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Managing and Measuring Business Value
 

Managing and Measuring Business Value

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Managing and Measuring Business Value

Managing and Measuring Business Value

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    Managing and Measuring Business Value Managing and Measuring Business Value Presentation Transcript

    • Brian FitzGerald, Senior Advisor, IVI Managing and measuring business value “Jimmy Choo versus the Duke of Wellington” © Innovation Value Institute 2013
    • “Jimmy Choo versus the Duke of Wellington” © Innovation Value Institute 2013
    • “Of Clouds & Clocks” IT Systems and their usage by human beings are “Clouds” which are increasingly mistaken for “Clocks” Source: Karl Popper “Of Clouds and Clocks” in “Objective Knowledge, 1973 © Innovation Value Institute 2013
    • Measuring Value as a Target - Goodharts Law “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes” (1975) © Innovation Value Institute 2013
    • IT is an Intangible Asset. Difficult to measure its financial effects - Value created is indirect - Value is contextual - The value of tangible assets is actual - The value of intangible assets is potential - Assets are bundled Kaplan, Robert S.and David P Norton: © Innovation Value Institute 2013 “The Strategy-Focused Organization”, Harvard Business School Publishing Corporation, Boston, 2001
    • Value Measurement - Value is Perceived - Value is contextual - IT systems and their users are not predictable (so value and its delivery not easily planned) - Measuring Value as a target can distort the delivery of value - Intangible Assets don’t deliver direct Financial Value If we remember all that, the rest is easy!! © Innovation Value Institute 2013
    • Tools to use - Power of the Results Chain Power of the Benefits Register (Metrics) Power of the VARA Planning & Prioritisation Power of the Strategic Logic Chain/Benefits Dependency Network The Mini-Business Case (S/A, Fin, Risk, Time) Decision Aids © Innovation Value Institute 2013
    • Benefits Identification: Results Chain Complete DATA Identification ALL Resources available when required Complete IT Interface work Communicate with Stakeholders System Established Achieve Crititcal Success Factors Other Divisions will accept it TEST SYSTEM Users will use system System Tested Establish Techical Support Function Initiate Implementation Plans Devise Impelementa tion Strategy E-Learning Pilot executed Survey Pilot users for feedback Survey Lessons Learnt Increased Cost Efficiencies System in use throughout Organisation E-Learning System in all Business Units Regularly Update Content and get User Feedback Train Users © Innovation Value Institute 2013 Continuos Learning is facilitated Source: from Thorp, J “Information Paradox” MORE EFFECTIVE ORGANISATION Learning linked to Business Strategy Automated Competency Register
    • Results Chain and Benefits Register Complete DATA Identification Complete IT Interface work ALL Resources available when required Communicate with Stakeholders System Established BENEFITS REGISTER Achieve Crititcal ID: SI001 Success Factors TEST SYSTEM TITLE: Implement e-Learning Other Divisions will accept it System BUSINESS UNIT: HUMAN RESOURCES ACCOUNTABLE MANAGER: MARY SMITH Users will use system Continuos Learning is facilitated System DESCRIPTION: E-Learning Tested will be in active use in all Business Units throughout the Division Devise Impelementa tion Strategy BENEFIT TARGETS Date Base Line 0 0 E-Learning 0 Pilot Sep 30/03 Dec 31/03 Mar 30/04 Initiate Implementation Plans Benefits Review Schedule Increased Cost Efficiencies Target Usage 200 500 Pilot Survey Survey users Lessons 1200 for feedback executed Measurement Mechanism: Monitor Application Usage Learnt Key Assumptions & Risks Establish Techical Support Function Benefits Impact Action Train Dec 03 Users June 04 © Innovation Value Institute 2013 System in use throughtout AIB Group E-Learning System in all Business Units Source: from Thorp, J “Information Paradox” Regularly Update Content and get User Feedback MORE EFFECTIVE ORGANISATION Learning linked to Business Strategy Automated Competency Register
    • Categorising Business Benefits* Source: Ward J, Daniel E and Joe Peppard: “Building Better Business Cases for IT Investments”, MIS Quarterly Executive, March 2008 © Innovation Value Institute 2013
    • Converting Measurable Benefits to Quantifiable Source: Ward J, Daniel E and Joe Peppard: “Building Better Business Cases for IT Investments”, MIS Quarterly Executive, March 2008 © Innovation Value Institute 2013
    • Fujitsu Value Achievement Risk Assessment Benefits/Risk Categories - The Four Ares” Are we doing the right things? Are we getting the benefits? Business Alignment Benefits Realisation Solution Integration Solution Delivery Are we doing them the right way? Source: from Thorp, J “Information Paradox” © Innovation Value Institute 2013 Are we getting them done well?
    • Notes on Planning & Prioritization & Change Governance - Link Projects explicitly with Strategy - Normalise projects value based on 4 common attributes - Strategic Contribution - Financial Worth - Benefits Feasibility/Risk Factors - Urgency - Allows prioritisation based on normalised data - Involve key stakeholders from Business and IT - Process can cover mandatory and discretionary projects - Can be retro-fitting to existing portfolio © Innovation Value Institute 2013
    • Fujitsu Strategic Logic Chain Programmes Compliance Related Initiative Product Innovation Initiative Customer Focus Related Initiative ? Local Objectives OBJ 1 Overall Objectives Sustain Compliance & Ratings OBJ 2 OBJ 3 OBJ 4 As Our Our Goal Measured Targets By Develop beneficial customer relationships Improved Knowledge Management Create Capacity Shareholder Value ‘EP’ Safe Growth & Profitablilty Customer Profitability ??? Capital Value ??? Cost Mgt. Related Initiative Top-Down, Strategic Planning (Right to Left) All Programmes/Projects explicitly aligned Source: from Thorp, J “Information Paradox” © Innovation Value Institute 2013 ???
    • Benefits dependency network: linking IT with benefits IT System D R I IT System V E R S IT System IT System IS/IT Functionality © Innovation Value Institute 2013 Enabling activities Business changes Business benefits Source: Prof. Joe Peppard, Cranfield University Investment objectives
    • Relative Value – One View Projects Plotted by Value Projects Plotted by Value Assess Downside Assess Downside Tackle real Priorities Tackle real Priorities PROCEED PROCEED 2 7 4 1 Urgency 3 17 8 9 6 16 5 11 12 10 18 15 14 STOP or Postpone STOP or Postpone © Innovation Value Institute 2013 Strategic Alignment Wait & See? Wait & See? Or Or Modify and/or Modify and/or Proceed Proceed