IT Value Realization


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This slides can help the students already in MBA and other managers who had little knowledge in ITVR and other people who want to expand their knowledge in value realization of technologies as competitive weapon today to the dot com marketplace.

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  • Use a couple of examples to illustrate using technology to create public value, e.g., on-line services save both citizens and government time and money by reducing their need to visit government offices in person People need to change their behaviors to make the best use of new technology, while processes must change to integrate new technology into the business IT governance addresses how technologies will be used, what technologies will be invested in, and who is responsible for realizing value from those investments is required. 3A. It governance is in wide use in the private sector for these purposes
  • At the foundation of IT governance is joint decision-making between IT and operating departments; targeted, focused involvement of key participants; and an IT department that is focused on the success of its customers. A number of supporting disciplines rest upon this foundation, including: IT strategic planning to align community goals with IT activities; business cases to specify the highest priority projects; a transparent process for identifying technology funding and determining which projects to fund; and, finally, understanding the expected value from IT and assigning accountability for realizing that value, including establishing measures of success.
  • It is not enough for the modern finance officer to simply control costs and collect revenues. The finance officer must play an active role in helping government create public value with limited resources. -Business case and shared project evaluation helps identify most valuable projects -IT governance used to measure and monitor value received from IT. The business case should use performance measures or other tangible indicators of success to describe the results the project will achieve and to provide a firm basis for evaluation. -Especially important with enterprise systems because enterprise systems are shared, so accountability can be too diffuse in the absence of IT governance -The need for value realization extends not just to new technologies, but also to existing technologies. This speaks to the need to invest adequately in upgrades and training. IT governance can be used to allocate resources across the IT portfolio adequately to do this. 2. IT projects have inherent risk and risk increases as IT becomes more pervasive. -Business cases identify specific sources of risk and mitigating strategies -Improved communication occurs through mechanisms like Project Management Offices (PMOs), IT liaisons, and the more frequent informal communications that the trust created through IT governance breeds.
  • As technology becomes more pervasive, it becomes a larger cost item. Therefore important to get a handle on both short and long-term costs, including new projects and replacement of existing assets. The modern finance officer must produce information to support decision-making – not just costs and revenues, but value received for the dollar spent. IT governance can be used to define what data is important, who is responsible for collecting and maintaining that data, and how that data will be turned into useful information and be made accessible. Example is an IT architecture plan. Public sector has a duty to provide transparency. IT governance provides transparency on how IT assets are managed, especially as it relates to what is invested in, amount spent and value received.
  • NOTE: THIS SLIDE CAN BE SUBSTITUTED WITH OTHER EXAMPLES OR TAKEN OUT IF THE PRESENTER CAN EXTEMPORANEOUSLY WORK ILLUSTRATIVE EXAMPLES INTO THE OTHER SLIDES Oakland County is recognized as a top-ten digital county by the center for digital government and has won a GFOA award for excellence for its collaborative use of technology with other jurisdictions The Public Health Department received a homeland security bio-terrorism grant to implement interactive voice response (IVR) to put in place the ability to rapidly contact first responders in an emergency event. In some governments, this grant may have simply been accepted and the system implemented within the department. However, in Nevada County the grant was used as a springboard to create much greater public value. Through its IT governance mechanisms, there was a shared recognition through IT Governance of the potential value of IVR for a host of County functions. Hence, by directing a little extra funding towards this project (20% over the baseline project cost) the County was able to make what would have otherwise been an isolated project in a single functional area into an enterprise strength platform. To illustrate, the library was able to use the IVR system to discontinue $.35 postcard late notices in favor of an $.08 automated phone call. In the community development function, County inspectors can now phone-in inspection results, including the remedial actions required of the holder of the permit. Construction contractors can access the results immediately and then use the system to schedule a re-inspection.
  • This slide shows symptoms of poor governance Confusion on how IT decisions are made; Lack of info on performance of IT investments Important symptom in government is maverick purchasing or harmful decentralization Signals frustration with IT. Will not work because poor decision-making structures remain, but now operate with a private vendor. If 90% of projects are either over budget or not on schedule, IT governance is a problem.
  • Resource allocation ties IT governance to the budget process – making its important immediately apparent to everyone. Formality levels can change over time – there is no “correct” level of formality. Using existing structures decreases the amount of change/adaptation and new time commitments participants will be subject to. Ideally the owner should be a business savvy CIO. If there is no CIO, a CFO my have to be the sponsor in order to confer the appropriate level of importance, guidance, and institutional momentum to IT governance IT governance is not going to be the most pressing item on the agenda of participants, so effective communication is critical. Here are some of the most important mechanisms Senior official communications demonstrate the importance of governance and the decisions made through it Formal committees provide an official forum for decision-making and communication IT relationship managers serve to bridge the divide that can arise between business and IT departments. Web portals provide an easily accessible and flexible medium for disseminating information and for gathering input. For example, Miami-Dade County uses a portal to send out and gather its forms for business case development. Informal communications keep participants apprised of major issues, making formal communications more effective because participants aren’t surprised by the message. Informal communications also builds trust, which is critical for inter-departmental cooperation.
  • If you don’t have a CIO you can engage your organization’s technology professional. However, if that person is very focused on technology and not as focused on the business-benefit technology provides, the finance officer may have to take a more active role in establishing governance.
  • Modify second bullet to whatever contact information is appropriate given the situation
  • IT Value Realization

    1. 1. Click to edit Master subtitle style 1
    2. 2. Agenda Introduction What is IT Value Management? Understand Strategy Alignment What is IT Governance in the context strategy? IT governance = IT Value Realization What is benefit approach of IT value? Financial based parameters to assess IT investment benefits Non - financial Benefits value realization in public sector Components of strategy alignment and IT value management IT Strategy in public sector The council’s strategic priorities in e-government Quality of IT value realization management in local government What are Factors that reduce alignment in public sector? Core benefits of public sector in IT value realization How to measure public value IT frameworks PVIT“BENEFITS 2
    3. 3. Introduction1. “Public value as public sector equivalent to shareholders value” Public value benefits can be defined social benefits of corporate activity which are hard to value in monetary terms such public policy, service improvements and effectiveness/ efficiencies. E-procurement and e-governance are typical approach used in public sector Government using e-procurement to satisfying requirements for goods, works, systems, and services in timely manner while by e- governance has to met transparency, accountability, and integrity of the social/community E-procurement in public sector consists and focus in three areas such as 1. Organisation and Management 2. Practices and process 3. systems and technology9.
    4. 4. What is value management?  Managing the IT budget to deliver better performance and value Managing the IT capability in core process areas Managing IT for business value by tying IT investments to business benefits Managing IT like a business by focusing on end users and services versus technology 4
    5. 5.  IT strategy Corporate Activities framework ITPM framework Assessment Model Project Management Book of Knowledge (PMBOK) and PRINCE 2 IT governance framework for management of IT activities:  Prioritizing IT investments  Monitoring and measuring results  Aligning IT and business  Creating & maintaining open communications  Examples: IT governance is not a “technology” issue – it is a business issue for everyone 5
    6. 6. What is IT Governance in context of strategy ? 6
    7. 7. IT governance = IT Value Realization IT governance (COBIT,ITIL,CMMI,SIX SIGMA) IT governance addresses issues like:  Identifying technology needs  Prioritizing technology investments  Assigning accountability for results  Aligning IT and business  Creating and maintaining open communications  TQM improvement of the organizations as whole  7
    8. 8. What are Benefits approaches of IT value ? 8
    9. 9. Financial based parameters to assess IT investment benefits Payback Period Net Present Value(NPV) Internal Rate of Return(IRR) Economy Value Added(EVA) Return On Investment (ROI) Real Option Valuation(ROV) Return On Assets(ROA) Return On Infrastructure Employed(ROIE) Total Cost Ownership(TCO) Total Value Ownership(TVO)
    10. 10. Non - financial Benefits value realization in public sectorMEASURED IN VALUE OF ACTIVITIES IN THE CONTEXT OF THE BUSINESS STRATEGY§ Public value of IT (PVIT) realizationo Constituent service levelo Operation service levelo Political return§ Multidimensional criteria approach Valueo Information Economics (IE)o Applied Information Economics(AIE)o Total Economy Impact(TEI)o Total Value of Opportunity (TVO) 10
    11. 11. Measurement in the context business strategy ”if you can’t measure it you can’t manage it” Balance scorecard customer, Finance, business processes and learning and growth) IT scorecard User orientation (efficiency), Operation excellence (efficiency in dvpt & operational) , Business contribution (Finance), Future orientation(approach to skill set development and innovation) Portfolio Management Techniques GIGA information portfolio framework, Ross and Beath investment quadrants, MIT center for system information system research portfolio pyramid, Business investment analysis Business Value measures for IT: Categories of IT investment, Business value characteristics, Typical business value outcomes, Key business value measure IT value benchmarking and realization: performance measurement, Investment tracking financial of organization, Benefit targeting 11
    12. 12. Components of strategy alignment and IT value management IT strategy Corporate of activities framework IT governance Framework for management of IT activity IT project framework for management of IT Activities IT Project Management Framework Assessment Model 12
    13. 13. IT Strategy in public sectorq THE MAIN FOCUS AREAS IN COUNCIL’S MUNICIPALITY: Enterprise Architecture and ICT governance IT governance Information management best value IT service delivery Enabling innovation and ICT Risk management 13
    14. 14. The council’s strategic priorities in e-government Safe community Customer service External communication Diversity and Strengthen the economy Leadership and Governance Information services and internal services 14
    15. 15. Quality of IT value realization management in local government Enablers: factors that Promote alignment Sharing Decision Making within IT portfolio Management Alignment between ICT strategy and corporate plan Linking high level of technical integration with customer services Linking between IT projects with a value and Alignment measurement tool 15
    16. 16. What are Factors that reduce alignment in public sector?q Misalignment in public sectorq Miscommunication in IT activitiesq The lack of well defined IT planq The lack of value realizationqqq 16
    17. 17. Core benefits of public sector in IT value management realization§ Costs reduction and efficiency gain§ Quality of service delivery to businesses and customer§ Transparency, anticorruption, & accountability§ Increase the capacity of government§ Network and community creation§ Improve the quality of decision making§ Promote use of ICT in other sectors of society 17
    18. 18. How to measure public value IT frameworks PVIT“BENEFITS”q DIFFERENT COUNTRIES HAVE DIFFERENT METHODS TO MEASURE PVIT FRAMEWORK BENEFITS FROM INVESTMENTS§ France: MAREVA “Methode d’Analyse et de REmontee de la Valeur” (Measure profitability for the state, internal aspects, external aspects, necessity)§ European Union: e-Government Economics Project (Measure quantitative and qualitative components for each dimension of PVIT).§ Australia: Demand and Value Assessment (Assess the benefits of its e-Government initiatives. The study highlighted the need for a comprehensive tangible and intangible benefits as well as the probable risks associated)§ India: E-Governance Assessment Framework (Measure service orientation technology, sustainability, cost effectiveness, and feasibility of replication. The methodology consists of assessments for G2G, G2B, and G2C services.) 18
    19. 19. E-GEP Framework public value benefitsEFFECIENCY DEMOCRACY EFFECTIVENESSCashable financial gains Openness Reduced administrative burdenEmpowered employees Transparency and Increased user value and satisfactionBetter organizational and accountability More inclusive public servicesIT architecture Participation Financial and Political value Constituent valueorganizational value 19
    20. 20. ConclusionsIn public sector the IT value management can bemeasured quantitative and qualitative with oneor more IT methodology framework in order toachieve desired outcome by the stakeholders suchmethodologies are , TQM 14 point by Deming ,balanced scorecard, benchmarking, IT governance(COBIT,ITIL,CMMI,SIX SIGMA)which are helping board of directors andmanagers to control and assess the businessstrategy and IT strategy if are aligning inadequate manner if not so can government takeearly corrective action. 20
    21. 21. REFERENCES§ Stenning & Associates pty ltd(S&A) (2003). Final Repport: Evaluation and Review of the e-procurement pilot project, version 1.2, Hobart, Australia§§ Al-Hatami &Hales European and Mediterranean Conference on information System 2010, April 12-13 2009, Abu Dhabi, UAE§§ Weerakkody, V., Janssen, J., & Hjort-Msdsen, K. (2007) integration and enterprise architecture challenges in e- government : A European perspective. International Journal of cases on electronic commerce, 2(3),13-35. 21
    22. 22. The End Th an ks 22