IT in value

Only a paltry 8% of IT investment actually brings home the bacon and adds value to business.

Only a paltry 8% of IT investment actually brings home the bacon and adds value to business.

This is among the key findings of "Measuring IT costs and value - maximising the effectiveness of IT investment", a report by analyst firm Butler Group who found that while companies are adept at measuring the cost of IT, they have little idea how to calculate the value IT brings to the business.

Butler partly blames a lack of tools and methods for making the business value of IT so hard to quantify. It argues that most firms place too much emphasis on ROI and TCO measurements. These, insists Butler, should be seen in a wider context of risk and IT capability.

The report suggests that your IT department may need to evolve into a service provider, concerned with supporting your company's growth, rather than merely talking about cost. Butler advises that you focus on three main areas to prove the link between IT investment and profitability: cost reduction (data processing); effectiveness (information usage); and value creation (knowledge capital).

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