Measuring The Business Value Of IT

There's an old management axiom: You can't manage what you don't measure. Yet many organizations do a very poor job (or no job at all) of measuring the business value of their IT investments; but maximizing the business value of IT investments is the primary objective of good IT governance. A number of formal measurement methodologies exist for measuring the business value of IT. Simple ROI or other financial metrics are not good enough. By employing a consistent, repeatable, credible methodology that both the business users and IT are held accountable for and that measures projected business value as well as the actual value delivered, organizations can significantly improve their IT investment returns. Four existing methodologies can be adopted as is or customized to suit specific needs. Firms should pick one, institutionalize it as part of an overall governance framework, and embed it in IT portfolio management.