Contents

• Introduction
• IT value realisation Life Cycle
• Business value index or BVI
• Evaluation of Business Value Index
• Conclusion
• references

Description

Gone are the days when operations in an industry relied mostly on human efforts and skills. This is the age of information technology, which finds its place even in unlikely areas such as automobiles, manufacturing and process chains etc. More and more companies are automating their processes and operations by incorporating IT in their operations. The debate is whether these investments in IT prove to be profitable or cost effective in the least. When the proposal to invest in IT comes up, the managers and senior executives have a difficult task in convincing their CEOs, COOs or Directors about the business profitability from the proposed IT investment (David Sward, 2006). There have been many approaches to evaluate the value of IT investment to the profitability of the company. Many use quantitative approaches using ROI (Return on Investment), NPV (Net Present Value), IRR (Internal Rate of Return) etc. (Craig Symons, 2006). These measures mostly rely on projected figures based on certain assumption and elasticities. The measurement approach obviously uses a few variables, which may not represent the complete process elasticities. When the investment in IT is made in an organization, there can be more long term qualitative benefits than immediate benefits that can be measured in quantity. Most importantly, the IT investment in an organization calls for its perception as value center than costs and cost effectiveness, which has many intangible benefits than tangible ones (Craig Symons, 2006). This paper tries to evaluate the approach presented in Measuring the Business Value of Information Technology, Practical Strategies for IT and Business Managers by David Sward. This book is a publication of Intel press and is the official view of Intel Inc. on the value of IT investment. It is quite understandable that the book is written as part of the marketing of the products and services of Intel Inc. to the prospective enterprises so that they understand the benefits of investing in IT in their operations.