CIO Enterprise Newsletter
 
NEWSLETTERS
 

CIO.com updates, insights and advice on technology, management and your career.

 CIO BlackBerry News and Tips
 CIO Research and Analysis
 CIO Microsoft
 CIO Insider
 
 
 
LEADERSHIP
 
CIO Executive Programs
The Leader in Face-to-Face Education for Senior Executives

Offering regional and national programs, CIO (and CSO) events bring together some of the most respected names and thought leaders in information technology and security. Presented by CIOs and other senior level executives, these invitation-only programs offer timely topics and strong networking. Learn More »

 
CIO Executive Council
A Peer-Advisory Service and Professional Association for CIOs

Public Council Teleconference: Application Rationalization — Hidden Costs and Smart Decisions

November 17 at 11:00 am US/Eastern (GMT-5)

Join Honorio Padrón, of The Hackett Group, who will share the drivers for companies to tackle application rationalization and the results of research that define the hidden cost of complexity. Additionally, we will discuss key decision milestones—to start or not, holding the course steady and fulfilling expectations.

Virtual Desktop Cost-Benefit Analysis — Michael Jacobs, Catlin Group

The analysis contained in this presentation measures the cost of everything from the machines and licenses to the infrastructure for virtual vs. traditional desktop environments.

Honor your best senior team members - Apply for the CIO Ones to Watch Award

Get well-earned public recognition for your top up-and-coming team members, your IT organization and your enterprise. Award winners will be announced, publicized and feted in May 2010, great timing to help attract new IT recruits to your company.

More / Register »

Learn more about the CIO Executive Council »



 
 
RESOURCE CENTER
 
 
 
 

Everything Is Measurable

The "I.T. VALUE MEASURE PROBLEM" is ubiquitous in companies today.

 

May 23, 2007CIO

The "I.T. VALUE MEASURE PROBLEM" is ubiquitous in companies today. Business executives often hear a mantra from their IT departments that goes something like this: "We can’t measure the value of IT. It’s too intangible." If the line works, and IT leaders persuade business executives that IT investments are somehow fundamentally different from other types of business investment, IT is relieved of the responsibility of attaching dollar values to those investments.

Some high-profile CIOs have gotten extended mileage from this approach. Paul Strassmann (the CIO guru) often recounts the story of being put on the spot to justify the costs of IT at Xerox Corp., where he was corporate director of worldwide computing. Since that uncomfortable experience, he has argued that evaluating an IT investment in the same manner that most other departments evaluate their efforts is nearly impossible. After all, he points out, accounting departments are never required to justify their budgets. IT is just as basic to the business as accounting, right? So the IT budget likewise should be exempt from the messiness of justification.

As one might imagine, this position is popular among some IT executives because it gets them off the hook. There is only one problem. Many business executives just aren’t buying it. And they shouldn’t. Unlike the accounting department, the IT department typically has a large and rapidly growing budget . In addition, most IT departments have had at least a few high-profile failures, causing business executives to be somewhat suspicious of IT’s value.

Other IT executives believe that only pseudomeasurements are possible. A method misleadingly dubbed Information Economics (I defy anyone to find any real economics in this method) was developed by Marilyn Parker and Robert Benson. It is basically a subjective scoring procedure that computes a composite score based on a completely arbitrary formula. It is, in effect, a nonquantitative method masquerading as a quantitative one by using numbers and a simple formula.

The first problem is that results have no meaning when compared to other investments: What would you rather have, a retooling of a plant with a 62 percent ROI or an IT investment with a "score" of 95? The second problem is that, to date, there is no empirical evidence that this method improves decisions.

So how should CIOs deal with the problem of measuring IT value? They should start by considering the possibility that the value of IT actually is measurable. Of course, this flies in the face of much of the last two decades of IT dogma, but then it wouldn’t be the first time dogma proved wrong.

 
 
Loading...
 
WHITE PAPERS

Improving the Value of IT to the Company

Strong Investment Governance is the answer to optimizing IT spending and helping stakeholders decide what new investments to make.
 

SharePoint is Dead. Long Live SharePoint

Read this white paper to learn how you can breathe new life into SharePoint and derive a higher return.
 

Service Level Reporting and Communication

Service level reporting is the most visible output and often the most time-consuming activity in SLM.
 

Informatica Platform and Integration Competency Centers

Forrester used its total economic impact methodology to interview seven companies that have standardized their data integration practices.
 

Cutting the Cost of Enterprise Databases

This IDC white paper discusses the growing complexity of datacenter management, which is causing escalating costs.
 

The CIO Calls the Shots

Learn how a selective sourcing model can deliver services in a flexible, efficient manner.
 

WEBCASTS

IT Consolidation Made Easy

The Primary IT Initiative for Reducing Costs
 

Taking a Seat at the Executive Table: The Reality of Virtualization

This year, for the first time, the number of virtual machines is on track to exceed the number of physical machines...
 

Who Are the Data Center Leaders?

Today's data center is still very much a heterogeneous environment. Gabriel Consulting recently surveyed over 250 d...
 

SharePoint - Unchecked growth of content is unsustainable - now what?

Recent research has confirmed that it has become critical for IT leaders to reclaim authority over the SharePoint c...
 

Unleashing the Power of Customer Data

To hear how companies use feedback from their clients to develop business strategy, watch our video.
 

Does Your Network Let Customers Drive Your Business?

It's no secret that customers exert greater influence over business decisions than at any time in history. But for ...
 

Resource Alerts

Get instant email notifications by topic when white papers, webcasts, and case studies are added to our library.

 
FEATURED SPONSORS
 
 
 
SPONSORED LINKS
 

The Key to Proving and Improving the Value of IT to the Company

Learn How Web Site Performance Impacts Shopper Behavior

Build a Foundation for Unified Communications

Removing the Barriers to IT Governance: How On-Demand Software Changes the Game

Should Your Email Live In The Cloud? A Comparative Cost Analysis

Learn about the growing threat of insider data theft.

Adobe® LiveCycle® solutions for business process automation

10 Ways Excel Drives More Value from Your SAP Investment

eBook: How Can You Make Your People Productive Anywhere?

Mind the Talent Gap: Global Survey on IT and HR trends and challenges

"Enterprise-Proven" is the Prerequisite for Enterprise SaaS Portal Solutions

Join us at the US-Brazil IT-BPO Summit, on November 10th in New York.

Unified Communications: Thoughts, Strategies and Predictions. Join the discussion

Read the RSA report: Security for Business Innovation

Webcast: Looking to the Cloud for Email and Collaboration Services

64-page prescriptive guide to security, compliance, and IT operations.

Keep your IT expertise up to date. Join the Intel Premier IT Professionals.

A new fleet of PCs with a total ROI in 10 months. Find your ROI.

eZine: A Roadmap to Reducing IT Complexity

Reduce risk, gain agility. See how Progress can help your business.

Virtualization Technology as a Business Solution

eZine: A Roadmap to Reducing IT Complexity

World-class trading technology solutions from NYSE Technologies.

If You're Paying for Telecom, You're Paying Too Much. Contact Asentinel Today.

Trade-In your old printer and save up to $1,000 plus free recycling!

Webcast: Unleashing the Power of Customer Data

Disciplined Autonomy: Resolving the Tension Between Flexibility and Control

Enterprise Capture: Your Onramp to Business Process Automation

Cloud Computing--What is its Potential Value for Your Company?

Seven Design Requirements for Web 2.0 Threat Protection

How Consumerization of IT Will Make Your Business More Productive

How does a software company save big with Green IT?

Translate business strategy into IT strategy and obtain maximum benefits.

Unleash the Power of Java with Oracle JRockit Real Time

Taking the Service Desk to the Next Level

See how AT&T can help protect your network.

Top Five CIO Challenges

Streamline IT Costs. Boost Performance with WAN Optimization.

Want to know how you can maximize employee productivity?

Build your 1st app FREE with Force.com

TDWI checklist helps define data readiness for analytics. Download report.

Increase UPS efficiency without sacrificing protection.

A Clear View Toward Virtualization

Virtualization Technology as a Business Solution

The rules of infrastructure management just changed.

A Clear View Toward Virtualization

Interactive Q&A helps you discover key ways to maximize IT assets.

Ready to virtualize tier one applications? Check your virtualization maturity.

Think you can't afford a Cisco Switch? Cisco Catalyst Switches are now more affordable.

Five minute business analytics assessment. Immediate results.