Executives around the world are trying to get a clear answer to one fundamental question when faced with significant IT investment proposals: Where’s the value? The IT Value Network provides a framework to answer that question. It systematically outlines effective techniques and tools for the measurement and management of IT investments to deliver a comprehensive and enlightening answer.
My career started in finance and I have held a number of CFO roles around the world, in different industries, within dynamic companies. The industries may have been different, but they all had the common challenge of ever-increasing IT investment demands, which required unquestionable justification.
If I take my 10 years at FedEx as an example, customers often talked about the great service, the knowledgeable couriers, or the vast fleet of aircraft covering the globe overnight—but it’s the IT investment that enables the “experience” behind the product or service. Consider the FedEx capability for you to track the movement of your precious package around the world from the comfort of your own home. Justifying IT investment requires a strong business case, which should include quantifiable drivers like customer experience. The IT value network aptly refers to the necessity of triangulating the value through a value index, determining stakeholder economic value.
Justifying IT investments goes beyond cost savings; it’s fundamental to your differentiation as a company—your strategic advantage. Consider the FedEx IT capability to provide your business with the opportunity to reconfigure your supply chain to minimize inventory, or the offering of a customized product from a single location, with service across the world. The decisions you make on your IT investments, sitting at the heart of your business, are one of the most important decisions you will ever have to make as an executive—so they better be informed! The IT value network framework enables you to make informed decisions: capturing, enabling, optimizing, and realizing business value.
My past eight years have been with Vodafone, in the telecommunications industry. As the CEO of Asia, Pacific, and Middle East region, I get the opportunity to see markets/countries in various stages of development—from mature to emerging. I see the profound impact that mobile telephony can have on a country’s rate of development, as a key part of the country’s infrastructure. There is obviously a lot of interest about the mobile technology evolution path, from 2G to 3G to LTE; taking us from pure voice
services to high-speed exchange of data on the move. Consider the growth of the smartphone like the iPhone, or mobile broadband connectivity to your corporate IT applications via your laptop. However, these technology investments are just enablers.
The way telecommunication operators, and indeed most companies, will differentiate themselves is through their IT choices and how those choices will provide unique and compelling products and services. In the case of the operator, choices that allow customers to make the most of their time, whether in the office, at home, or on the move. IT agility and value options are a necessity within today’s business, driving current and future returns and intellectual capital, which drives shareholder wealth. Bad choices make for bad economics. Thus, the need to appropriately migrate away from traditional “industrial age” measures to more effective “informational age” techniques to manage and govern IT investments, as effectively covered within the IT value network.
At Vodafone, we want to ensure that our customers stay connected to the people and the information that are central to their lives—via voice, text, instant messaging, e-mail, music, communities, news, and applications both social and work related—whenever, wherever. The IT value network helps you explore your company’s value system and value network, building network advantage, a concept for sustained competitive advantage.
Being on various company boards, many of which have other shareholders represented, I reiterate the book’s mantra: that maximizing shareholder economic value should be a primary consideration. The IT Value Network not only provides guidance on how to assess the trade-offs, it also outlines methods of triangulation, when a single perspective is too narrow a line of sight. The book also provides an IT investment governance model that goes beyond the pure “industrial age” regulatory compliance, internal controls or audit requirements, to more effective “informational age” considerations, required to run a company in today’s fast paced global economy.
The IT Value Network is a thought-provoking book that is rich in content and one that will continue to be referenced beyond the first read. I passionately believe in IT as a key differentiator, where mistakes set you back years and can be fatal to your business and your competitiveness. Tony has brought his extensive IT management and consulting experience to focus on addressing a real need—making an informed decision on how to value IT and ultimately make the right call for the future of your business. I am fortunate that I get his advice for free. You just need to pay the price of this book—an investment with a great ROI. Enjoy the read.
Regional CEO Asia, Pacific, and Middle East
Board member of China Mobile and several Vodafone subsidiaries
Copyright © 2009, Tony J. Read, The IT Value Network. Publishers: John Wiley & Sons. All rights reserved.