From a CAI webinar that takes a new perspective on the factors that contribute to value and will look beyond the standard metrics of return on investment (ROI) and total cost of ownership (TCO). Because there's more to value than just money!

1. Why ROI & TCO Stink
as Measures of System Value
July 16, 2014, 10:30am
Slide: 1
9/18/2014
Webinar Sponsored by Computer Aid, Inc.

2. Slide: 2
Steve Weissman
Minister of Process & Information Betterment
Holly Group
steve@hollygroup.com
Hosted by:
Jessica Snyder
ITMPI
Jessica_Snyder@compaid.com
9/18/2014
Webinar Sponsored by Computer Aid, Inc.

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.

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Slide: 7
9/18/2014
Webinar Sponsored by Computer Aid, Inc.

8. Slide: 8
Why ROI & TCO Stink
as Measures of System Value
9/18/2014
Webinar Sponsored by Computer Aid, Inc.

9. Slide: 9
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Let’s Start at the Very Beginning
ROI
The Use of Return on Investment in the Performance Measurement and Evaluation of Information Systems
Peter Andru and Alexei Botchkarev
Toronto, Ontario, Canada
March 11, 2011

10. Slide: 10
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Let’s Start at the Very Beginning
TCO

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
So What’s the Catch?
Strategically Short-Lived
» Dominate initial discussions but rarely reviewed after
system selection

12. Slide: 12
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
So What’s the Catch?
Strategically Short-Lived
Off the Mark
» “Return on Investment” generally focused on a single
point in time (i.e., payback) despite solution lifespans of
many years

13. Slide: 13
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
So What’s the Catch?
Strategically Short-Lived
Off the Mark
» “Total Cost of Ownership” suggests spending is finite
when expenses are incurred each and every year of
service

14. Slide: 14
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
So What’s the Catch?
Strategically Short-Lived
Off the Mark
Incomplete
» ROI and TCO address economics only

15. Slide: 15
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
There’s More to Value Than Just Money

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Your Objectives
To work better …
… and work better
together

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
On the Road to
Maximum Total Value®

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
On the Road to
Maximum Total Value®
Value
Value
Value

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
On the Road to
Maximum Total Value®
Value
Value
Value
More
Value
More
Value
More
Value

20. Slide: 20
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
On the Road to
Maximum Total Value®
Value
Value
Value
More
Value
More
Value
More
Value

21. Slide: 21
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Hey, Don’t Just Take My Word for It
“I wish I had thought of this
when I started, but I can’t go
back and start again.”
– CIO of a major athletic
shoe manufacturer

22. Slide: 22
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
What is “Value”?
“Relative Worth, Utility, or Importance”¹
» Notice that money is not the object
¹ Merriam-Webster

23. Slide: 23
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
The Value Disconnect
Economics
Process Change
Collaboration
Required for justification but
irrelevant to implementation success
Irrelevant to justification but
critical to implementation success

24. Slide: 24
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Value: It’s What’s for Dinner
You May Be Implementing for ‘Compliance’
» To heed new regulations or assuage your legal
department

25. Slide: 25
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Value: It’s What’s for Dinner
You May Be Implementing for ‘Compliance’
But You’ll Be Grilled On Value
» To justify the financial and human resources you’ll
expend

26. Slide: 26
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Impediments to Value
Under Pressure, Over Spent
» Schedules and budgets as measures of “behindness”

27. Slide: 27
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Impediments to Value
Governance, Social, and Mobile Initiatives
» Nothing like trying to do it all,
and to do it all at once!
No wonder a CIO’s average
tenure is only 18 months!
?
?
?

28. Slide: 28
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Politics

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Baggage

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Religion

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
People

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
“It’s Psychology,
Not Technology”
© 2014 Holly Group. All Rights Reserved.

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Change Management = Parenting

34. Getting People To Do Things They Don’t
Want to Do But You Know is Good for Them
Slide: 34
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
“Put a coat on”
© 2014 Holly Group. All Rights Reserved.
“Prioritize value”?
“Clean your room”
“Eat your vegetables”

35. Slide: 35
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Now Back to Our
Regularly Scheduled Program

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9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Economics
ROI
» Investment
» Return
TCO
» Costs

37. Slide: 37
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Economics

38. Slide: 38
Process Change
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Image: Flickr.com / MightyBoyBrian
Greater Efficiency, Effectiveness
» Greater customer satisfaction
Unforeseen Opportunities
» Early payment discounts

39. Slide: 39
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Process Change
Image: Flickr.com / MightyBoyBrian
Procedures Applications
Processes Technology
Working Better
discrete process innovation · continuous process improvement

40. Slide: 40
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Collaboration
Less Duplication of Effort
» Saves time, frustration
Better Quality
» Facilitates review, validation, correction
» Reduces risk
Image: ©Ning Zhao | Dreamstime Stock Photos

41. Slide: 41
Employees
Suppliers
Customers
Shareholders
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Collaboration
FINANCE DEPT.
• CFO
• Auditors
• Managers
• Receivables
• Payables
• Payroll
• Pension
Working Better Together
learning & knowledge · relationship management
Investors
Executives
Directors
IT Dept.

42. Slide: 42
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Information as an Asset

43. Slide: 43
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Context
Medium
Data
Format
© Holly Group
All Rights Reserved.

44. Slide: 44
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Missing or poor data?
- No utility.
Data
© Holly Group
All Rights Reserved.

45. Slide: 45
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Missing or poor data?
- No utility.
Missing or wrong context?
- Not meaningful.
Data
Context
© Holly Group
All Rights Reserved.

46. Slide: 46
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Missing or poor data?
- No utility.
Missing or wrong context?
- Not meaningful.
Data
Context
Format
Mismatched formats?
- Not shareable.
© Holly Group
All Rights Reserved.

47. Slide: 47
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Missing or poor data?
- No utility.
Missing or wrong context?
- Not meaningful.
Context
Format
Medium
Data
Mismatched formats?
- Not shareable.
Improper medium?
- Not receivable.
© Holly Group
All Rights Reserved.

48. Slide: 48
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Decisions regarding one strand
affect all the others.
Context
Medium
Data
Format
© Holly Group
All Rights Reserved.

49. Slide: 49
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Elements of Information Value
Decisions regarding one strand
affect all the others.
Context
Format
Medium
Data
Thus, they all must
be continually well
orchestrated in order
to maximize value!
© Holly Group
All Rights Reserved.

50. Slide: 50
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
ROI and TCO Don’t Talk About This

51. Slide: 51
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
ROI and TCO Don’t Talk About This
And That’s Why They
Stink as Measures of
System Value!

52. Slide: 52
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
Questions?

53. Slide: 53
9/18/2014
Webinar Sponsored by Computer Aid, Inc.
© 2014 Holly Group. All Rights Reserved.
Thank You!
Steve Weissman
Minister of Process & Information Betterment
Holly Group
Tel 617-383-4655
Email steve@hollygroup.com
Twitter @steveweissman
Visit Weissman’s World at
blog.hollygroup.com

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56. Slide: 56
Steve Weissman
Minister of Process & Information Betterment
Holly Group
steve@hollygroup.com
Hosted by:
Jessica Snyder
ITMPI
Jessica_Snyder@compaid.com
9/18/2014
Webinar Sponsored by Computer Aid, Inc.