EVALUATING THE BUSINESS
VALUE OF INFORMATION
TECHNOLOGY
13.05.2005, Janne Laine
Fujitsu Services Oy
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ
Background and problem
 Evaluating IT is considered problematic in businesses in general
– The value of IT is largely intangible (calculation ROI difficult)
– The value-creating process in IT is not clear (cause-effect relationships unclear)
– Traditional metrics do not capture the business value of IT
 Many IT projects do not obtain their objectives
– IT is not managed and steered by business (technology project perspective or
business development project perspective)
– The actual business value of IT is not measured
– The necessary change to realise the benefits is not managed
There is a strong need for adequate methodology and process to
analyze and manage the potential business benefits of information
technology projects
Fujitsu Services Oy
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ
Objectives
The study had two principal objectives:
1. To understand and describe the value-creating process in
IT (how IT produces measurable business value)

linkage between IT and business (strategic alignment)

critical phases of the process, and their inputs and outputs

effective IT management and control according to corporate strategy
and business requirements
2. To develop methodology to analyze the benefits of a single
IT investment
Fujitsu Services Oy

business benefit identification and evaluation

clear responsibilities

foundation for change management
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ
IT value cycle
BALANCED PORTFOLIO
Financial
Perspective
Customer
Perspective
Internal
Perspective
Learning &
Growth
Perspective
Strategic
Objectives
Strategic
Outcomes
Business
Objectives
IT Strategy
New
Capabilities,
Informational
Capital
Business Value
Change
Management
Complementary
Capabilities
Business Strategy &
Value Proposition
Fujitsu Services Oy
Technology
Objectives
Intangible
Assets
Human
Capital
IT Portfolio
Management
Investment
Proposals
Technology
Investments
Benefit
Analysis
Complementary
Investments
Organisational
Capital
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ
Benefit Analysis Flowchart
Benefit Identification
Enabler
Enabling Change
Business Change
Benefit Classification
Financial Impact
Quantification Level
Benefit Valuation
Value Estimate
Effect Type
Target Process
Risk Analysis
Saved Time Estimate
BSC Perspective
Impact Area
Benefit Type
Benefit Ownership
Risk Type
Benefit Owner
Risk Description
Multiplier
Business Change Owner
Value Rationale
Severity
Occurence
Enabling Change Owner
Annual Total Value
Annual Saved Time
Sensitivity Analysis
Fujitsu Services Oy
Probability
Avoidance Plan
Enabler Owner
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ
Benefit analysis
Enabler
Enabling change
•new IT product or service
•features, funcionalities etc.
indirect
Business change
•the actual business benefit
Effect type
Type
•direct/indirect
•new, better, stop
Metrics
•benefit evaluation
Benefit value
•quantitative/qualitative/other
Fujitsu Services Oy
Target process
•sales, prodution, R&D etc.
Key roles
Risk
Ownership
•clear responsibilities
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ
Conclusions
 IT value cycle provides linkage between business objectives and IT
management and identifies critical phases and elements in the
value-creating process enabled by information technology
– Business strategy and IT strategy become aligned and integrated
 Benefit analysis is required to identify the business changes that
ultimately deliver the benefits the IT enables
– the responsibilities for both IT and business must be made clear (ownership)
 Understanding the value-creating process and the role of IT helps
managing the necessary business changes to realise the business
benefits
– IT is only an enabler for the potential benefits
IT can only be responsible for the enabler part of the process, the business
change requires also actions on other assets
Fujitsu Services Oy
ETTEI TIETOTEKNIIKKA KÄVISI TYÖSTÄ