Test of getting the measure of IT

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

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.

Comment on this article: computer.weekly@rbi.co.uk

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