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How
to Quantify and Justify the Benefits of Your IT
Investments
By James A. Browning
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Too
often the IT department within midsize businesses
is viewed as a cost center with its actions and investment
decisions highly scrutinized. Rather than being viewed
solely as overhead, the IT department should become
a key enabler for business success, and can achieve
this by becoming comfortable with working closely
with business leaders when it comes to the IT strategy.
Some CIOs are inclined to fend off participation of
business executives in the IT function, but in today’s
world, that’s a mistake.
Sharing
ownership of IT initiatives between the business and
the IT department will result in greater value realization
from IT investments. To establish or improve the credibility
of the IT department, CIOs must foster greater communication,
collaboration, standardization and resource sharing
across business units. The decision-making process
for IT investments should start with the enterprise
strategy and prioritize initiatives and aggregate
funding issues at the enterprise level. Priorities
should be set, and projects should be measured across
business units. Once these levels of understanding
are established, the IT department should develop
the guidelines and principles for technology standards
and practices.
As
IT departments work to improve their bottom lines,
they will find that several frameworks and techniques
are useful such as portfolio management, total value
of opportunity and TCO. Those tools can help demonstrate
the true cost and value of IT, and are essential in
communicating with business leaders. Business unit
executives need business-relevant data regarding the
availability, performance, user experience and service
levels being delivered by the IT infrastructure. This
may include important performance perspectives such
as sales performance, supply chain status, hiring
levels and inventory, as well as analyses such as
sales trends, profitability analysis and customer
demographics. These metrics can enable business executives
to better manage their business and realize increased
value from its IT investments.
Providing
the ability to view IT expenditures as investments
and having processes to track the performance of these
investments will give IT departments a higher level
of credibility and the ability to deliver on strategic
goals.
James
A. Browning is Vice President and Research Area Lead
of the Small and Midsize Business Research organization
at Gartner, Inc.
If
you have a question related to this article, e-mail
Jim Browning at midmarket@gartner.com.
Reference
Article
CIO Update: Issues That Keep CIOs of Midsize Businesses
Awake at Night
Published: October 22, 2003
Authors: J. Browning and R. Brown, Gartner, Inc.
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