Chapter 1 © 2015 Pearson Education, Ltd. 1-1 IT Value is the worth or desirability of a thing. (Cronk and Fitzgerald, 1999) IT Value is a subjective assessment. IT Value is based on how a business chooses to view it. IT Value is tied to the business model. IT Value can be defined by ROI or KPI’s. © 2015 Pearson Education, Ltd. 1-2 IT Value is a function of people, process, and technology. IT Value is also a function of organizational value. © 2015 Pearson Education, Ltd. Technology P e o p l e Process 1-3 Decisions about IT Value may be made to optimize value to the firm even if they cause difficulty for a business unit or individual. IT Value needs to be leveraged for the benefit of the firm. © 2015 Pearson Education, Ltd. 1-4 IT Value has a temporal dimension. Initially, companies spend a considerable amount to deploy new technology with no benefit. Some value is then achieved by solving initial inefficiencies. As use increases, complexity grows and costs increase. Finally, the business is made simpler and efficiencies are achieved. © 2015 Pearson Education, Ltd. 1-5 © 2015 Pearson Education, Ltd. 1-6 Link IT Value directly to the business model. Recognize that value is subjective, and manage perceptions accordingly. Aim for a value “Win-Win” across processes, work units, and individuals. Seek business commitment to all IT projects. Manage value over time. © 2015 Pearson Education, Ltd. 1-7 IDENTIFICATION + CONVERSION + REALIZATION = IT VALUE © 2015 Pearson Education, Ltd. 1-8 Joint IT-Business mechanisms should be established to identify business and technical opportunities where IT can add value. Establish a formal process for project prioritization. © 2015 Pearson Education, Ltd. 1-9 Recognize and evaluate opportunities through a joint business-IT structure. Develop a means to compare value across projects. Utilize a portfolio approach to project selection. Establish a funding mechanism for infrastructure. © 2015 Pearson Education, Ltd. 1-10 Conversion is the transformation of ideas and opportunities into IT value propositions. Excellent project management, effective execution, and reliable IT operations are critical to IT value creation. © 2015 Pearson Education, Ltd. 1-11 More projects than resources Insufficient time to complete all projects Training limitations Inadequate technical or business resources Implementation of IT may require significant business process redesign. © 2015 Pearson Education, Ltd. 1-12 Availability of adequate and qualified IT and business resources Training in business goals and processes Multifunctional change management Emphasis on higher-level learning and knowledge management © 2015 Pearson Education, Ltd. 1-13 IT Value realization is a long-term process. To deliver Value – technology must be used extensively. Measurement is a key component. [Does Expected Value = Actual Value?] © 2015 Pearson Education, Ltd. 1-14 Plan a value-realization phase for all IT projects. Measure outcomes against expected results. Look for and eliminate root causes of problems. Assess value realization at all levels in the organization. Have provision for acting on new opportunities to leverage value. © 2015 Pearson Education, Ltd. 1-15 1. Have a clearly defined portfolio value 2. 3. 4. 5. management process. Aim for chunks of Value. Adopt a holistic orientation for technology value. Aim for joint ownership of technology initiatives. Experiment more often. © 2015 Pearson Education, Ltd. 1-16 Track projects as they are developed. Revisit portfolio decisions to determine if projects should be changed. Invest in strategic and infrastructure projects. Develop an ongoing means to ensure value is realized. © 2015 Pearson Education, Ltd. 1-17 Focus on key areas. Deliver Value through a series of small focused projects. Balance short-term and long-term strategic goals. © 2015 Pearson Education, Ltd. 1-18 Manage and use people, process, and technology. Anticipate the impact of technology. Incorporate technology changes into business changes. © 2015 Pearson Education, Ltd. 1-19 Ensure executive sponsorship for all IT projects. Develop a culture of joint responsibility and mutual trust between IT and the business. © 2015 Pearson Education, Ltd. 1-20 Experiment with new technologies on a small scale to minimize risk. Experimentation enables technology investments to be made in smaller chunks. Experimentation enables IT Value to be realized sooner. © 2015 Pearson Education, Ltd. 1-21 This chapter explored the concepts and activities involved in developing and delivering IT value to an organization. IT value cannot be viewed in isolation. The entire IT process must be managed from conception to cash. © 2015 Pearson Education, Ltd. 1-22 Chapter 2 © 2015 Pearson Education, Ltd. 2-1 New technologies co-evolve with new business strategies and changes to the business environment. IT and business strategies must be complimentary. © 2015 Pearson Education, Ltd. 2-2 Historical View – IT strategy should support the business strategy. IT’s contribution was inhibited by a limited understanding of the business strategy. IT’s contribution was inhibited by a limited understanding of IT’s potential by the business managers. © 2015 Pearson Education, Ltd. 2-3 Current View – IT strategy should be integrated with the business strategy. IT must be positioned for flexibility, speed and innovation to support rapidly changing business environment. Technology investments should compliment business strategy. © 2015 Pearson Education, Ltd. 2-4 Future View – IT strategy must become more dynamic and focus on developing strategic capabilities that support a variety of changing business objectives. IT and business alignment will not be point-in-time planning; it will support evolutionary change. © 2015 Pearson Education, Ltd. 2-5 1. Revisit your business model. 2. Have strategic themes. 3. Get the right people involved. 4. Work in partnership with the business. © 2015 Pearson Education, Ltd. 2-6 A business model explains how the different pieces of the business fit together. The business model should be clear and describe the unique value that the organization can deliver. © 2015 Pearson Education, Ltd. 2-7 IT strategy is about carefully crafted programs that focus on developing specific business capabilities. IT and business programs that are grouped in strategic themes are easier to track and support interdependencies. © 2015 Pearson Education, Ltd. 2-8 Senior management should take an active role in IT decision making. Key stakeholders should be involved in determining technology opportunities. Some companies have accomplished this through account manager positions. © 2015 Pearson Education, Ltd. 2-9 Business and IT must both have input into the strategy. IT projects should be synchronized with business objectives. © 2015 Pearson Education, Ltd. 2-10 Business Improvement – stress relatively low-risk investments with shortto medium-term payback. Focus is on streamlining business processes. © 2015 Pearson Education, Ltd. 2-11 Business Enabling – transforms or extends how a company does business. --Typically focused on revenue growth. -- Cost-benefit is usually not as clearly established. © 2015 Pearson Education, Ltd. 2-12 Business Opportunities – small-scale experimental initiatives designed to test the viability of new concepts or technologies. High risk projects that typically do not have well-defined, expected returns. These typically have a much lower success rate, so funding is sometimes difficult to obtain. © 2015 Pearson Education, Ltd. 2-13 Opportunity Leverage – leverages successful experiments or prototypes. Technology is easy to imitate; some initiatives may leverage the results of other companies. © 2015 Pearson Education, Ltd. 2-14 Infrastructure – Operating level hardware and software must be maintained. Typically not well understood by business managers. © 2015 Pearson Education, Ltd. 2-15 Rolling Planning and Budget Cycles – plans and budgets should be updated more than once per year. An Enterprise Architecture – consisting of an integrated business and IT blueprint. It should assist in identifying duplicate solutions. © 2015 Pearson Education, Ltd. 2-16 Different Funding Buckets – allocate funding for all five types of IT projects. Account or Relationship Managers – IT account managers to identify synergies and interdependencies among lines of business and opportunities for technology to improve the business. © 2015 Pearson Education, Ltd. 2-17 A Prioritization Rubric – Adopt multiple approaches to justify project funding decisions to account for the differences in return on IT investment. © 2015 Pearson Education, Ltd. 2-18 A governance structure for enterpisewide projects Enterprisewide funding models Parallel and linked resources for developing IT and business strategies Traditional budget cycles © 2015 Pearson Education, Ltd. 2-19 Balancing strategic and tactical initiatives Skills in strategizing © 2015 Pearson Education, Ltd. 2-20 IT strategy is gaining attention by businesses. Most organizations are still at the early stages of integrating IT strategy with business strategy. Balancing IT solutions with business strategy will position organizations to respond to rapidly changing business environments. © 2015 Pearson Education, Ltd. 2-21
