Matakuliah
Tahun
: A0814/Investment Analysis
: 2009
SUCCEEDING AT IT PAYOFF
MEASUREMENT: AN ACTION PLAN
Pertemuan 23-24
Challenge to Calculate IT Payoff
• The challenge of managing and evaluating information
technology has become more complicated as the
investment has continued to grow.
• The IT function will have to stand on its own and
demonstrate business and strategic value
• While it is easier to calculate payoff for operational
information technology, it is far more challenging and
critical to measure and show value of strategic IT
investments
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An Action Plan
(1) What metrics should be caputer
(2) How to implemented a measurement system so that the
metrics can be captured, analyzed, and used in
corporate decision making.
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OPERATIONAL
IT
Investment
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Financial
investment in :
• FTEs
(employees)
• Equipment
• Consulting
MANAGERIAL IT
Financial
investment and
budgeting for :
• Applications
• Training\
• Education
STRATEGIC IT
Financial
investment and
budgeting for:
• Collaboration
technologies
• Electronic Data
Interchange
• ERPs
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OPERATIONAL IT
IT Assets
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Number of :
• Workstations
• Automated check-in
counters (airlines)
•Assembly machines
(manufacturing)
• Toll processing
stations (toll road)
•Modems (Insrance
adjuster in the field)
• Information kiosks
(theme parks)
• Computer-based
training
• Physical space
• Telecommunications
infrastructure
• Help Desk
MANAGERIAL IT
STRATEGIC IT
Number of
• Process redesign
projects
•Extent of process
redesign measured
by number of person
hours invested and
departments involved
• Change
management
initiatives
• Managerial
reporting such as
cost accounting
applications
Number of
• Hubs and routers
• Imaging technology
• Knowledg-based
applications
• Teams working on
strategic systems
• Industry and vendor
partnerships
• Decision makers
• IT payoff
measurement
process
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IT Impacts
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OPERATIONAL IT
MANAGERIAL IT
STRATEGIC IT
Number of
• Customer serviced
•Hits on the web site
• High-quality pieces
produced
• Problems resolved
• Satisfied customers
• Returning customers
• Customer referred by
other customers
• Order processed per
day
• Wait times
• Sales per employee
• Mean loan approval
days
• Impact on inventory
Number of
• Escalations
• Missed deadlines
• Extension of project
and dates
• Reporting errors
• Technology
substitution
• Mid-Project process
redesigns
• Adverse Event
Episode detecetion
• Product recalls
• Average length of
stay
Number of
Actual usage by
period by user
Extent of integration
of it intro corporate
decision making
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OPERATIONAL IT
Organizational
Impacts
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• Profitability
• ROI
• ROA
MANAGERIAL IT
STRATEGIC IT
• Employee turnover
• Maintenance
expense
• Downtime
• Mortality rate
• Market share
• Ranking
• Industry awards
• Customer service
rating
•Stock price
• Financial rating
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How to Implement a Measurement System
• Securing organizational and management commitment
• Building data partnership with constituencies inside and
outside the organization
– Partnership is the operative word in gaining access to
meaningful data.
– Partnership also means that the provider of the data also has a
stake in the outcome of the analysis
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• Communication plays a critical role in facilitating the
proeject to tis sccessful conclusion. An effective
communications plan should:
–
–
–
–
Demonstrate organizational commitment to a project
Specify the intent or need for the project
Introduce the project team
Direct various departments to share data with the project
members
– Quell fears o negative outcomes
– List of timetable of when and how the results of the study will be
shared with the organization
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• For partnership, analysts or project leader should proper
to :
– Sign a nondisclosure agreement (NDA)?
– Exclude any references that would identify the partners or their
clients
– Disguise the actual numbers and coefficients by multiplying or
dividing them with constants
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Gathering Data
• Generate a timeline of the events beginning with when
the investment need was felt and how long it took to
develop a systematic approach to invest, implement, and
use the IT assets
• Identify the users of the IT, people who maintain the IT
and understand how to track the data, and those who
are responsible for keeping the data.
• To mnimize the up-fron effort, request samples of each
of the data sets available
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• The key data sources will depend upon the type of IT
(strategic, managerial, or operational), how it is being
used (customers, employees), and the objective of the
technology (improve productivity, profitability, or
customer value).
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Analyzing Data
• Analytical plan to ensure that the data are sufficient to
answer the questions of interest.
• Analytical help can be sought from individuals in finance,
quality assurance or other departements that are wellversed in data analysis approaches
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Capitalizing on The Cascading Effect of IT Payoff
• The cascading effects of the payoff analysis were further
capitalized upon when the design and manufacturing
departments at various units began interpersonal
netwrking to share best practices and learn from each
other.
• When developing the action plan, explore additional
uses of the information generated by the payoff analysis
of an information technology
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Building an Infrastructure for Ongoing IT
Payoff Analysis
• Organizations should strive to build the measurement
into the systems and the culture of the organization.
• Clear measurement of the costs and benefits are easier
to capture when data tracking and analysis is built into
the system, in most cases the infrastructure for capturing
the data is built around existing systems.
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Integrating IT Payoff Results in Managerial
and Strategic Planning and Decision Making
• After the infrastructure for data collection and analysis is
established, using the results for planning and decision
making constitutes the “rubber meets the road” test.
• Some steps are critical in accomplishing the integration :
– The results should be communicated to the managers within the
organization
– Cross-trained individuals should be ready and willing to assist
managers in understanding the meaning of the findings and
demonstrating how they can be tied to their decisions
– The internal consulting activities should be backed up with
information systems that deliver payoff outcomes on an ongoing
basis.
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