Measuring the Business Value of IT - Business Value Index

This is the second in a series of postings providing updates to our book, "The Business Value of IT."  This posting explains in more detail the Business Value Index or BVI.  BVI was developed by Intel's IT organization so it comes with the advantage of having been developed by practitioners. BVI considers three dimensions of IT value: - Business Value Business Value measures both the tangible and intangible benefits of a project on a set of weighted criteria.  While there is the advantage of starting with Intel's tried and tested criteria and weights, there is no reason why your organization could not adjust these to suit its own needs.  Some examples include: - Customer need - Business risks - Technical risks - Strategic fit - Revenue potential (recognizing that this is not a fixed number is important!) - Level of required investment - Innovation - Learning - IT efficiency IT efficiency measures a project's impact on the IT organization.  For example, how well does the proposed project "fit" with the organizations enterprise architecture policy (where we are now) and strategy (where we plan to be in the future).  Again, a set of weighted criteria are used. - Financial Criteria The model separates business value form financial value.  It is possible for a project to have great business value with little or no financial value.  Projects with negative financial value can still be imperative for the business e.g regulatory implementations or "must have" competitive features.  The model uses Net Present Value, Internal Rate of Return and payback period (see our book for definitions) to assess financial attractiveness. Intel uses the scores for these 3 dimensions to generate a value visualization of the comparison between candidate projects:

Written by Michael D. Harris at 11:33

0 Comments :

Comment

"It's frustrating that there are so many failed software projects when I know from personal experience that it's possible to do so much better - and we can help." 
- Mike Harris, DCG Owner

Subscribe to Our Newsletter
Join over 30,000 other subscribers. Subscribe to our newsletter today!