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Hi Dan,
On the question of the relationship of the value to intangibles there's also the nice point made elsewhere on IT Counts that "informed, empowered and independent employees are happy employees and create happy customers". Get it right and IT plays an empowering role help them to overcome institutional barriers to achieving this:
“Productive professionals make big enterprises competitive, yet these employees now increasingly find their work obstructed. Creating and exchanging knowledge and intangibles through interaction with their professional peers is at the very heart of what they do. Yet most of them squander endless hours searching for the knowledge they need – even if it resides in their own companies – and coordinating their work with others.” McKinsey, 2005
But like much in the way of cultural change it's 'chicken and egg'. To get the sort of IT which empowers employees you need the kind of CIOs who see the benefit of this approach to value, as reported in a recent FT piece:
"The areas where senior IT executives’ skills are found most wanting are: applying IT strategy for business benefit – being able to “walk the talk” – and communicating IT issues to a non-IT audience."
@dennis - one impression I've gained over the last few months is that accountants are just a different species of geek, as capable of mystifying mere mortals like me with obscure financial terminology and explanations of the credit crisis as any tech-geek is of baffling people with TLAs, protocols, quad core hyperthreading and RAID levels.
I'll get my coat.
@chris? @dennis! - after my experience of the lack of ROI, after launching a global e-commerce start-up with a spare few million quid, I'd agree with you that the technical side wasn't the issue, but neither was it the solution down to business needing to get closer to geeks.
Could it be the poor ROI was simply the lack of dialogue with customers as to what they really wanted? And that's taking into account doing the expensive upfront global market research.
Maybe it sounds a tad evangelical, but as a result I'm now a firm believer in user-centered design to get to what the customers need. Not to mention the power of the best communities to generate conversations *with* customers to help discover what they want!
@dennis - I'm looking at design & usability from the perspective of what helps deliver maximum value to the customer, so they want to use product. I was fortunate to hear an excellent presentation from Directgov's Andrew Lamb at the British Computer Society recently where he outlined it much better than me:
"How often have you found web applications that don’t deliver what you want or are so badly designed they’re frustrating to use? User centred design is the discipline used to discover a meaningful proposition and create a user experience that customers will thank you for." (Presentation slides-zip, 5mb)
Thanks for the feedback. I still find the ROI issue one of an economic langauge disconnect. I don't believe we can articulate value in terms of knowledge economy work, and thus we return to ROI with an industrial age bent to it.
In terms of the currenct economic crisis, I think the inability to tie business to IT was a huge part of the model as trading software was built on false assumptions and had few if any contigencies built in for assumption failure (e.g., growth was a consistant, capital markets and credit markets are flowing, etc.).
I don't think we understand value in terms of total investment value against business outcomes. I would love to hear about alternative models to traditional ROI that challenge the industrial age assumptions under current methods. Thanks!
Having worked in a large public sector organization in a role which involved contract tendering my first response is to look to see what non-commercial organizations use apart from ROI to justify spend. The problem is nicely articulated here in an article on bnet titled 'Beyond ROI: a new framework for measuring the value of technology investments':
"The major shortcoming of traditional ROI models is that they fail to account for non-financial costs and benefits. The fact of the matter is that non-financial measures are difficult to quantify. However, by relying only on financial measures to evaluate IT projects, governments are left with an incomplete picture of the relevant costs, benefits, and risks. Further diminishing the usefulness of ROI is the fact that organizations sometimes use dissimilar methodologies to evaluate the same project, undermining the comparability of the analysis."
See page 5 of the article to skip to an illustration of an alternative decision framework to traditional ROI. Not sure if this directly answers your question Dan as it's meant for government projects, but it may provide a useful idea or two to answering your need for alternative models to traditional ROI.
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