Survey: Most Companies Struggle to Measure Value of I.T.

By Allan Alter  |  Posted 2006-07-25 Print this article Print

No right way has emerged to measure I.T. value, and the most common measures fare the worst. (CIOInsight.com)

If most companies really know how to measure the business value of IT, we'd see a clear consensus on which metrics to use, and IT executives would feel those metrics accurately capture business value. But our data indicates just the opposite: Companies use many different metrics, and the most popular metrics are used more often by companies that aren't very good at measuring value. Companies that have developed their own metrics fare somewhat better, but many of those are also dissatisfied. It appears companies aren't picking the right metrics, don't know how to go about measuring, or both.

Finding 5: How best to measure IT's value?
No one "right way" to measure the value of IT emerges from our study. The most common and simple measures, such as time-to-payback and savings-minus-costs, are the ones most often used by companies that lack accurate measures of value. And except for balanced scorecards, more sophisticated measures such as internal rate of return and net present value, though also used fairly often, don't clearly correlate with accuracy. A reason for the jumble: In four out of five companies, different executives want to see different metrics, forcing IT to provide this potpourri.

Read the full story on CIOInsight.com: July 2006 Survey: What's the Value of IT? At Many Companies, It's Just Guesswork

Executive Editor

Allan Alter has been a specialist on information technology management, strategy and leadership for many years. Most recently, he was editor-in-chief and the director of new content development for the MIT Sloan Management Review. He has been a columnist and department editor at Computerworld, where he won three awards from the American Society of Business Press Editors. Previously he was a special projects editor, senior editor and senior writer for CIO magazine. Earlier, Alter was an associate editor for Mass High Tech. He has edited two books: The Squandered Computer: Evaluating the Business Alignment of Business Technologies and Redesigning the Firm.


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