall