How to Measure IT Value

May 25, 2021

What do you expect of your IT organization?  Are they simply a utility expected to work in the background and keep the infrastructure running? Are they expected to be a source of commercial service/product innovation?  How do you know if you are getting enough value from your IT organization or IT investments?

As companies mature and grow, it is common to question whether IT is delivering the value needed.  The skills and talent needed in a growing company usually expand and it is difficult for leaders to feel confident they’re getting the value they should.

It can feel rather subjective but there are key questions you can explore to determine whether IT meets your value expectations:

• Is IT a significant contributor to achievement of business goals?
• Does IT help advance and accelerate strategic goals?
• Is IT a strategic partner that proactively identifies opportunities and addresses challenges in the business?
• Is IT’s budget appropriately sized for the anticipated growth trajectory of the company?
• Does IT ensure that the company leverages your IT systems, tools, and capabilities?
• Does IT add value by ensuring investments attain benefits and anticipated returns?
• Is IT a strategic enabler and a source of product/service innovation?

The Next Steps:

Of course, not only explore how effective IT is at each of these but also how important is to your company?  Most companies expect IT to be more than just the backroom utility. Improving IT value is less subjective when you address the following critical areas:

IT Organization Strategy – Determine what expertise and talent is required and how to best align your IT resources.  A good structure can help ensure you not only have the needed skills but builds the foundation for efficient processes that do not incur too many handoffs. Do not forget to explore different staffing options.  What really needs to stay in-house and when is it OK to use staff augmentation? Should outsourcing be used or a managed service? If you decide to outsource or use a managed service, do you have the vendor management skills in-house to hold them accountable?

Harmonize Information & Technology (I&T) with the Business Vision -   The I&T strategy is not for the IT organization but rather describes how information and technology will be used to achieve the business vision and should be embedded directly in the business strategy.  Some things to consider include what business and technical capabilities are needed to achieve the goals? What trends are relevant in your industry? Does anything in your culture enable or inhibit the strategy?

Execution Plan & Roadmap – Typically, no longer than a two or three-year plan should be developed. The roadmap should outline all the requirements including skills, business capabilities, technologies, etc. in a multi-year plan that will help ensure you are on the right path and that you have what you need when you need it.

KPIs & Metrics that Matter – If the vision is to increase revenue, or improve customer loyalty how will it be measured? Determine the expected outcome, define the key performance indicators and what metrics will be used.   Defining the business KPIs and the right metrics will demonstrate success or opportunity and can be used to show value.  All major projects or programs should have clear, measurable success factors defined to ensure attainment of the expected benefits and return on the investment.

Industry Benchmarks – IT spending and IT staffing benchmarks can help gauge how competitive your investments levels are compared to similar companies.  How does your company align to the industry averages and do you want to be average? Does the company workforce benefit from IT automation or is it largely a manual workforce? Are you overspending compared to similar companies and is it justified by the competitive advantage? These are just some of the questions benchmarks can help with.

If your IT is not as  effective at delivering value as it should be and it is important to your company, let us talk about how ITechrity Exec Consulting can transform your IT organization and I&T strategy to one that meets your value expectations.