News on ISACA's Value of IT Investments survey

Pick more winning IT investments and get the story straight from the horse's mouth, as it were:

ISACA have just issued their news release, Nine-country ISACA Survey: Two-thirds of Companies Not Fully Measuring IT Value, Neglecting Competitive Advantage, about the survey I mentioned in my post yesterday, Businesses failing to capture IT value.

The good news is that 76 percent of the survey respondents are aware of the Val IT framework.

The bad news is that only 44% have some kind of framework or guidelines in place to select the investment that will result in the highest value. What do the remaining 56% do? Even seasoned gamblers have a system.

Businesses failing to capture IT value

In this recent NBR article, which refers to a survey by ISACA and quotes John Thorp, one can identify at least five key issues that are preventing organizations from realizing value from their information system (IS) and information technology (IT) investments:

• The failure to establish a shared understanding of what constitutes value across the enterprise.
• The failure to focus on and measure the realization of benefits.
• The failure of business stakeholders to own the realization and measurement of benefits, and assign appropriate accountability for the changes needed to realize the benefits.
• The failure to adopt effective value delivery practices, such as Val IT, to manage IT-enabled investments as a portfolio of investments, to include the full scope of activities required to achieve business value, and to manage investments through their full economic life-cycle.
• The failure of boards and CEOs to accept accountability for the performance of their value delivery practices.

Organizations that persist with current value delivery practices cannot reasonably expect to achieve value from their IT-enabled investments, except by chance. In fact, they would problably do better if they gambled the investment in a casino! (A Cranfield Univerity study of the IS investment processes of large companies found that just 27% of projects delivered the benefits that justified the investment. This statistic has remained largely unchanged in 30 years despite the advancements in technology and IT professional practices - the things that IT can control.)

Introducing effective value management requires commitment to a change in behaviour and it is needed from the very top. John Thorp has more to say about this in his blog, Managing Change - The key to Delivering Value: "Individual board members and executives are being asked to change their behaviour – behaviour that they may feel has served them well in the past."

"It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Beall Sinclair, Jr. American novelist and polemicist, 1878-1968

Leveraging the Value of IT in Good Times and Bad

John Thorp's article, Leveraging the Value of IT in Good Times and Bad, published in IndustryWeek.com and discussed in his blog today, describes how between 20%-30% of current and new expenditures can be reduced or curtailed and the potential value of investments increased by two to three times. John's advice is for all business leaders:

• IT can no longer be managed as a black box because IT is now entwined in the business processes that make up an organisation's value chain and investments are not about IT but about change;
• Effective governance is needed to make the right decisions concerning investment in IT-enabled change, manage those investments throughout their full lifecycle so that they continue to create and sustain value, and letting go the ones that won't;
• ISACA's Val IT practices for value governance, portfolio management and investment management can be used selectively to improve the quality of decisions and reduce risk.

Val IT 2.0 is a new framework with supporting publications addressing the governance of IT-enabled business investments (see Getting Started With Value Management).

John Thorp is President of The Thorp Network (http://www.thorpnet.com/), author of The Information Paradox, and Chair of Val IT™ Steering Committee for ISACA.

The Business Case for implementing IT governance frameworks

Organizations that effectively implement IT governance frameworks achieve their IT and business goals more frequently, according to a recent study of 538 organizations worldwide by the IT Alignment and Governance Research Institute of the University of Antwerp (ITAG).

The study was commissioned by ISACA to explore and demonstrate the business value of implementing the COBIT and Val IT frameworks.

Implementing these frameworks is perceived as costly and complex but the research shows that it does ultimately create business value. This study revealed that:

• A strong, positive relationship exists between the implementation status of COBIT and Val IT processes and the achievement of IT goals - the more complete the implementation of these processes, the higher the achievement of IT goals
• A strong, positive relationship exists between the achievement of IT goals and the achievement of business goals - the higher the achievement of IT goals, the higher the achievement of business goals.

These strong, positive relationships would also imply that the opposite is true, so not implementing these frameworks across the enterprise is likely to have an adverse effect on business performance.

ISACA's executive briefing on the study, Building the Business Case for COBIT® and Val IT™, can be downloaded from www.isaca.org/downloads.