The modern computing era started more than 60 years ago with the advent of early digital technology, but debate remains about whether organizations have seen the expected value from their IT investments. In the current economic climate, the tendency is to focus IT investments on short-term profitability. Yet successful firms cannot ignore future business opportunities for long-term growth and competitive advantage and for building strategic options for agility under uncertainty. Establishing confidence in future IT value provides the impetus to invest now, despite a recession. The emerging reality is that attitudes toward IT value are changing to accommodate new paradigms such as value networks and value systems, which are driving intellectual capital and company valuations. The goal of this book is to provide insights into IT value-based management and to maximize stakeholder economic value—beyond shareholder value. The IT value network framework presented here provides current and new, multidimensional measurement and management approaches to gain sustained competitive advantage or network advantage from IT investment and spending.
As managing partner of Read & Associates, I have traveled the world working with various companies to capture, enable, optimize, and realize IT value. As I journeyed through sunny days and cloudy days, periods of boom and doom, there was always an opportunity to realign IT investment and connect the dots for a higher IT value proposition. It’s amazing what new constellations you can configure from stargazing—but this book is not “pie in the sky”; it’s grounded on proven techniques, as depicted in various client cases. The IT value network approach has been deployed in many companies within the high-tech, telecommunications, computing, banking, financial, retail, and professional services industries. The book covers a multitude of various financial- and organization-based tools, methods, and techniques for practical application in the real world, including an IT value network maturity model for current practice assessment.
The IT value network presents a business focus on IT value, bridging the value gap between the CIO and CXO. Thus, the book’s intended audience is for business and IT leaders and managers, wanting to get more out of the IT dollar—and why not, given a $3 trillion annual global IT investment and a 2009 economic recession with a credit crunch. The IT value network builds a comprehensive IT value proposition, extending beyond company boundaries and leaving nothing on the table. Academics and students engaged in the fields of IT management and the economics of IT will also find this book valuable. It discusses multidisciplinary fields, including finance and accounting, decision support, organizational management, information economics, portfolio and project management, business strategy and planning, and value-based IT management. The book challenges conventional approaches to IT value measurement and management, identifying lost value. The IT value network provides a comprehensive toolkit for IT value-based management, organized as follows.
Part One: Status Quo—Where’s the Value?
Part One considers the following topics: reflecting on six decades of IT investment and discussing future IT investment direction. Classifying IT investment spending—the four “S” category model. Conventional asset valuation is contested, challenging traditional norms of IT investment evaluation. Lost value is identified—no bang for the buck—providing IT value observations within the banking industry.
Part Two: Triangulating the Value—Somewhere Here
Part Two considers the following topics: how traditional and emerging financial-based and organization-based IT value measures are defined, creating a strong value-creation business case. Financial and accounting measures alone are just not good enough; value needs to be triangulated through strategic, operational, stakeholder, and agility value lenses, culminating in an IT value index scorecard. The IT value portfolio is discussed, citing stars and black holes.
Part Three: Six Degrees of IT Value—There IT Is
Part Three considers the following topics: IT value management, which covers capturing, enabling, optimizing, and realizing stakeholder economic value. Six degrees of separation from IT investment to stakeholder economic value exist; proactively managing the six degrees of IT value will unlock and realize stakeholder economic value. Each degree of IT value improves IT value management, providing an iterative cycle for enhanced network advantage or sustained competitive advantage.
Part Four: IT Value Network Clients—Did IT, Got IT
Part Four considers the following topics: Four client cases are discussed, within the banking, financial, retail, and high-tech/telecommunications industries. Each case describes the company challenges, the IT value network solution, and subsequent stakeholder economic value impact. Realized IT value is discussed.
Part Five: Emerging Reality—Do IT, Value IT
Part Five considers the following topics: applying thought leadership, with respect to new paradigms and emerging concepts, including social networking, value networks, network portfolios, value network analysis, exchange value, value systems, value options, risk management, collaboration, and value loyalty. An IT value network maturity model and implementation checklist enables stakeholder economic value maximization.
IT investments are becoming more than just business enablers or assets on the books; they provide capability that can drive the business. Thought leadership should migrate toward information investment with the aim of getting a bigger bang for the buck from the “I” in IT and from the “I” in CIO, accounting for intellectual capital and 80 percent of market capitalizations. The IT value network will make a difference in the way your company manages and measures IT investments for network advantage or sustained competitive advantage. I hope you enjoy the book and resonate with the IT.
Copyright © 2009, Tony J. Read, The IT Value Network. Publishers: John Wiley & Sons. All rights reserved.