The elusive value of IT with respect to Business value

Few IT investments actually lead to competitive advantage. IT spends between 3-5 % of revenue generally accepted as cost of doing business or rather most fashionable keeping the lights on.

Gartner is expecting for year 2013 expenditure US 3,7 trillion (source http://www.computerworld.com/s/article/9240518/Gartner_downgrades_2013_global_IT_spending_forecast_on_currency_shifts?taxonomyId=237), of this Enterprise Revenue Software US 304 billion, data center 143 billion, IT services US 926 billion.  Basically US 3,7 trillion to manage organizations (profit, nonprofit and government) IT Systems. The term used by Gartner ‘Keeping the Lights on’

Gartner: Business value comes from the ability to conduct business process more reliably, faster and at lower costs and to control inventories, increase revenue and reduce time market, improve customer service.

Reality this is not possible without considering system dynamics and current IT architecture (complex and rigid) . Just about all IT projects consider narrow elements of the system, dependence on software capability. Most CEO believes that they are getting return on investment on 50% of IT projects; they are not even sure which 50%. IT generally cannot demonstrate real leverage.

Some good stuff off the web: http://futureofcio.blogspot.co.uk/2013/03/six-ways-cios-can-contribute-to-revenue.html

Generally all has merit but there is a missing link: the HOW.  How will ‘CIOs will contribute to revenue generation when they are part of the senior exec team responsible for the revenue targets.’

Optimizing Business value of IT, by IBM

http://www-935.ibm.com/services/uk/cio/pdf/IBM610_IT_value_White_paper_04_singlepgs.pdf

What IBM states : ‘An IT function is a complex organisation that can only be  optimised by taking a holistic ‘ecosystem’ view to ensure that all elements are seen in balance with each other and that the impact of actions taken in one place are understood throughout the ‘ecosystem’

What do they mean ecosystem: how different is that to System Thinking ‘system’ or System Dynamics

Any organization that wants to be leader from a competitive advantage perspective cannot manage IT as just a cost centre. Value of IT needs to be exploited to leverage system objective and to be synchronized with system dynamics.

 The elusive value of Business Process Improvement

Gartner claims in 2012 that the BPI/BPM discipline is falling through disillusionment. Most organization 90% are struggling to apply BPM as an enterprise program.  This is mainly due to fact that initiative fail to create real leverage. Optimization or improvement of process does not really imply efficiency and effectiveness or revenue increase.

One can optimize the sale process so that it is streamlined , error free and satisfy all of compliance requirements but from a bottom line perspective the leverage is close to zero specially if the supporting IT architecture is complex, rigid and costly to support.

The processes must optimized but within more system focused direction. One must understand archetypes and critical emerging properties, understand system dynamics, then the supporting processes are optimized.

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