IT Governance and Value Measurement

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Questions and Answers

What is the main reason why business and IT strategies often fail to align?

Lack of technical expertise in the IT department

The current IT portfolio creates implementation barriers (correct)

Insufficient budget for IT projects

Inadequate communication between business and IT teams

What is the primary challenge in measuring and demonstrating the value of IT?

Inadequate training of IT staff

Lack of advanced approaches to measure IT value

Insufficient budget for IT projects

Difficulty in quantifying intangible benefits of IT (correct)

What is the main goal of applying the balanced scorecard technique to IT-enabled investments?

To increase IT staff productivity

To measure and manage the value creation of IT-enabled investments (correct)

To improve IT service quality

To reduce IT costs

Why is it important to involve both business and IT in the implementation of IT projects?

To ensure that IT projects align with business strategies and generate value Signup and view all the answers

What is a common challenge in integrating legacy systems with new IT projects?

All of the above Signup and view all the answers

What is the primary objective of IT Cost Optimization?

To reduce IT costs Signup and view all the answers

What is the phenomenon referred to as the 'IT black hole'?

The increasing cost of IT without visible returns Signup and view all the answers

What is the primary goal of measuring and managing IT-related value?

To provide answers to specific business questions Signup and view all the answers

What is the IT BSC used for?

To measure and manage the value of IT Signup and view all the answers

What is essential for measuring and managing IT-related value?

Considering both tangible and intangible costs, benefits, and risks Signup and view all the answers

What should be a shared responsibility between business and IT?

Getting business value from IT Signup and view all the answers

Who introduced the BSC at the enterprise level?

Kaplan and Norton Signup and view all the answers

What is the primary goal of IT according to the IT VALUE Principles?

To develop and maintain competencies aligned to the organization's expertise Signup and view all the answers

What is the approach to outsourcing in IT VALUE Principles?

Outsourcing is always organized in joint partnership between business and IT Signup and view all the answers

What is the primary concern of business managers regarding IT investments?

The benefits of IT investments might not be as high as expected Signup and view all the answers

What is the approach to developing new business projects in IT VALUE Principles?

Starting from the initial development of a new business project, the potential impact on IT needs to be analyzed Signup and view all the answers

What is the focus of IT in relation to business processes?

IT is pro-actively engaged in reviewing and designing efficient business processes Signup and view all the answers

What is the requirement for IT applications in IT VALUE Principles?

All IT applications comply with rules and policies as mutually agreed upon by business and IT Signup and view all the answers

Study Notes

Scope Definition and Commitment

Business and IT collaboratively commit to timely delivery while adhering to quality standards based on scope definitions and capacity reviews.
Continuous monitoring ensures transparency regarding required service quality from IT to the business.

IT VALUE Principles for EGIT

IT operates as a professional organization, effectively managing resources aligned with the organization's needs.
IT exclusively provides IT services, with outsourcing organized as a partnership with the business.
Proactive engagement in development and innovation within the organization is prioritized by IT.
IT focuses on developing competencies essential for supporting the organization’s expertise and strategic goals.
Priorities within IT are synchronized with the organization's strategic goals through integrated planning processes.
Compliance with mutually agreed rules and policies is mandatory for all IT applications.
IT actively reviews and designs efficient business processes in collaboration with the business.

IT Investment Concerns

Increasing IT investments raise concerns among business managers regarding the expected benefits versus costs.
The “IT black hole” phenomenon highlights the issue where substantial investments yield unclear returns.
Measuring business value from IT is a critical governance area, with a shared responsibility between business and IT teams.

Managing IT Value

Essential questions to assess IT value include:
- Return on additional IT expenditure.
- Comparative IT performance against competitors.
- Fulfillment of IT promises and strategy alignment with business objectives.
- Learning from past performance to optimize organizational processes.

Balanced Scorecard (BSC) in IT

The IT Balanced Scorecard is a growing tool for measuring and managing IT value, supported by consultants like Gartner and IDC.
Originally introduced by Kaplan and Norton in the early 1990s, the BSC applies at the enterprise level to connect business and IT strategies.
Implementation barriers can occur due to existing IT portfolio constraints, such as technical, political, or financial limitations, often exacerbated by legacy systems.

Measuring IT-Generated Value

Value realization from IT requires alignment between IT efforts and business objectives; IT alone does not create value.
Advanced techniques, like the balanced scorecard, can enhance the measurement of value derived from IT investments.
Traditional performance measures like ROI and payback period work effectively when costs and benefits can be quantified monetarily.
Challenges arise in applying traditional methods to information systems due to the predominance of intangible benefits like improved customer service or decision-making.
Value perceptions of IT vary across different management levels and user groups.

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Description

Learn about the 'IT black hole' phenomenon and the importance of measuring the value derived from IT investments. Understand the shared responsibility between business and IT in governance and the factors to consider in evaluating costs, benefits, and risks.