The Business Value of IT: Managing Risks, Optimizing Performance and Measuring Results

by Harris; Michael D. S.

• ISBN13: 9781420064742
• ISBN10: 1420064746
• Format: Hardcover
• Copyright: 2008-03-17
• Publisher: Auerbach Public

Summary

The Business Value of IT: Managing Risks, Optimizing Performance, and Measuring Resultsexamines how to measure IT performance, how to put a dollar value on IT, and how to justify value of an entire IT program. It places sharp technical focus on the techniques, methods, and processes used to identify and to assess risks. Based on the authors' extensive experience in the field, this comprehensive text discusses IT from the perspective of its contribution to business, the necessity of governance, the importance of measuring performance, and changes that must be made in order to effectively measure IT.

Table of Contents

Foreword	p. xiii
Preface	p. xv
Acknowledgments	p. xvii
Introduction	p. xix
About the Authors	p. xxiii
List of Commonly Used Acronyms	p. xxv
What Does IT Contribute to the Business?
What Should the Business Expect from IT?	p. 3
Information for Decisions	p. 5
Value for Money	p. 6
Risk Management	p. 7
Innovation	p. 8
Process	p. 9
Responsiveness	p. 11
Summary	p. 12
References	p. 12
How Do I Measure the Value of IT?	p. 13
What Is Value?	p. 13
Why Is It Important to Measure IT Value?	p. 15
Financial Value Measures	p. 16
Total Cost of Ownership (TCO)	p. 16
Return on Investment (ROI)	p. 16
Economic Value Added (EVA)	p. 17
Real Options Valuation (ROV)	p. 17
Return on Assets (ROA)	p. 18
Return on Infrastructure Employed (ROIE)	p. 18
Non-Financial Value Measures	p. 19
Multi-Dimensional Value	p. 19
Strategic Value	p. 21
Using IT Value Measurements for Decisions	p. 25
Dashboards	p. 26
The Business Case	p. 27
Value Visualization	p. 29
Summary	p. 31
References	p. 31
How Much IT Is Enough?	p. 33
ROI or Return on Investment for IT Spending	p. 34
IT Spending as a Percentage of Gross Company Revenue	p. 36
IT Distribution Analysis	p. 36
Organizational Evaluation	p. 39
Containing Cost Versus Innovation	p. 40
Summary	p. 42
References	p. 42
Am I Paying Too Much for IT?	p. 43
What Is a Budget?	p. 44
Defining a Budget for IT	p. 44
IT as a Percent of Revenue	p. 46
IT as a Percent of Total Operating Expenses (Opex)	p. 46
IT as a Strategic Business Partner	p. 47
IT Poised to Enable the Business Strategy	p. 51
Capitalizing IT Expenses	p. 52
Monthly Budget Review	p. 54
Monthly Project Review	p. 55
Summary	p. 56
References	p. 56
Why Should We Care About it Governance?
Who Governs IT?	p. 59
What Is IT Governance?	p. 59
Key Elements of IT Governance	p. 60
IT Principles Decisions	p. 60
IT Architecture Decisions	p. 61
IT Infrastructure Decisions	p. 62
Business Needs Decisions	p. 63
IT Investment and Prioritization Decisions	p. 63
Decision Input and Decision Making Models	p. 64
Summary	p. 69
Reference	p. 70
What Models Should IT Use?	p. 71
Capability Maturity Model Integration (CMMI)	p. 72
Control Objectives for Information and Related Technology (COBIT)	p. 77
IT Infrastructure Library (ITIL)	p. 79
Service Strategy Processes	p. 84
Service Design Processes	p. 86
Service Transition Processes	p. 87
Service Operation Processes	p. 89
Continual Service Improvement Processes	p. 89
International Organization for Standardization (ISO)	p. 90
Project Management	p. 92
Six Sigma	p. 93
Summary	p. 98
References	p. 98
Are We Outsourcing Effectively?	p. 99
Why Should We Outsource or Why Are We Outsourcing?	p. 100
What Are Our Competitors Outsourcing Today?	p. 101
What Should We Be Outsourcing?	p. 105
Is Our Governance of Outsourcing Appropriate?	p. 107
Are We Engaging With Our Outsourcing Vendors Appropriately?	p. 111
Are Our Service Level Agreements (SLAs) Driving the Behavior We Need?	p. 115
The SLA Framework	p. 117
Identifying Service Level Measures	p. 117
Measuring Levels of Service	p. 118
Monitoring Performance	p. 119
Summary	p. 120
References	p. 120
What Tools Should IT Use?	p. 121
What Are the Business Benefits of Using IT Tools?	p. 122
What Are the Business Risks of Using IT Tools?	p. 124
How Will IT React to Business Questions About Tools?	p. 125
An IT Software Tools Taxonomy	p. 127
Service Management Tools	p. 127
Service Support Tools	p. 128
Service Delivery Tools	p. 132
What Criteria Should We Use for Evaluating Software Tools?	p. 133
What Are the Best Options for Delivering IT Tools to End Users?	p. 134
Summary	p. 135
References	p. 135
Why Should We Measure It Performance?
How Do I Measure IT Performance?	p. 139
IT Value Contribution	p. 140
Four Key Performance Measures (+ One)	p. 142
Cost	p. 143
Quality	p. 143
Duration	p. 143
Customer Satisfaction	p. 144
The Missing Measure: Size	p. 144
Function Point Analysis	p. 146
Combing the Key Performance Measures	p. 147
Cost and Size	p. 147
Duration and Size	p. 148
Quality and Size	p. 148
Effort and Size Productivity	p. 149
A Successful Measurement Program	p. 150
Determining the Source of the Data	p. 150
Ensuring the Integrity of the Data	p. 151
Reporting the Data	p. 151
Summary	p. 152
References	p. 153
Is IT Operating Effectively?	p. 155
Introducing the Measurement Model	p. 155
Quantitative Data	p. 156
Qualitative Data	p. 158
Collecting the Data	p. 160
Quantitative Data Collection	p. 161
Qualitative Data Collection	p. 161
Analyzing the Data and Reporting the Results	p. 163
Measuring Effectiveness	p. 172
Improved Estimating Practices	p. 173
Summary	p. 175
References	p. 175
Where Are We in Relation to Industry Peers?	p. 177
Comparing to Industry Data	p. 178
Where Does the Data Come From?	p. 178
Comparative Data Points	p. 180
Developing a Baseline	p. 180
Initialization	p. 181
Establishing Baseline Objectives	p. 181
Defining Baseline Deliverables	p. 181
Identifying Key Data Elements	p. 182
Data Collection	p. 182
Defining the Data Collection Process	p. 182
Collecting Quantitative Data	p. 182
Collecting Qualitative Data	p. 182
Analysis	p. 183
Establishing Performance Profiles	p. 183
Establishing Internal Benchmarks	p. 183
Comparing Findings to Industry Data	p. 183
Project Performance Baseline	p. 183
The Baseline Process	p. 184
The Collection Process	p. 184
Quantitative Data	p. 184
Qualitative Data	p. 185
Baseline Deliverables	p. 185
Analysis of Process Strengths and Weaknesses	p. 187
Not-for-Profit Industry Data Sources	p. 189
ISBSG	p. 189
Software Engineering Institute Data	p. 190
The Importance of Auditing	p. 191
Objectives of an Audit	p. 192
Scope of the Audit	p. 192
The Auditing Process	p. 193
Problem Resolution	p. 194
Summary	p. 194
References	p. 195
How Can We Do IT Better?	p. 197
The IT Industry Context	p. 197
Case Studies	p. 199
Large Financial Institution	p. 200
Mid-Size Insurance Company	p. 202
Large Service Organization	p. 203
Performance Modeling	p. 204
Summary	p. 205
How Should We Change?
How Can We Manage IT Changes?	p. 209
The Need for Change Management	p. 209
Types of Change	p. 210
Seven Principles of Managing Change	p. 211
Two Levels of Management Support	p. 211
Proper Funding	p. 212
The Business Case	p. 213
Setting and Managing Expectations	p. 213
It's About the People	p. 214
Communicate, Communicate, Communicate	p. 214
Measurement Is Key	p. 214
Managing Resistance	p. 215
Using a Change Agent or a Coach	p. 217
Summary	p. 218
Further Readings	p. 218
How Should IT Manage Risk?	p. 219
Why Perform Risk Planning?	p. 220
How to Begin Risk Planning	p. 221
How Does Security Relate to Risk Planning?	p. 225
What Legislation Has Affected Risk Planning, and Why?	p. 226
Sarbanes-Oxley Act of 2002	p. 226
Health Insurance Portability and Accountability Act of 1996 (HIPAA)	p. 227
Gramm-Leach-Bliley Act of 1999 (GLB Act)	p. 228
Summary	p. 229
Reference	p. 229
How Should IT Manage Its People?	p. 231
What Should You Expect From Your CIO?	p. 232
Leadership	p. 232
Management Skills	p. 233
Communication Skills	p. 234
Technical Expertise	p. 235
Business Expertise	p. 235
Vision - Ability to Create and Manage Change	p. 236
Ability to Hire, Develop, and Retain High-Quality IT Professionals Who Can Work Together	p. 237
International or Global Experience	p. 239
Industry-Specific Experience	p. 240
Relationship Skills	p. 240
IT Staff as Assets	p. 240
IT Staff and Change	p. 243
IT Staff as Stakeholders	p. 245
Summary	p. 248
References	p. 248
What Should IT Expect From the Business?	p. 249
It's the Relationship That Matters	p. 249
Develop an Operating Model	p. 250
Statement of Commitment	p. 253
Summary	p. 254
References	p. 254
Index	p. 255
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