Businesses failing to capture IT value

by CBR Staff Writer| 29 July 2009

Isaca study poses benefits realisation challenge

Data being crunched by Cobit-authors Isaca will reveal that although enterprises believe they are realising value from their IT investments they cannot be sure, because most of them fail to fully measure it.

When details of its findings are published later this week, Isaca’s report will show how in a nine-country survey of 1,217 IT professionals two-thirds accepted they were failing to measure IT in ways that provide a full account of its benefits.

The IT governance, security and assurance body carried out its Value of IT Investments survey to assess if any progress is being made in the area of IT benefits realisation.

It found that half of the respondents believe they are realising between 50% and 74% of the value they expected from their IT investments. Nearly 20% believe they are realising between 75% and 100%. Yet, half measure the actual value only ‘to some extent’ while 10% of sites apparently do not measure value returns at all. 

Fewer than half of respondents believe their organisations have a shared understanding of value across the enterprise. A similar number reported that accountability for such value measurements is delegated to the IT function itself, instead of remaining with the business, where it belongs.

It is about three years ago since Isaca introduce its Val IT framework as a means of helping businesses measure, monitor and improve the value being gained from their IT investments. The body insists that it is the responsibility of senior business management, rather than IT professionals, to ensure investments in IT-enabled projects provide the expected returns and add value. 

Val IT recommends that IT-enabled projects are managed as a portfolio of investments, focused on business value, and supervised through their economic lifecycle. 

The Val IT framework is tightly integrated with COBIT, the collection of approved ‘best practice’ processes for IT governance. Specifically, Val IT focuses on the investment decision and the realisation of benefits, while COBIT focuses on the execution.

John Thorp, chair of the Val IT Development Team for Isaca and president of the Thorp Network, commented, ‘The results of this survey reinforce findings from earlier studies. This raises the question - On what basis are spending decisions made? Additionally, enterprises that do not fully measure value are unable to determine which investments are successful and which need to be cut - and thereby are likely to miss out on revenue-generating opportunities, pursue unsuccessful investments and neglect competitive advantage.’

The consultant argues that organisations will not come close to realising the full value of their IT investments until they adopt effective value management practices and assign accountability for the realisation of value from those investments to the board and CEO, rather than abdicating it to the CIO.

He added, ‘These findings support the results of a number of other studies, anecdotal evidence and my own experience that most decisions related to value from IT are subjective, and all too often are based on perception and emotion rather than on facts.’

Thorp’s view regarding the lack of business accountability for value from increasingly significant and complex IT-related investments is reflected in the 49% of Isaca’s survey respondents stating that the CIO or IT managers are responsible for ensuring that stakeholder returns on such investments are optimised. 

Only 15% said responsibility lies with the board, another 11% with the CEO and 9% the CFO. Remarkably, 8% said no one was responsible.


 

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