1. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ EVALUATING THE BUSINESS VALUE OF INFORMATION TECHNOLOGY 13.05.2005, Janne Laine

2. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ Background and problem  Evaluating IT is considered problematic in businesses in general –The value of IT is largely intangible (calculation ROI difficult) –The value-creating process in IT is not clear (cause-effect relationships unclear) –Traditional metrics do not capture the business value of IT  Many IT projects do not obtain their objectives –IT is not managed and steered by business (technology project perspective or business development project perspective) –The actual business value of IT is not measured –The necessary change to realise the benefits is not managed  There is a strong need for adequate methodology and process to analyze and manage the potential business benefits of information technology projects

3. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ Objectives The study had two principal objectives: 1.To understand and describe the value-creating process in IT (how IT produces measurable business value)  linkage between IT and business (strategic alignment)  critical phases of the process, and their inputs and outputs  effective IT management and control according to corporate strategy and business requirements 2.To develop methodology to analyze the benefits of a single IT investment  business benefit identification and evaluation  clear responsibilities  foundation for change management

4. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ IT value cycle Technology Objectives Strategic Objectives IT Strategy Benefit Analysis Change Management Technology Investments Business Value Complementary Investments Complementary Capabilities Business Strategy & Value Proposition BALANCED PORTFOLIO Learning & Growth Perspective Internal Perspective Customer Perspective Financial Perspective Strategic Outcomes Organisational Capital IT Portfolio Management Investment Proposals New Capabilities, Informational Capital Human Capital Intangible Assets Business Objectives

5. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ Benefit Analysis Flowchart Enabler Risk Type Saved Time Estimate Enabling Change Business Change Benefit Owner Enabler Owner Enabling Change Owner Business Change Owner Financial Impact Effect Type Sensitivity Analysis Annual Total Value Occurence Multiplier Value Rationale Value Estimate Quantification Level Benefit Type Target Process Impact AreaBSC Perspective Annual Saved Time Benefit Identification Benefit Classification Benefit Valuation Risk Analysis Benefit Ownership Severity Probability Risk Description Avoidance Plan

6. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ Benefit analysis Enabler new IT product or service Enabling change features, funcionalities etc. Business change the actual business benefit Benefit value quantitative/qualitative/other Metrics benefit evaluation Type new, better, stop Effect type direct/indirect Risk indirect Target process sales, prodution, R&D etc. Ownership clear responsibilities Key roles

7. Fujitsu Services Oy ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ Conclusions  IT value cycle provides linkage between business objectives and IT management and identifies critical phases and elements in the value-creating process enabled by information technology –Business strategy and IT strategy become aligned and integrated  Benefit analysis is required to identify the business changes that ultimately deliver the benefits the IT enables –the responsibilities for both IT and business must be made clear (ownership)  Understanding the value-creating process and the role of IT helps managing the necessary business changes to realise the business benefits –IT is only an enabler for the potential benefits  IT can only be responsible for the enabler part of the process, the business change requires also actions on other assets