IT Value Creation: A Roadmap for CIOs

According to Cutter Consortium Senior Consultant David J. Caruso, "IT plays an important role in strategic planning, and cost-effective implementation of the right IT investments creates competitive advantage. Too many CIOs face a serious and untenable credibility gap. Even if their performance is stellar, they don't know how to prove it -- to themselves or to their CEOs. This is an unenviable spot that requires facts and decisive next steps."

"Savvy CIOs recognize that to thrive, they must develop a different view of their performance, one expressed not in the language of technology but in terms of profitability and growth. With technology acknowledged as an essential part of a company's strategic thrust, CIOs are now challenged with showing how well IT propels company achievement. Running a tight ship is expected, but the effect pales when compared to applying technology adroitly to core business processes."

Caruso asserts that organizations must make three factors inherent to its approach to all projects and ongoing systems usage if it is to realize value from its technology. These factors are:

1. Adoption. Technology is not effective if it is not used. CIOs should constantly ask, "Are we really effective in the way we deliver technology to users? Are they using it to its fullest potential?" Far too many ERP projects set out with lofty user-count targets but years later find that only a fraction of the users -- and often an even smaller percentage of the functionality -- was actually put in place.

2. Process performance improvement. Experience shows that projects are more successful when systems arm users with processes that are better than they had before or that are innovative, which helps them speed delivery, reduce overhead, and create new market opportunities. For organizations to be successful, managers must link strategic business drivers to business processes via metrics that monitor the achievement of strategic goals, not just project completion. Higher productivity from these processes becomes institutionalized in the profit margins.

3. Realization of benefits. IT effort should target improved business results. For most organizations, this means profitability. For others, such as nonprofits, it means an improved ability to achieve the organization's mission. All project measurements should include ROI or overall financial return. CIOs must be able to translate the operational changes that come as a result of IT projects into measurable value. And then they must work with the LOB executives to ensure that the value shows up on the financial statements.

Caruso concludes, "Progressive companies recognize how important it is that IT investments give managers the information and technologies they need in a cost-efficient manner. A well-managed IT organization that is in tune with the company's strategic direction makes an enormous contribution to the company's competitiveness. No IT organization has reached Nirvana, but the progressive ones identify where they fall short and take immediate action."

To request a copy of the Business-IT Strategies Executive Update, "Assessing Business Value Creation from IT: A Diagnostic Roadmap for CIOs" or to schedule an interview with Cutter Consortium Senior Consultant David J. Caruso, contact Ron Pulicari (+1 781 641 5114 or rpulicari@cutter.com).

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