I recently attended a presentation by a large research firm. Boiled down to its essentials, the presentation made two points:
- IT activities are still not aligned with business priorities — no profound new insight there.
- IT projects should only be initiated when there will be a measurable financial benefit to the enterprise.
It’s hard to argue with the second point, but it begs the question of how one should measure the financial benefit of an IT project. The presentation was silent, however, on that question.
Currently, most IT departments either make no attempt to measure the value of IT projects or, if they do, they invent methods that are not based on proven scientific methods and not proven to improve decisions. If “intangibles” around business benefits are considered at all, they are merely a subjective “weighted score.” Typical business cases for IT projects are, at best, simple accounting exercises with no way to measure risk statistically.
Fortunately, methods exist which can enable IT managers to measure risk like an actuary, value like an economist, and portfolio optimization like a financial analyst.
Among The Advisory Council’s professional development workshops, we have one specifically designed for this purpose — the “TACometer” workshop, which has been one of our Expertise-as-a-Service® offerings for several years. Created by TAC Thought Leader Douglas Hubbard, author of How to Measure Anything: Finding the Value of “Intangibles” in Business, TACometer provides three days of intensive training in methods that have the most evidence of improved decision performance.
Clients that have brought in our TACometer workshop have never again had to wonder about how to measure the financial benefit of an IT project.