Measuring Business Value of IT Projects

Posted by admin on March 25, 2009 under Governance, Technology |

I had an interesting discussion the other day with the former CIO of a major consumer goods manufacturer. We were discussing why we still, after 30 years of talking about it, have such a gap between business and IT.

Part of the problem is that the metrics we use to measure project success in the IT department are not related directly enough to the actual impact on the business. Most of the metrics used to evaluate IT project delivery performance are some form of:

1) did we deliver on schedule
2) did we deliver against the requirements
3) did we deliver on budget?

While these are important project execution metrics, from a business perspective, measuring on these items does not necessarily mean we were successful in delivering “business value”. Witness the number of implementations where the end users complain that the system does not perform as desired/needed.

For IT organizations to deliver truly valuable business solutions, it is critical to understand how the system implementation will:

1) impact top line growth
2) bottom line growth
3) increase liquidity

This responsibility rests not only with the business team, but also the IT team members. Each member of the project team must be able to articulate how they will be directly impacting one of the items listed above. Without that ability, there really is no project.

The challenge then becomes identifying the actual metrics used to measure, post-implementation, the impact of the system. Due to the number of variables that impact the financial performance of a company, it is difficult to attribute the changes to the system implementation. What metrics have you used to measure system implementation impact against business goals?