6 steps to measure the business value of IT

5. Measure the value proposition

“We’ve learned in our discussions and from scientific findings that there is no general, standardized measurement with definitive key figures,” says Matschi. “Each measurement is individual and dependent on the stakeholder and the business case under consideration.”

Against this background, the consultants developed a 3×3 matrix structured according to IT- and business-oriented key figures. Both quantitative and qualitative measurement approaches are presented in order to measure the value contribution individually for a stakeholder or a business scenario. Depending on the focus of the activity (operation, projects, innovation) and business architecture (IT capabilities, business capabilities, business goals), different types of added value can be derived, behind which there are certain metrics.

Discussions with the CIOs made it clear where the hurdles lie in the measurement. It’s particularly difficult to measure the IT value added, for example, in day-to-day operations, especially in network or workplace ​​commodity IT services, says Holger Blumberg, CIO at mechanical engineering company Krones.

6. Planning the communication

Once the value contribution is identified in its respective forms, the next step is well-planned communication. CIOs should consider what information they want to provide to whom. From 4C’s point of view, the form of presentation is also decisive for success, which must look different for qualitative metrics than for quantitative ones.

In order to get more added-value visibility, and find out where IT can provide even better support, CIOs go different ways. Kleine from Pfizer Germany, for example, introduced IT ambassadors in the departments that support communication. Büchner, CIO of SachsenEnergie, relies on the additional role of “demand managers,” or IT employees with business skills who act as an interface between IT and business, and take care of the communication with the department.

The sum of its parts

Discussions with CIOs have shown that the process model can be used in practice. Krones CIO Blumberg, who helped develop the model with his team as a practical partner, reports on successful piloting and success in cooperation with stakeholders. In addition, the survey revealed other useful results that could help make the IT value contribution more tangible. Matschi and Held add there’s no single value behind it, but a conglomerate of metrics. These can be of a qualitative or quantitative nature that ultimately show how satisfied stakeholders in the departments are with IT. It’s important to connect facts with perceptions, and that metrics are measured in dimensions that are relevant for respective stakeholders. The bottom line is it’s about shared success across departmental boundaries. Both IT and business departments should be able to see how IT affects business performance, so neither can create value on their own. In the end, it’s the combination of IT and organizational skills that counts.

(This post is based on an article from our sister publication CIO Germany.)