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A Buyer's Guide to IT Value Methodologies

A Buyer's Guide to IT Value Methodologies

It's entirely possible to quantify, qualify and prioritise the ways IT contributes to the bottom line. Here's a roundup of several tools to help you do just that

IT SCORECARD

"Why kill yourself developing financial scorecards when the discussion is just going to get pushed back down to operational issues?"

Nuts and Bolts: Michael Bitterman, a principal with the IT Performance Management Group, spent two years trying to fit IT into the Balanced Scorecard but found it just wouldn't fit to his standards. "The cause-and-effect linkages of the pure Balanced Scorecard don't work," he says. "Some of the [Balanced Scorecard] perspectives don't apply, for example, knowledge and growth. And pure Balanced Scorecard requires a strategy map, but IT organisations are for the most part tactical organisations whether they want to be or not."

For an antidote, he developed an IT-centric approach that emphasises moving IT toward a strategic involvement. In place of the Scorecard's four perspectives, Bitterman substitutes business growth, productivity, quality (both internal and external to IT) and decision making. "The idea is to build toward value but start with an internal view for IT to use," says Bitterman.

It's an approach that works for California-based Firemen's Fund Insurance. "One thing we faced was a dearth of information. We felt we had to build some credibility with basic measures and show how those fit [into the strategic objectives]," says Jon Cooper, project manager for the IT department.

Word of Mouth: If you like Bitterman's IT-centric, bottom-up philosophy, chances are you'll find stability in the program's highly specific, many-layered approach.

Time and Money: Between six and eight weeks; consultant's fees run from $75,000 to $250,000; software can be as little as $20,000 or as much as $150,000.

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