Strategic CIO // Executive Insights & Innovation
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12/1/2008
04:11 PM
Chris Murphy
Chris Murphy
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Can You Track The 'Revenue Of IT'?

Does your company capture the full value of what IT delivers, or are the conversations only about how much IT costs? (Which then usually comes down to "too much.")

Does your company capture the full value of what IT delivers, or are the conversations only about how much IT costs? (Which then usually comes down to "too much.")In our article on a 3-year IT transformation project at Hewlett-Packard, one of the most striking elements is how much effort the company now puts into tracking the value of IT initiatives -- the "revenue of IT," in the language of HP CIO Randy Mott. Mott defines that as the hard-dollar and intangible benefits that a project delivers in the 12 months after full implementation. CIOs often talking about "running IT as a business," but Mott notes:

Every business has revenue, but IT typically doesn't ... because we don't have the discipline to capture the benefit of projects in a way that we can show the CEO or executive committee and have numbers that are real.

HP's revenue of IT figures come out of an annual planning process where business units, finance, and IT teams agree on the benefits a project is supposed to deliver. That gives the numbers credibility. To Mott, the critical factor for measuring IT's value isn't the exact metrics a company uses. It's that everyone in the company uses the same yardstick.

But it's not easy to get to that point, and the article explores the obstacles. Some HP business units didn't want to use the cost-benefit analysis process and centralized IT planning. That meant IT had to hold its ground -- "don't blink" -- that every IT project had to go through this cost-benefit analysis and planning process. And that required support from the very top of the company.

We'd love to hear from you on the different ways your company is tracking the value of IT projects. Is tracking that value seen as important in your companies? And do those values have credibility in an executive committee discussion, just like revenue of a business unit?

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