IPMA Executive Conference Value of IT September 22, 2005

IPMA Executive Conference

Value of IT

September 22, 2005

IPMA Executive Seminar 2005Value of IT

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Today’s Discussion

The purpose of today’s discussion is to provide an opportunity to share ideas and lessons learned on how to determine the “Value of IT” Presentation

Define the problem Discuss an approach Discuss how to get started

Panel Discussion Share experiences Open discussions


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IntroductionThe Problem

Information Technology makes up a significant portion of an organization’s budget

Information Technology competes for precious resources; and therefore, must demonstrate value to the organization How does IT demonstrate the value that it provides to the

business? How can IT best evaluate the effectiveness and efficiencies

of its operations? In today’s business world, it has become virtually impossible

to separate business from technology So, the problem is………..


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IntroductionThe Problem

Many have tried to define:What

DefinesValue?

WhoDefinesValue?

How isValue

Measured?

How does an organization quantify the value

of information technology

BalancedScorecard

SLA’sGMAP

ROIAnalysis

CustomerSatisfaction

Surveys

PerformanceMeasures

OutcomeMeasures

So, why is it so hard?


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IntroductionThe Problem - “Value” is in the eye of the beholder!

Webster’s Dictionary defines “Value” as: Worth of a thing in money or goods; estimated worth; that

quality of a thing that makes it more or less desirable; a thing or quality having intrinsic worth

• What is the value of a hammer?• To a roofer? • To me?

• What is the value of technology?• To a business

customer? • To a

technologist?


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IntroductionThe Problem - “Value” is in the eye of the beholder!

We will never be successful at determining the value of IT if we do not have a common definition of value, and a common answer to these questions:

WhatDefinesValue?

WhoDefinesValue?

How isValue

Measured?


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Who Defines Value?

Value is defined by needs at “multiple levels” in an organization: Executives Program Managers End Users


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What Defines Value?

Value is best defined in terms of “Outcomes” Outcomes – are the conclusion of core functions; the results of

activities, which accomplish the end product of service to the customer


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How is Value Measured?

Value is best measured by establishing: Objectives –clarify how the organization will realize their outcome;

they are actionable and measurable Measures – describe how the outcome will be measured Target Measures – quantify the outcome by establishing a

common understanding of what we are striving to accomplish IT Value is the difference between whether an objective’s

target measures are met with or without IT Immunization outreach programs may expect 60% without direct

mailing, but 75% if parents are contacted


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Technology Activities

Services

Processes/Solutions

Infrastructure

Data/Information

Knowledge

Skills

S

Best Practices

Per

form

ance

Mea

sure

d(H

ow

we

ll y

ou

do

yo

ur

bu

sin

es

s)

So, What Is So Hard?

Measures andTarget

Measures

Outcomes

Strategies

Initiatives

Mission&

Vision

Perfo

rman

ce Measu

red(H

ow

we

ll yo

u d

o y

ou

r bu

sin

es

s)

Objectives

Business Activities

Services

Processes/Solutions

Infrastructure

Data/Information

Knowledge

Skills

S

Best Practices

Governance


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We try to define value for our customers We measure things we currently collect data on vs. measuring

things important to the organization We don’t align outcomes/objectives/strategies/initiatives/

measures We don’t fund activities based on defined outcomes; or even

more importantly, we fund non-contributing activities We select too many measures

Use measurements for good – they change behavior We don’t always measure things in our control We don’t evaluate results on an on-going basis

Annual review is not sufficient


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Senior Executives understand the importance of IT in running their businesses, but do not always see it as a significant advantage

They often see IT as a major hindrance to change due to cultural and technical barriers

IT Value depends on successful management of IT resources and a clear understanding of IT’s value add

Bottom-line We don’t focus on answering the 3 questions:

1. Who defines value?2. What defines value?3. How is value measured?

When we do answer the three questions, we don’t formalize (contract) our agreements with each other to establish clear roles and responsibilities and deliverables

Therefore, we can not assert we did what we said we would do


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Defining The Value of IT

Define theValue of IT

Create yourValue Program

Develop aValue Program

Contract

MonitorResults &

Adjust

Align BusinessAnd IT

Strategies

ReviewResource

Allocations


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Define the Value of IT Gain an understanding of “need” by

analyzing organizational plans &GMAP results

Conduct program/customer interviews (at any level of the organization) to determine: What changes are you making to improve

program outcomes? Where can IT help? What would you consider success? What will be your

objectives, measures and target measures? What initiatives are you planning this year?

Will technology be needed to implement your initiative? Look for value opportunities

Define the

Valueof IT

Create your

Value Program

Develop aValue

ProgramContract

MonitorResults &

Adjust

Align Businessand IT

Strategies

ReviewResource

Allocations


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Create Your Value Program Evaluate your interview results

Look for similarities that can be leveraged Can you identify common strategies? Can you identify common outcomes?

Identify program strategies and objectives Define IT roles in supporting program outcomes/strategies Define measures and targets

Conduct workshops that will assist your customers with identifying and envisioning opportunities

Cluster ideas, look for an enterprise view

Define the

Valueof IT

Create your

Value Program

Develop aValue

ProgramContract

MonitorResults &

Adjust


Strategies

ReviewResource

Allocations


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Develop Value Program Contract(s) Contracts are used to establish “value” and

to agree how IT will be measured Best when there is an organizational

understanding of Governance Contract should include:

Scope of work Contract participants (may be multiple entities) Outcomes, Objectives, Strategies and Initiatives Measures and Targets that focus on

Program outcomes Performance outcomes

Define the

Valueof IT

Create your

Value Program

Develop aValue

ProgramContract

MonitorResults &

Adjust


Strategies

ReviewResource

Allocations


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Align Business and IT Strategies Once your contracts are in

place, validate IT alignment Understand individual program’s outcomes

and how they combine to meet organizational objectives

Combine the IT efforts in the same manner Tell your story in terms of outcomes Use this test to determine if you are doing the right thing, at the

right time Prioritize your efforts Take things off the plate!!!!!

Define the

Valueof IT

Create your

Value Program

Develop aValue

ProgramContract

MonitorResults &

Adjust


Strategies

ReviewResource

Allocations


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Review Resource Allocations Look at Technology Activities

Budget – Are we funding only those activitiesthat can be tracked to the outcomes, indicators,and strategies?

People – How are they allocated? Do theyhave the right skills?

Processes – Are they usable? Are theybest practices?

Technology – Is it being driven by need that supports and improves program outcomes?

Recognize that all resources and activities should track to your Value Program; however, not all will be measured and reported Expand your Value Program as you grow in experience and

maturity

Define the

Valueof IT

Create your

Value Program

Develop aValue

ProgramContract

MonitorResults &

Adjust


Strategies

ReviewResource

Allocations


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Monitor Results and Adjust Review indicators quarterly, at a minimum

Understand how you are included or support GMAP activities

Ensure you have the data collection activities in place that support your Value Program

Be responsive to feedback A critical few indicators are key to success

Define the

Valueof IT

Create your

Value Program

Develop aValue

ProgramContract

MonitorResults &

Adjust


Strategies

ReviewResource

Allocations


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Remember!

Too perfect and too precise forces us into a thought process that is ultimately not doable

Create a top down and specific program approach to value; however, be aware of how specific program’s continue to satisfy the enterprise

Be aware of the full range of organizational objectives, but select based on organizational maturity

Once you have defined “how” value will be measured then you can establish accountability – who will do what by when!


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Conclusion

Value is in the eye of the beholder!

The value of IT is measured over time based on your ability to demonstrate if IT is: Doing the right thing! At the right time! For the right price! In the right way! Again and again and again and again!

Panel Discussion

Documents

IPMA Executive Conference Value of IT September 22, 2005