Achieving Business Value from Technology: A Practical Guide for Today's Executive

Introduction xi

Chapter 1: Industrial Age Thinking for Information Age Problems 1

Business Value from Information Technology (BVIT)—A Large and Growing Problem 2

Learning from Case Studies 3

What Do These Case Studies Have in Common? 11

Some Historical Perspective 12

Drawing Conclusions from These Changes 23

Revisiting the Case Studies 27

Industrial Age Thinking for

Information Age Problems 30

The Limitations of Financial Metrics 30

The Value of Financial Techniques for IT Investment Appraisal 36

What Else Do We Need? 36

Summary 38

Chapter 2: The Five Pillars of Benefits Realization 39

Pillar 1: Strategic Alignment 42

Pillar 2: Business Process Impact 45

Pillar 3: Architecture 52

Pillar 4: Direct Payback 61

Pillar 5: Risk 66

Summary 76

Chapter 3: P2—Process 77

Step 1: Setting the Ground Rules 81

Step 2: Defining IT Value Standards 90

Step 3: IT Value Analysis 95

Step 4: IT Value Project Management 113

Step 5: IT Value Achievement 118

Step 6: IT Value Management 127

Selecting Specific Products and Vendors 140

Refinements 142

Sensitivity Analysis 146

Investment Scope 147

Summary 148

Chapter 4: P3—People 151

Roles—A Foundation Stone of Effective Governance 153

The IT Council 155

The IT Investment Board 157

The Office of Architecture and Standards 159

The Project Office 163

Summary and Next Steps 165

Appendix A: Sample Value Standards 169

Strategic Alignment 169

Payback 171

Architecture 173

Business Process Impact 174

Risk 174

Appendix B: Sample Value Standards Scoring Metrics 177

Business Process Impact 177

Architecture 180

Risk 181

Appendix C: Completed Weightings 183

Appendix D: From the Field—Investment Case Worked Example 185

Appendix E: Quantifying End-User Benefits 201

Preliminary Information 201

Opening the Meeting 202

Resolution of Inconsistencies 202

Quantifying the Benefits 203

Refine Quantification 205

Cross-Verification 205

Appendix F: Gartner Recommended Approach to Risk Management 207

Collaborative Risk Management 207

Risk Assessment Processes 208

Predictability and Complexity of Risks 215

Summary 216

Appendix G: Analytical Hierarchy Process/Analysis 217

Appendix H: Probability Analysis (Monte Carlo Simulation) 227

Appendix I: Gartner Approach to Change Management: Strategic Planning Assumption 231

The Need for Change Management 231

The Human Response to Change 233

Appendix J: Financial Metrics 239

Net Present Value (NPV) 239

Internal Rate of Return (IRR) 239

Index 243