IT’s Elusive Bottom Line

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Quick: What’s your IT department worth? If you had to put it on an eBay auction, what would you set the minimum bid at? It’s not the kind of question that lends itself to easy answers. First of all, you have to consider the dollar value of the PCs, servers, software and other infrastructure in your calculations. Then, you might throw in the number of staff, the amount of floor space occupied and the solutions rolled out for enterprise operation and management.

Even after tallying up all these figures, you still might conclude that the sum didn’t accurately reflect the value of your company’s IT function. And more often than not, you’d be right.

Balanced Scorecards: Going Beyond Dollars and Cents

Can these aspects be quantified, though? Is there some sort of gray-matter quotient that can help IT managers ascertain how much mental capital their techies have? Perhaps not, but there are some measurement methods that can help business leaders get a better sense of the native talents of their IT staff. De Haes recommends implementing a balanced scorecard concepts system to gauge skills and knowledge in both overall operations and specific IT projects.

Balanced scorecards incorporate both hard and soft metrics, including IT’s contribution to business objectives, end-user satisfaction, efficiency, and training and education of IT employees. (The number of certifications you hold could conceivably be a valid measurement.) This calculates not only bottom-line value, but also shows whether IT is guided by a sound strategy and aligned to the goals of the business. The benefits of a balanced scorecard system are manifold, but the main advantages are that it can illustrate the capabilities of the IT department and facilitate more cohesion between it and the organization as a whole.

Of course, once you’ve gathered the results, you have to shape them into a compelling business case for company leaders. This can be difficult, because if it doesn’t have a dollar sign in front of it—believe it or not—many executives just aren’t interested. The connection must be established, inasmuch as it can be, between the skills and knowledge of IT staff and the financial performance of the company. Another key element in elucidating the value of IT is to avoid using any techno-jargon or industry buzzwords. Instead, frame your explanations in universal, lucid terms that the board will understand. “We’re always talking about ‘IT management’ and ‘IT governance,’” De Haes said. “Maybe it would be better if we talked about governance and value in general to get their attention.”

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