Justifying IT Investments

IT spending is reportedly increasing, albeit modestly (6-7%, 2006; 2%, 2007). It is clear, however, in both research reports and my own conversations with customers, that enterprises are not releasing funds to CIOs and IT Executives without justification and metrics. A recent InformationWeek article explores this increasing trend.

While ROI has long been an important factor in justifying IT investments, the notion of measuring the effectiveness of these investments is a welcome extension. I have always been critical of and frustrated by both vendors and IT departments that do not track technology's contribution to the business. Reasons for a lack of measurement range from the difficulty of the task, to plain old politics. In the end, time and time again, the most effective providers and implementers of technology are those who track its value back to the mission of the organization. Furthermore, the IT employees who always appear to be on the fast-track to promotion are the ones who can provide evidence of the bottom-line results their efforts bring to the organization.

This list of a dozen metrics for measuring IT's effectiveness is an excellent start. The key for any manager, however, is to select those metrics that are best suited to their projects and organization...and stick to them. The ease with which overcrowded "executive dashboards" can be developed can lead to analysis paralysis. This is debilitating, allowing managers to avoid making critical decisions by hiding behind data, and preventing important projects from ever getting off the ground. A healthy balance and consistency yields the best results. Obviously neither the ability nor desire to measure effectiveness guarantees a successful implementation of a particular technology. However, through regular measurement and analysis, an organization can make data-driven tweaks and improvements, learn from mistakes, and foster a culture where IT is credited as a profit-center.

Doing More With Less

CIO Insight released its latest Business Process Improvement (BPI) Survey since 2003. According to the survey, BPI ranks as the "top business priority for IT organizations." This is an increase from their April CIO role survey, where it was the #2 priority.

Since I have been engaged for years in the Business Process Management (BPM) market and directly seen interest rise, I am not surprised by such a high priority designation. What is noteworthy is that for $1b+ organizations, one of the most significant drivers for process improvement is "ensuring compliance with regulations." This is only 2 percentage points behind the #1 driver, "improving productiviey." For smaller organizations, compliance ranks low on the list.

I suspect for larger companies, high-profile legislation and increasingly complex industry rules and regulations, coupled with large distributed workforces, the constant threat of litigation, and personal accountability (courtesy of Senators Sarbanes and Oxley) makes ensuring compliance a top priority. According to the survey, the holy grail is an approach that improves productivity and ensures compliance, all while reducing cost (priorities 1, 2, and 3 respectively). It harkens back to the old addage of "do more with less" with the addendum "...but make sure it's legal."

Hasn't this always been the case? Is any legitimate corporation interested in inefficient processes that waste money and break the law (set aside the Enron's of the world for a moment). It is encouraging to see that IT organizations, long criticized for being a cost-center, are increasingly focusing on technology to help directly improve business processes. In fact, I often encourage customers to use their BPM systems to demonstrate the explicit value of their contribution to their organization.