Assignment: IT And Business.
Assignment: IT And Business.
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So Who Should Make the Decisions?
• Ross & Weill say • The CEO should not make those decisions alone • C-level executives should not even make those
decisions • Input is needed from both IT and the business units
alike • Steering (or Executive) Committee solution
© 2016 John Wi ley & Sons, Inc. 12
Building a Business Case – Components
• Executive Summary
• Overview and Introduction
• Assumptions and Rationale
• Project Summary
• Financial Discussion and Analysis
• Benefits and Business Impacts
• Schedule and Milestones
• Risk and Contingency Analysis
• Conclusion and Recommendation • Appendices
© 2016 John Wi ley & Sons, Inc. 13
© 2016 John Wi ley & Sons, Inc. 14
Sample of benefits in a business case for adding chat function linked from Facebook page
Busy chat operators; busy Facebook page; Customers seem happier
Sales improved by $250k; costs decreased by $50k after change
Facebook page likes; number of chats; Customer satisfaction scores moved from 3.3 to 4.1 (out of 5)
Converted 150 calls per day to chats; reaching 200 more customers per day
© 2016 John Wi ley & Sons, Inc. 15
IT Portfolio Management
• IT investments should be managed as any other investment.
• Evaluate and approve IT investments as they relate to other potential investments of all kinds
• Goals: • Pick the right mix of investments
• Invest in the most valuable IT initiatives
© 2016 John Wi ley & Sons, Inc. 16
Asset Classes
• Weill and Aral say that there are four asset classes of IT investments: • Transactional systems – systems that streamline or cut
costs on business operations.
• Informational systems – any system that provides information used to control, manage, communicate, analyze or collaborate.
• Strategic systems – any system used to gain competitive advantage in the marketplace.
• Infrastructure systems – the base foundation or shared IT services used for multiple applications.
© 2016 John Wi ley & Sons, Inc. 17
Average company’s IT portfolio profile (See Discussion Question 4)
Transactional
13%
Infrastructure
54%
Informational
20%
Strategic
13%
46%
25%
18% 11%
© 2016 John Wi ley & Sons, Inc. 18
Comparative IT portfolios for different business strategies (See discussion question 4)
Valuing IT Investments
• Soft benefits, such as the ability to make future decisions, make it difficult to measure the payback of IT investment • IT is expensive, thus under close scrutiny. • IT is complex; calculating the costs is an art, not a science.
• Payback period for infrastructure is much longer than other types of capital investments.
• With necessary systems (due to laws, etc.), the payback period cannot be calculated
• Many valuation methods are available…
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