InformationWeek
Defining The Business Value Of Technology
September 14, 1998
Defining IT Innovation
continued...page 3 of 5
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Other strategic technology priorities include tools, languages, and year 2000 issues, mentioned by 87% of respondents; building or refurbishing network infrastructures, cited by 84%; refining relational databases and data warehouses, chosen by 77% of survey respondents; and implementing enterprise software, cited by 71%.
But as much as InformationWeek 500 companies strive to implement new systems and
provide new ways of generating revenue, keeping basic IT operations running smoothly around the
clock is still of utmost importance to IT management. Asked about the key organizational
challenges each IT management team will face this year, nearly nine in 10 executives cited
providing adequate IT support. More than eight in 10 chose retaining staff members, keeping up
with the pace of change, year 2000 conversions and testing, attracting new employees, and
implementing E-commerce strategies.
Meeting organizational challenges is one step, but how do you measure success in these areas? Some 63% of the InformationWeek 500 managers benchmark against past performance, while 56% benchmark against third parties or competitors.
Citicorp employs both methods. "We benchmark both internally and externally against other similar industries," Taylor says. "We subscribe to all the research studies and benchmark ourselves on everything from check processing and clearing to cycle times for product development. We're using the Software Engineering Institute model for each software development organization and putting in place standards to audit for SEI ratings."
Close to six in 10 companies use formal return-on-investment models. Others also focus on improvements in customer satisfaction and repeat business due to IT enhancements, or informal payback scenarios. Many IT executives say measuring or estimating expected returns on projects is a critical step in the funding process.
"In order to start a project, we need to have a return-on-investment analysis," says Joe Durocher, CIO at $5.3 billion Hilton Hotels Corp. "Then we go back and verify that we're achieving our goals."
Adds Northern States' Anders, "We have to justify all of our expenditures on IT. If we can't
convince [government] regulators that what we're doing will have a payback for our customers,
they won't authorize rate increases. We can't spend frivolously."
IT executives say less-formal indicators of IT payback, such as winning contracts or getting customers to come back because of an IT initiative, help promote technology's place in their organizations. Hank Leingang, senior VP and CIO at Bechtel Group Inc. in San Francisco, says the use of databases that store information on building designs has helped the $11.3 billion construction and engineering company speed up the time it takes to prepare bids for new proposals.
In an industry where some bidding processes take years, any time edge helps Bechtel win
proposals. Bechtel also uses traditional cost/ benefit analyses to measure returns on projects
designed to improve most business processes.
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