Valuing IT Assets – Up the Blind Alley, Again

A survey just reported in the London Financial Times has found that many organisations do not know the value of IT their assets. Here we go again… The survey, by the software company Micro Focus canvassed 250 CIOs and CFOs in businesses with revenues from $100m to more than $1bn, in the US, UK, France, Germany and Italy. It found that 37% of CIOs and 60% of CFOs had tried to quantify their IT assets, and that 56% of respondents thought that the financial value of software was ignored or poorly evaluated compared with other classes of asset. So here we go again. I thought we had got beyond the “what’s the value of IT?” question, realising that even if we found the answer (which, as we all know from our Hitch Hikers Guide, is 42) it doesn’t really help much. After all, the first strategic principle of IT investment is that Information Technologies, on their own, create no value. It’s what people do with them that counts. Knowing the value of IT assets may well be a Good Thing and it sounds like we should making more effort to do so, but it’s not going to tell us whether they’re worth having, and whether we’re making the very most of them. And as IT evolves from being capital investments to services, the question of asset value is becoming less and less relevant. Meanwhile, this survey notwithstanding, the strategic conversation about IT has moved on to the next level of maturity – about the value we are creating from the business changes that exploit IT. With this in mind, there’s one glimmer of hope in the FT article. The dean at Insead that helped to write the survey questions is quoted as saying that “tech people tend to focus on the ‘new’ – finding a business case for the ‘new’. Very little though goes into the benefit and almost none goes into the managing of legacy assets.” While it’s not just ‘tech’ people who prefer to focus on the ‘new’, it’s true that you don’t always need to invest in something new to create new value. As another principle of (IT) investment tells us: only a fool would invest in something new to create value they could have from what they’ve already got. That’s true whether we’re talking about IT, a business change, or anything for that matter. Culturally, executing this principle is still something many organisations have yet to crack.