It takes brainstorming and empowerment from the boardroom to the collective effort and collaboration cross-functionally to run a highly effective and high-performance digital IT organization.
IT ROI is always a controversial topic, with the difficulty of defining "value.” IT management needs to properly understand all elements of value that are translated to the organization, and how all the pieces and parts of the organization are ultimately impacted, for good or bad, by each new business initiative, in order to run digital IT with pragmatic advancement.
IT ROI analysis and a TCO analysis can be done on a whole new initiative or just on enhancements: IT and business executives should be managing IT as a business and allocating funds and resources where they make the most sense. IT should prove that the combination of quality and price for any given service feature is comparable to the marketplace. Doing cost/benefits analytics is important to improve IT management maturity.
It’s important to do ROI and TCO analysis for IT investment and management effectiveness. One needs to look at the models from a pure IT cost viewpoint as well as a business view. The latter determines whether or not the business should invest in the opportunity while the former determines what implementation approach to satisfy the business requirement is best. Use hard numbers if you can, measure the right things, and measure them right. Total IT impact and total value should get more attention rather than just cost.
IT spending never achieves anything in isolation and value is more than just ROI: More often, IT is perceived as a cost center, rather than value generator. Sometimes ROI has been mistreated by finance and IT professionals alike. Sometimes because finance has no idea what bill of materials really goes into making IT work, and from a financial point of view, there is no such thing as a value outside of quantifiable returns; and sometimes because IT simply sells the benefits using a lot of jargon and buzzwords.
When you have that kind of a financial model that actually represents what IT is building and how to present IT value, you can get to a reasonably accurate value. One of the problems is that IT generally has a very difficult time coming to grips with the true cost of a service. IT needs to start with a simple service catalog for financial management purposes and define a set of sub-services and cost elements, using charging back, charging forward, etc, techniques to run IT as a business for improving overall organizational performance.
ROI directly linked to the saved loss if the firms are trying to initiate analytics initiatives for the first time: Business is investing heavily on business analytics to determine strategies for customer retention and identify new customers at the same time the investments on. Analytics for employee retention, vendor retention needs improvement as well.
Analysis needs to have a reasonable ROI, The low ROI may be related to ineffective or failed enterprise analytics. However, always keep in mind, data analysis benefits for both incremental business improvement and long term business growth, ROI number is just one dimension to assess data analysis investment, but not the only one.
Information and knowledge can be tapped in monetizing an IT-driven business initiatives’ benefits flow. The general expectation from IT has changed. Not only are they being seen as an enabler, they are now mandatorily required to give ROI for the investments. To put simply, IT needs to become the revenue rainmaker via enabling new digital services and adding new revenue streams.
IT is not a function that can be handled only inside the IT department or by IT managers only. Nowadays, information technology is permeating into the business ecosystem and making a significant impact on how people think and do things, or the culture of the organization. It takes brainstorming and empowerment from the boardroom to the collective effort and collaboration cross-functionally to run a highly effective and high-performance digital IT organization.
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