IPMA Executive Conference Value of IT

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IPMA Executive ConferenceValue of IT
September 22, 2005
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Todays Discussion

• The purpose of todays 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 organizations 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 todays business world, it has become
  virtually impossible to separate business from
  technology
• So, the problem is..

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IntroductionThe Problem
How does an organization quantify the value of
information technology
Balanced Scorecard
Customer Satisfaction Surveys

• Many have tried to define

Outcome Measures
SLAs
GMAP
ROI Analysis
Performance Measures
So, why is it so hard?
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IntroductionThe Problem - Value is in the eye
of the beholder!

• Websters 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 technology?
• To a business customer?
• To a technologist?

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

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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

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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
  objectives 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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So, What Is So Hard?
Outcomes
Mission Vision
Measures and Target Measures
Objectives
Strategies
Initiatives
Technology Activities
Business Activities
Services
Data/Information
Governance
Processes/Solutions
Infrastructure
Performance Measured (How well you do your
business)
Performance Measured (How well you do your
business)
S
Knowledge
Knowledge
Skills
Skills
Best Practices
Best Practices
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So, What Is So Hard?

• We try to define value for our customers
• We measure things we currently collect data on
  vs. measuring things important to the
  organization
• We dont align outcomes/objectives/strategies/init
  iatives/measures
• We dont 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 dont always measure things in our control
• We dont evaluate results on an on-going basis
• Annual review is not sufficient

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So, What Is So Hard?

• 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 ITs value
  add
• Bottom-line
• We dont focus on answering the 3 questions
• Who defines value?
• What defines value?
• How is value measured?
• When we do answer the three questions, we dont
  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
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Defining The Value of IT

• 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

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Defining The Value of IT

• 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

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Defining The Value of IT

• Develop Value Program Contract(s)
• Contracts are used to establish value andto
  agree how IT will be measured
• Best when there is an organizationalunderstanding
  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

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Defining The Value of IT

• Align Business and IT Strategies
• Once your contracts are in place, validate IT
  alignment
• Understand individual programs outcomesand 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!!!!!

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Defining The Value of IT

• 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

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Defining The Value of IT

• 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

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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
  programs 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!

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Panel Discussion