Governance: Embracing IT Value Management

Q: Why have organizations been slow to embrace IT value management?

A: CIOs haven’t been strong advocates of it, and many organizations have weak governance mechanisms. CIOs have long understood proving IT value is important, but they have lacked practical approaches to making it a reality since many have little experience in finance or Six Sigma disciplines.

From a governance perspective, CEOs have expressed frustration about the lack of understanding around IT value. Given the magnitude of its costs and frustration about delivery, IT is an easy target. In many cases, however, there is also a lack of measurement and accountability across the enterprise.

It is hard for CIOs to sponsor a value management initiative and it’s easy to rationalize a lack of action, but the times, they are a-changing. Leading-edge organizations such as Intel are proving IT value management is real (see Intel’s solution to “Calculating IT Business Value” at www.itsharenet.org under IT Management & Finance).

Q: Can you discuss value management from a government perspective?

A: Some IT leaders think value management is more difficult in a government setting because there isn’t a P&L and therefore no financial definitions of value beyond costs. The good news is, there is little difference between for-profit and nonprofit approaches to IT value management. The approaches that work focus on the leading indicators to value. These are operational measures that are relevant to the business such as customer satisfaction, sales calls, cycle time and so on. These measures can be defined and measured regardless of the type of organization.

Value management implodes when organizations take a purely financial view, because there is not a direct correlation between many investments and the financials except in the case of cost cutting, which is no longer the main focus of IT investments.