A Strategic Measure of IT Value

Determining the value of an IT investment is no longer a matter of equating three accountants with one DEC minicomputer—not surprising, given that technology today focuses on enhancing processes rather than replacing them. In the search for new ways to measure IT value, executives are increasingly looking to traditional management theory.

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In the scorecard scenario, a company organizes its goals into what the Collaborative calls perspectives: Financial, Customer, Internal Process and Learning/Growth. The company then determines cause-effect relationships—e.g., satisfied customers buy more goods, which increases revenue. Next, the company lists measures for each goal, pinpoints targets and identifies projects to help reach those targets.

Departments create scorecards tied to the company’s targets, and employees and projects have cards tied to their department’s targets. This cascading nature “provides a line of sight between each individual, what they’re working on, the unit they support, and how that impacts the strategy of the whole enterprise,” says Michael Radcliff, CTO of Ingersoll-Rand, which recently worked with Gold to set up an IT scorecard. “It’s a terrific way to link initiatives to strategic objectives and get your people lined up with those initiatives.”