Assignment: IT And Business.

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Assignment: IT And Business.

Assignment: IT And Business.

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So Who Should Make the Decisions?

• Ross & Weill say • The CEO should not make those decisions alone • C-level executives should not even make those

decisions • Input is needed from both IT and the business units

alike • Steering (or Executive) Committee solution

© 2016 John Wi ley & Sons, Inc. 12

Building a Business Case – Components

• Executive Summary

• Overview and Introduction

• Assumptions and Rationale

• Project Summary

• Financial Discussion and Analysis

• Benefits and Business Impacts

• Schedule and Milestones

• Risk and Contingency Analysis

• Conclusion and Recommendation • Appendices

© 2016 John Wi ley & Sons, Inc. 13

© 2016 John Wi ley & Sons, Inc. 14

Sample of benefits in a business case for adding chat function linked from Facebook page

Busy chat operators; busy Facebook page; Customers seem happier

Sales improved by $250k; costs decreased by $50k after change

Facebook page likes; number of chats; Customer satisfaction scores moved from 3.3 to 4.1 (out of 5)

Converted 150 calls per day to chats; reaching 200 more customers per day

© 2016 John Wi ley & Sons, Inc. 15

IT Portfolio Management

• IT investments should be managed as any other investment.

• Evaluate and approve IT investments as they relate to other potential investments of all kinds

• Goals: • Pick the right mix of investments

• Invest in the most valuable IT initiatives

© 2016 John Wi ley & Sons, Inc. 16

Asset Classes

• Weill and Aral say that there are four asset classes of IT investments: • Transactional systems – systems that streamline or cut

costs on business operations.

• Informational systems – any system that provides information used to control, manage, communicate, analyze or collaborate.

• Strategic systems – any system used to gain competitive advantage in the marketplace.

• Infrastructure systems – the base foundation or shared IT services used for multiple applications.

© 2016 John Wi ley & Sons, Inc. 17

Average company’s IT portfolio profile (See Discussion Question 4)

Transactional

13%

Infrastructure

54%

Informational

20%

Strategic

13%

46%

25%

18% 11%

© 2016 John Wi ley & Sons, Inc. 18

Comparative IT portfolios for different business strategies (See discussion question 4)

Valuing IT Investments

• Soft benefits, such as the ability to make future decisions, make it difficult to measure the payback of IT investment • IT is expensive, thus under close scrutiny. • IT is complex; calculating the costs is an art, not a science.

• Payback period for infrastructure is much longer than other types of capital investments.

• With necessary systems (due to laws, etc.), the payback period cannot be calculated

• Many valuation methods are available…

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