4 Steps to Improving IT Value Realization

IT Value RealizationImproving IT value realization is clearly top of mind for many executives these days. Sadly, IT value realization is more of a focus among CEO’s and CFO’s than it appears it is for CIO’s. The reasons I am hearing for the interest in IT value realization in the executive suite often start something like “IT seems like a black hole” or “we just know what value we are getting for our IT spend”.

What is IT Value Realization

Just to be sure we are all thinking the same way about IT value realization, I thought I should at least offer my view on what IT value realization is. I consider IT value realization to be the moments when you achieve or extract the intended benefit from an IT investment, a project or other activity.

Some prefer to refer to it as benefit realization because it aligns better to achieving the benefits of a project business case or cost-benefit analysis. For me, value is much more encompassing and extends beyond IT project applications which is why I prefer ‘value’ over ‘benefit’.

Improving IT Value Realization

I recently had a great discussion about how to improve IT value realization. My first recommendation was to consider reading a book like Making Technology Investments Profitable. That recommendation is based on the simple, yet thorough, approach offered by the authors and because you can find supplementary writings such as the one linked to below on the value realization method.

So I thought I would share a basic 4-step approach to improving IT value realization with you here in hopes that more CIO’s will engage on this issue and avoid their CFO or CEO having to do it for them.

Step 1: Diagnose the Value Challenge

  1. Understand the value realization gaps and develop strategies targeting those issues
  2. Reconcile the time and energy devoted to value realization versus other less significant aspects of your program or project management processes and IT operations
    1. Management and stakeholder decision-making time devoted to value realization
    2. IT budget, IT investment and project approval decision-making processes
    3. Ensure value is central to all decision-making process and models
  3. Ensure your IT governance model focuses on value creation and accountability for value realization
  4. Ensure your organization’s definition of IT success speaks to the IT value contribution

Step 2: Create a Culture of Value

  1. Promote and foster a value oriented mindset amongst management
    1. Program & Project Management must put value at the center of all processes and reporting
    2. Think in terms of value and regularly reinforce and discuss key concepts of value and value realization (Leaks) at every turn
    3. Allow for thinking in terms of probabilities and confidence levels rather than absolutes when considering value and benefits
    4. Develop a sense for the trustworthiness of the value claims in every business case
  2. Attack the tolerance for process problems and value realization failures
  3. Address the emotional dimension of implementing value accountability

Step 3: Increase Your Capability for Creating Value

  1. Train on how to build a better business case
    1. Train on writing a good, trustworthy business case
    2. Train on quantifying value and calculating ROI
    3. Develop rules and train on treatment of tangibles and intangibles as well as soft dollar versus hard dollar inflows/outflows
  2. Educate your workforce on what is valuable to your organization and your IT value proposition
    1. Create awareness for what value leaks are, where they live and strategies to avoid them (Value Leaks are those moments when you can realize a benefit but you don’t)
    2. Similarly, there must be awareness on why projects fail and what the processes and controls designed to mitigate those influences
  3. Strengthen processes and controls making value realization central to their purpose

Step 4: Develop an IT Value Audit Process

  1. Incorporate a value attainment tracking (IT Value Realization Method) method to plan out and track benefit realization
  2. Develop “value quality control” process for business cases before going for approval
  3. Audit for IT value realization throughout the program/project lifecycle
    1. Ensure process model focuses on building value and value attainment
    2. Safeguard against proxies (earned value) that are not direct measures of value
    3. Audit and report on for value realization post project
    4. Budget for committed IT value realization (inflows and outflows)

Of course this is not an exhaustive list. But it should give you enough of a starting point to create your own plan. If you get nothing else from this simply consider the amount of time and attention (like status reporting) you devote to value versus other attributes of IT success and IT performance.

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