10 truths for measuring the business value of IT

Questions about the business value of tech often come from senior biz execs outside of IT. This can happen at the initial stages of a programme of work. The clever people @Gartner published these 10 truths a decade ago and I still use them today.

1. IT Organisation– In measuring the business value of IT, IT refers to the organisation within the enterprise, not the technology. In other words, funding isn’isn'tt for acquisition, bu also for securing, integrating and providing reliable services from IT.

2. Funding– A desire to optimise IT funding levels drives the need to measure the business value of IT.

3. Mon ey– is the unit of measure for value. IT people often talk about other attributes for value, but it all needs to be translated into a way the approving authority can compare to other sources requesting funding. Hint: DonDon'te text to describe the value of money, or the approving authority may discount your amount when translating it to a monetised benefit.

4. Transaction– You cannot measure the business value of IT without a transaction. Something must be delivered and consumed to measure the value of IT.

5. Services– You cannot measure the business value of IT until you have explicitly defined what the IT organisation is delivering (IT services) in a way that the consumer completely understands

6. Customer– The consumer determines the value of internal IT services by agreeing to pay for them. The approving authority for the IT budget is the consumer that will determine the business value of IT.

7. Operate & Change– All IT funding requirements can be grouped into two categories: Operate and Change. You measure the business value of these two categories differently.

8. Operate: Cost of Services– For the Operate portion of the IT budget (av. 66% of spend), value is measured by comparing the cost of your IT services to the next best alternative.

9. Change: ROI– For the Change portion of the IT budget (av. 35% of spend) all benefits must be quantified, so that the ROI can be measured.

10. Enduring– All these truths are enduring and are not influenced by changes in technology or processes. 

Reading a recent post about the hidden risk of metrics got me thinking about what the 10 truths are for measuring tech outcomes and during build to ensure they deliver their intended biz value. 

HerHere'sfew of my thoughts. What are yours?

1. Business-outcome-driven metrics– Monitor metrics that align with and track progress toward concrete business goals. (Note: tech-first metrics may be more easily accessible & trackable but collaborate with biz stakeholders to establish which link to biz goals)

2. Gather user feedback– Regularly speak to those who use the technology to understand its impact. Combine metrics and anecdotal insights to determine leading indicators.

3. Business value accountability– Focus all involved on delivering business outcomes, not outputs. Align incentives with business impact. Integrate business leaders into product teams to ensure direct value linkage.