Comments on: The value of IT exists over time not at a point in time

By: IT Infrastructure has been among your most productive assets

IT Infrastructure has been among your most productive assets — Tue, 10 Aug 2010 13:58:34 +0000

[...] sure to measure this scale over time, as that is how IT creates value. Besides at any one point in time, all you tend to focus on is [...]

By: Is there one metric that best demonstrates the business value of IT?

Is there one metric that best demonstrates the business value of IT? — Fri, 18 Jun 2010 06:06:48 +0000

[...] says everything is the progression of that metric over time. See my prior post: The value of IT exists over time not at a point in time for more details. That shows that IT is well managed, has a business impact and has meaning to [...]

By: IT Zero or IT Hero « The Death of Business Intelligence

IT Zero or IT Hero « The Death of Business Intelligence — Mon, 26 Apr 2010 09:56:00 +0000

[...] department back into the corridors with the rest of the workplace. As Mark McDonald said, “the value of IT exists through time, so any measure of IT should be shown across time”, while, it may be the case that you are no [...]

By: Technically oriented IT metrics one of the CIOs and IT executives make it easier to separate business from IT

Thu, 21 Jan 2010 11:56:40 +0000

[...] is necessary to capture IT’s actual contribution to changing bsuienss performance. Here is a link that describes this point in greater [...]

By: Are you providing the CEO with the best script for IT?

Are you providing the CEO with the best script for IT? — Wed, 06 Jan 2010 14:47:39 +0000

[...] related posts: ITs value exists over time [...]

By: Mark McDonald

Mark McDonald — Sun, 08 Nov 2009 22:44:02 +0000

Mark

Thanks for your comments and yes I am saying that IT value is in terms of business performance as a whole. It may sound hard to implement, but if we do not start, then the IT value conversation only revolves around what IT spends — a losing proposition for IT and the business.

You are right that companies spend a lot on IT, but in reality its often a pittance compared to what they spend on the other part of their operations. Assume a company spends 5% of revenues on IT and has a 20% margin. That means that is spends another 75% of revenues on cost of goods, operating expenses etc. That is a 15x leverage comparing the IT budget to the operating budget.

You are right that IT looks like a big line item, in large part because the budget for IT is consolidated under the CIO. This makes it a target for financial engineering, but CFO’s and the like are managing the pennies despite the dollars. Leaders are concentrating on what IT can do to change the performance profile of the other 75% of their expenses, rather than skinning down 5% of their total budget. They are doing that through connecting IT spend, not to IT budget but to business performance — hence the reason for the post.

Keeping IT separate form business performance means that executives will continue this practice and micro-manage IT because its easier to see and change than the entire enterprise. Without a way to show the relationship, both positive and negative, of IT to business performance, then we only have ourselves to blame when IT budgets get cut without consideration of their business impact today and in the future.

It is difficult to prove that connection at a point in time. However, you can see IT’s impact on business performance over time.

So here is a thought, just start making this connection, include it in your metrics, share it with your teams. You are not trying to get all the credit but you are trying to show “where we work good things happen.”

See what this does to the conversation about IT, benefits realization and the like. We have to change that conversation, else we will become a back office, commodity cost.

By: Gartner Blog Network — Gartner Blog Network

Gartner Blog Network — Gartner Blog Network — Sun, 08 Nov 2009 20:56:54 +0000

[...] The value of IT exists over time not at a point in time November 6th, 2009 · by Mark McDonald · 5 commentsDemonstrating the business value of IT is challenging CIO’s, CEO’s, CFO’s and other managers. The problem is not that IT creates no value; it is just how do I measure and communicate that value. Current practices in IT measurement and metrics do not help as they concentrate on reporting how… Read more… [...]

By: Gartner Blog Network — Gartner Blog Network

Gartner Blog Network — Gartner Blog Network — Sun, 08 Nov 2009 20:56:30 +0000

[...] The value of IT exists over time not at a point in time November 6th, 2009 · by Mark McDonald · 4 commentsDemonstrating the business value of IT is challenging CIO’s, CEO’s, CFO’s and other managers. The problem is not that IT creates no value; it is just how do I measure and communicate that value. Current practices in IT measurement and metrics do not help as they concentrate on reporting how… Read more… [...]

By: Links for November 8 2009 | Eric D. Brown - Technology, Strategy, People, Projects

Sun, 08 Nov 2009 14:44:56 +0000

[...] The value of IT exists over time not at a point in time by Mark McDonald on the Gartner Blog Network [...]

By: Mark Brewer

Mark Brewer — Sun, 08 Nov 2009 02:12:52 +0000

I really like the point of this article, but the practical side of it is very difficult to put into practice. In a sense, you are saying that a discussion about IT value is really a discussion about business results as a whole. If they are improving, then IT somehow gets some credit for this (along with others). If they are not improving, then the blame (along with others). The problem is when the business is spending $1XX M on IT it becomes a big spend bucket and it is almost inevitable that finance and others want to start breaking it down. Once you start breaking it down, then the ‘value as a whole’ approach starts to break down.