Computer Weekly's survey of IT leaders underlines that
demonstrating the value of IT holds the key to fruitful relations
between IT and the board
Senior IT professionals are struggling to measure the business
value of IT, Computer Weekly’s latest CIO Index has revealed. The
research among CIOs and IT directors, which we first reported on
last week, showed that only 42% had systems in place to measure the
value of IT to the business.
The issue raises a thorny problem for senior IT managers of how
to balance two conflicting demands. The more time IT chiefs spend
measuring their performance, the less time they will generally have
to improve that performance. But how can those that make little or
no attempt to measure performance know if their efforts to increase
the effectiveness of the business are working?
The time lag between rolling out an IT system and accruing
benefits can make such change difficult to measure. Peter Thomas,
vice-president of European enterprise IT at Chubb Insurance, had
this problem with the Cognos business intelligence system the
company had developed over the past three years.
“Our senior management would not back it unless it impacted the
bottom line or the top line,” he said. Because the company may not
know if the product is profitable until they know the number of
claims against it, which could take years, this was difficult to
measure, he said.
Chubb’s IT department met this challenge by creating proxy
measures of business value, such as how often users log-in and
retention of frequent users. This system is now due to be
implemented in South America.
Computer Weekly’s Strategy Clinic recently discussed the problem
of measuring the value of IT. It concluded that IT directors should
grasp this as an opportunity rather than avoiding the issue.
“Reluctantly agreeing to provide some metrics does not sound like
an IT director who considers themself a fully participating member
of the company’s senior management team,” said Robin Laidlaw,
president of the Computer Weekly 500 Club and former IT director at
British Gas.
Measuring performance can also help the relations between IT and
the board – something the CIO Index suggests a significant number
of IT managers are struggling with. Thirty three per cent of IT
directors said they did not feel sufficiently empowered by their
boards, and 24% said the board did not understand the importance of
IT to the business.
Another 33% of IT directors said the company’s business
processes were not well integrated with IT systems. Ensuring
businesses processes are in line with IT systems is vital if
systems are to deliver their maximum value to the company.
One of the reasons for the disparity between business processes
and IT systems in some cases may be a lack of end-user training.
Despite spending millions on IT, businesses are failing to go the
final yard and invest in training people to use them to the best
advantage. Fifty three per cent of CIOs believe to some extent that
their end-users are not sufficiently trained to use systems
effectively. This figure has risen from 43% in April this year.
If businesses are to get the most from IT and demonstrate this
to the board in order to gain its confidence, they still need to
invest in people and processes.
About the CIO Index
The CIO Index is Computer Weekly’s quarterly online survey of IT
directors in the Computer Weekly 500 Club. The research is
conducted by our parent company Reed Business Information’s market
research department, strictly adhering to the Market Research
Society’s code of conduct.
In addition to analysis of key metrics for IT expenditure in UK
businesses, the CIO Index tracks technology adoption and highlights
trends in the business readiness of emerging technologies.
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