Dean Nelson – Achieving,Measuring and Communicating IT Value
The report, “Achieving, Measuring and Communicating IT Value,” includes revealing data on the dichotomy between the expectations of IT organizations and the real and perceived value of IT in reaching business goals.
The primary objective of the study, conducted in late 2002, was to determine how companies are utilizing and evaluating their IT investments — from cost reduction to resource allocation to performance improvement and business value. Two hundred IT leaders from financial services, retail/wholesale/distribution and government organizations, with annual revenues ranging from $250 million to $5 billion, responded to a set of questions probing the expectations and value of IT departments, the technology they procure and implement, and the relative contribution and alignment of IT with the larger enterprise.
Survey responses illustrated contrasting expectations of IT executives with those of their organizations, coupled with a murky view of technology as related to business objectives. The results show a strategic quandary for CIOs:
* Nine out of 10 IT executives say that IT value is either critical or
very important to their company.
* Two out of every three respondents acknowledge that IS groups have not
been successful in measuring and communicating IT value.
* Nearly half the respondents say that executive management consistently
understates the value of information technology.
“In conducting the survey and analyzing the results, we saw a common dilemma emerge,” said Dean Nelson, leader of Deloitte & Touche’s Integration, Development and Infrastructure practice in the U.S. “CIOs and other IT leaders are under increasing pressure to deliver real business value from IT investments, but are challenged when it comes to quantifying and communicating that value.”
Indeed, while respondents express increasing focus on delivering IT value, clear priorities in 2003 are scarce. When asked to identify the top IT engagements undertaken or planned this year, responses were evenly distributed among hardware and software upgrades, security and cost reduction, exhibiting a fragmentation of IT efforts with no prevailing focus. That said, 84 percent of those surveyed report they are not among the decision makers who assess IT value, suggesting a service and maintenance-oriented model as opposed to one utilizing IT as a strategic business partner.
Also included in the report are analysis and comparison of vertical industry trends by Deloitte & Touche practice leaders in manufacturing, financial services and consumer business, as well as the proprietary Deloitte & Touche IT Value Management Framework, a seven-step toolkit for creating and communicating IT value.
“Achieving, Measuring and Communicating IT Value” includes industry-specific analysis and perspective from Deloitte & Touche industry leaders, including:
Manufacturing: 60 percent of the survey respondents from the manufacturing sector cite decreased costs as the primary measurement of IT value. This follows recent trends in the manufacturing industry to scale down large projects and implement more moderate spending.
“We’re seeing issues raised in the survey that closely resemble challenges facing our clients,” said Doug Engel, national manufacturing industry leader at Deloitte & Touche. “Companies are looking to simplify IT environments, adopt strategies for outsourcing and shared services, and employ a tactical ERP in the context of an increasingly stringent spending environment.”
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