IT Value Realization
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Transcript of IT Value Realization
PowerPoint Presentation
Agenda
Introduction
What is IT Value Management?
Understand Strategy Alignment
What is IT Governance in the context strategy?
IT governance = IT Value Realization
What is benefit approach of IT value?
Financial based parameters to assess IT investment benefits
Non - financial Benefits value realization in public sector
Components of strategy alignment and IT value management
IT Strategy in public sector
The councils strategic priorities in e-government
Quality of IT value realization management in local government
What are Factors that reduce alignment in public sector?
Core benefits of public sector in IT value realization
How to measure public value IT frameworks PVITBENEFITS
Introduction
Public value as public sector equivalent to shareholders value
Public value benefits can be defined social benefits of corporate activity which are hard to value in monetary terms such public policy, service improvements and effectiveness/ efficiencies.
E-procurement and e-governance are typical approach used in public sector
Government using e-procurement to satisfying requirements for goods, works, systems, and services in timely manner while by e-governance has to met transparency, accountability, and integrity of the social/community
E-procurement in public sector consists and focus in three areas such as
1. Organisation and Management
2. Practices and process
3. systems and technology
Use a couple of examples to illustrate using technology to create public value, e.g., on-line services save both citizens and government time and money by reducing their need to visit government offices in person
People need to change their behaviors to make the best use of new technology, while processes must change to integrate new technology into the business
IT governance addresses how technologies will be used, what technologies will be invested in, and who is responsible for realizing value from those investments is required.
3A. It governance is in wide use in the private sector for these purposes
What is value management?
Managing the IT budget to deliver better performance and value
Managing the IT capability in core process areas
Managing IT for business value by tying IT investments to business benefits
Managing IT like a business by focusing on end users and services versus technology
Understand Strategy Alignment
IT strategy
Corporate Activities framework
ITPM framework Assessment Model
Project Management Book of Knowledge (PMBOK) and PRINCE 2
IT governance framework for management of IT activities:
Prioritizing IT investments
Monitoring and measuring results
Aligning IT and business
Creating & maintaining open communications
Examples: IT governance is not a technology issue it is a business issue for everyone
What is IT Governance in context
of strategy ?
ITchart
At the foundation of IT governance is joint decision-making between IT and operating departments; targeted, focused involvement of key participants; and an IT department that is focused on the success of its customers. A number of supporting disciplines rest upon this foundation, including: IT strategic planning to align community goals with IT activities; business cases to specify the highest priority projects; a transparent process for identifying technology funding and determining which projects to fund; and, finally, understanding the expected value from IT and assigning accountability for realizing that value, including establishing measures of success.
IT governance = IT Value Realization
IT governance (COBIT,ITIL,CMMI,SIX SIGMA)
IT governance addresses issues like:
Identifying technology needs
Prioritizing technology investments
Assigning accountability for results
Aligning IT and business
Creating and maintaining open communications
TQM improvement of the organizations as whole
What are Benefits approaches of IT value ?
Financial based parameters to assess IT investment benefits
Payback Period
Net Present Value(NPV)
Internal Rate of Return(IRR)
Economy Value Added(EVA)
Return On Investment (ROI)
Real Option Valuation(ROV)
Return On Assets(ROA)
Return On Infrastructure Employed(ROIE)
Total Cost Ownership(TCO)
Total Value Ownership(TVO)
Non - financial Benefits value realization in public sector
MEASURED IN VALUE OF ACTIVITIES IN THE CONTEXT OF THE BUSINESS STRATEGY
Public value of IT (PVIT) realization
Constituent service level
Operation service level
Political return
Multidimensional criteria approach Value
Information Economics (IE)
Applied Information Economics(AIE)
Total Economy Impact(TEI)
Total Value of Opportunity (TVO)
Measurement in the context business strategy
if you cant measure it you cant manage it
Balance scorecard
customer, Finance, business processes and learning and growth)
IT scorecard
User orientation (efficiency), Operation excellence (efficiency in dvpt & operational) , Business contribution (Finance), Future orientation(approach to skill set development and innovation)
Portfolio Management Techniques
GIGA information portfolio framework, Ross and Beath investment quadrants, MIT center for system information system research portfolio pyramid, Business investment analysis
Business Value measures for IT:
Categories of IT investment, Business value characteristics, Typical business value outcomes, Key business value measure
IT value benchmarking and realization:
performance measurement, Investment tracking financial of organization, Benefit targeting
Components of strategy alignment and IT value management
IT strategy
Corporate of activities framework
IT governance Framework for management of IT activity
IT project framework for management of IT Activities
IT Project Management Framework Assessment Model
It is not enough for the modern finance officer to simply control costs and collect revenues. The finance officer must play an active role in helping government create public value with limited resources.
-Business case and shared project evaluation helps identify most valuable projects
-IT governance used to measure and monitor value received from IT. The business case should use performance measures or other tangible indicators of success to describe the results the project will achieve and to provide a firm basis for evaluation.
-Especially important with enterprise systems because enterprise systems are shared, so accountability can be too diffuse in the absence of IT governance
-The need for value realization extends not just to new technologies, but also to existing technologies. This speaks to the need to invest adequately in upgrades and training. IT governance can be used to allocate resources across the IT portfolio adequately to do this.
2. IT projects have inherent risk and risk increases as IT becomes more pervasive.
-Business cases identify specific sources of risk and mitigating strategies
-Improved communication occurs through mechanisms like Project Management Offices (PMOs), IT liaisons, and the more frequent informal communications that the trust created through IT governance breeds.
IT Strategy in public sector
THE MAIN FOCUS AREAS IN COUNCILS MUNICIPALITY:
Enterprise Architecture and ICT governance
IT governance
Information management
best value IT service delivery
Enabling innovation and ICT Risk management
Best research on ITVR presentation.pdf
The councils strategic priorities in e-government
Safe community
Customer service
External communication
Diversity and Strengthen the economy
Leadership and Governance
Information services and internal services
As technology becomes more pervasive, it becomes a larger cost item. Therefore important to get a handle on both short and long-term costs, including new projects and replacement of existing assets.
The modern finance officer must produce information to support decision-making not just costs and revenues, but value received for the dollar spent. IT governance can be used to define what data is important, who is responsible for collecting and maintaining that data, and how that data will be turned into useful information and be made accessible. Example is an IT architecture plan.
Public sector has a duty to provide transparency. IT governance provides transparency on how IT assets are managed, especially as it relates to what is invested in, amount spent and value received.
Quality of IT value realization management in local government
Enablers: factors that Promote alignment
Sharing Decision Making within IT portfolio Management
Alignment between ICT strategy and corporate plan
Linking high level of technical integration with customer services
Linking between IT projects with a value and Alignment measurement tool
What are Factors that reduce alignment in public sector?
Misalignment in public sector
Miscommunication in IT activities
The lack of well defined IT plan
The lack of value realization
NOTE: THIS SLIDE CAN BE SUBSTITUTED WITH OTHER EXAMPLES OR TAKEN OUT IF THE PRESENTER CAN EXTEMPORANEOUSLY WORK ILLUSTRATIVE EXAMPLES INTO THE OTHER SLIDESOakland County is recognized as a top-ten digital county by the center for digital government and has won a GFOA award for excellence for its collaborative use of technology with other jurisdictions
The Public Health Department received a homeland securitybio-terrorism grantto implement interactive voice response (IVR) to put in place the abilityto rapidly contact first responders in an emergency event. In some governments, this grant may have simply been accepted and the system implemented within the department. However, in Nevada County the grant was used as a springboard to create much greater public value. Through its IT governance mechanisms, there was a shared recognition through IT Governance of the potential value of IVR for a host of County functions. Hence, by directing a little extra funding towards this project (20% over the baseline project cost) the County was able to make what would have otherwise been an isolated project in a single functional area into an enterprise strength platform. To illustrate, the library was able to use the IVR system to discontinue $.35 postcard late notices in favor of an $.08 automated phone call. In the community development function, County inspectors can now phone-in inspection results, including the remedial actions required of the holder of the permit. Construction contractors can access the results immediately and then use the system to schedule a re-inspection.
Core benefits of public sector in IT value management realization
Costs reduction and efficiency gain
Quality of service delivery to businesses and customer
Transparency, anticorruption, & accountability
Increase the capacity of government
Network and community creation
Improve the quality of decision making
Promote use of ICT in other sectors of society
This slide shows symptoms of poor governanceConfusion on how IT decisions are made; Lack of info on performance of IT investments
Important symptom in government is maverick purchasing or harmful decentralization
Signals frustration with IT. Will not work because poor decision-making structures remain, but now operate with a private vendor.
If 90% of projects are either over budget or not on schedule, IT governance is a problem.
How to measure public value IT frameworks PVITBENEFITS
DIFFERENT COUNTRIES HAVE DIFFERENT METHODS TO MEASURE
PVIT FRAMEWORK BENEFITS FROM INVESTMENTS
France: MAREVA Methode dAnalyse et de REmontee de la Valeur
(Measure profitability for the state, internal aspects, external aspects, necessity)
European Union: e-Government Economics Project
(Measure quantitative and qualitative components for each dimension of PVIT).
Australia: Demand and Value Assessment
(Assess the benefits of its e-Government initiatives. The study highlighted the need for
a comprehensive tangible and intangible benefits as well as the probable risks associated)
India: E-Governance Assessment Framework
(Measure service orientation technology, sustainability, cost effectiveness, and feasibility of replication.
The methodology consists of assessments for G2G, G2B, and G2C services.)
Resource allocation ties IT governance to the budget process making its important immediately apparent to everyone. Formality levels can change over time there is no correct level of formality.
Using existing structures decreases the amount of change/adaptation and new time commitments participants will be subject to.
Ideally the owner should be a business savvy CIO. If there is no CIO, a CFO my have to be the sponsor in order to confer the appropriate level of importance, guidance, and institutional momentum to IT governance
IT governance is not going to be the most pressing item on the agenda of participants, so effective communication is critical. Here are some of the most important mechanisms
Senior official communications demonstrate the importance of governance and the decisions made through it
Formal committees provide an official forum for decision-making and communication
IT relationship managers serve to bridge the divide that can arise between business and IT departments.
Web portals provide an easily accessible and flexible medium for disseminating information and for gathering input. For example, Miami-Dade County uses a portal to send out and gather its forms for business case development.
Informal communications keep participants apprised of major issues, making formal communications more effective because participants arent surprised by the message. Informal communications also builds trust, which is critical for inter-departmental cooperation.
E-GEP Framework public value benefits
EFFECIENCY Cashable financial gains
Empowered employees
Better organizational and
IT architecture
DEMOCRACY
Openness
Transparency and
accountability
Participation
EFFECTIVENESS
Reduced administrative burden
Increased user value and satisfaction
More inclusive public services
Financial andorganizational valuePolitical valueConstituent value
If you dont have a CIO you can engage your organizations technology professional. However, if that person is very focused on technology and not as focused on the business-benefit technology provides, the finance officer may have to take a more active role in establishing governance.
Conclusions
In public sector the IT value management can be measured quantitative and qualitative with one or more IT methodology framework in order to achieve desired outcome by the stakeholders such methodologies are , TQM 14 point by Deming , balanced scorecard, benchmarking, IT governance (COBIT,ITIL,CMMI,SIX SIGMA)
which are helping board of directors and managers to control and assess the business strategy and IT strategy if are aligning in adequate manner if not so can government take early corrective action.
REFERENCES
Stenning & Associates pty ltd(S&A) (2003). Final Repport: Evaluation and Review of the e-procurement pilot project, version 1.2, Hobart, Australia
Al-Hatami &Hales European and Mediterranean Conference on information System 2010, April 12-13 2009, Abu Dhabi, UAE
Weerakkody, V., Janssen, J., & Hjort-Msdsen, K. (2007) integration and enterprise architecture challenges in e-government : A European perspective. International Journal of cases on electronic commerce, 2(3),13-35.
The End
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