Like it or not, IT has no inherent business value. All of the datacentres, blade servers, enterprise applications, networks, and so forth have no business value by themselves.
Yet, millions of dollars are spent on hardware, software, and applications development for an IT project that ultimately provides little or no return. The project is termed a failure, business leaders continue to question the investment in IT, and then the cycle repeats.
CIOs have been searching for ways to measure, improve, and communicate the business value of IT for years without a lot of success. Many have implemented PMOs, hired certified project managers, and begun CMMI or Six Sigma initiatives, all designed to improve their project management and project execution capabilities.
But bringing IT projects in on time and on budget and delivering all of the specified functionality hasn't necessarily led to business value and improved business outcomes. The reason is that it isn't simply a matter of implementing technology, but using the technology as a means to enable business and/or organisational change.
The first step in improving IT business value is to stop thinking in terms of IT projects and begin thinking in broader terms about IT-enabled business change programs. With the exception of some pure infrastructure investments (e.g., a server capacity upgrade), it is not the technology that provides the value - it is how that technology is used. This means that there are organisational, people, and process changes that must take place in concert with the technology implementation.
Realising business value from these investments requires more than an RoI section in a business case. It requires an actively managed formal process that forecasts the expected benefits, continually monitors the program to ensure that it is on track, measures the actual benefits realised over the life cycle once it is deployed, and holds people accountable for these results. Components of a successful program management capability include:
Clear definition of program scope. All of the activities required for the success of the program must be explicitly defined and documented. This means that in addition to the IT project(s), any required organisational changes, business process changes, and training must be included as part of the program. Most, if not all, of these additional activities are outside the scope and control of IT.
Shared accountability for results. Successful programs require that both IT and the business execute their respective projects well. This means adhering to budgets and schedules and being held accountable for the results. IT is accountable for delivering the IT project(s), while the business unit is accountable for the business (organisational, people, and process) projects and for the overall benefits of the program.
Active program management. Programs must be constantly monitored to ensure that they remain on track to deliver value to the business. Change caused by internal and external forces is a constant in today's world. Sometimes these changes can affect a program adversely. When this occurs, the program must be re-evaluated to determine if it is still viable. In some cases, programs can be adapted to preserve value, and sometimes programs must be terminated and resources redeployed where they can be more effective.
The IT project culture is deeply ingrained in many organisations and business has delegated many important project-related decisions to IT for years. Transitioning from this IT-centric project perspective to a business-driven, IT-enabled business change program perspective will require significant changes in behavior across the organisation from IT project managers up through senior executives. This transformation can be accomplished by creating awareness at all levels, expanding the scope of the PMO and enforcing accountability.
Successful IT-enabled business change programs require more than just improved program management. Benefits don't just happen, especially when they are predicated on the successful deployment of information technology. IT provides a capability that must eventually be linked to a business outcome for benefits to be realised.