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Measuring value and ROI from beginning to end of your IT projects
Do you know the concrete value of your IT projects? These five steps are crucial
to understanding and demonstrating the real value and ROI of your IT initiatives
- to your IT department, to company leaders, and to shareholders.
Measuring
the value of IT projects can be tricky at best - but it's a lot tougher if you don't
plan ahead and measure concrete metrics. It's one thing to claim that you've had
an impact... but can you provide evidence? When your boss calls you into his office
for the big, final meeting and asks what your project has delivered, do you have
concrete, verifiable information to present?
Just like any other application or business plan, IT projects do have measurable ROI - but only if their benefits can be demonstrated empirically to company leaders and investors. It's vital to look ahead from the start of your endeavour and measure the most relevant metrics from day one, so you'll be able to demonstrate the progress and value of your work, from beginning to end.
Measure IT value with concrete metrics
The businesses that show the greatest success through IT initiatives use a basic
"value capture" model that involves five steps:
- Analyse Market: First, it's important to have a sense of the larger market in which your project will operate.
- Focus & Strategise: Business leaders or IT department heads strategise to focus on a particular opportunity or idea.
- Tactics: The tactical stage involves refining your big-picture idea with concrete plans, such as implementing an ERP platform or opening your sales initiatives with a new ecommerce site.
- Tracking: The largest and most time-consuming of the five steps, this phase involves creating and implementing your IT plan, and tracking concrete metrics from start to finish as you do so. The statistics you collect before introducing any new applications become a baseline against which to measure the impact of your work.
- Communication: Finally, it's vital to communicate your results to business leaders in a way that makes sense to them. This may mean learning to speak "financial-ese" as you present the effects of your application to your board of directors, stockholders, or management executives.
These five steps lay down a path that makes it easy to plan, track, and present your results. Skipping even one of these steps can set you up for trouble.
Why waste time on these steps?
This kind of tracking and record-keeping might seem unnecessary to many IT pros,
but rest assured that it isn't. You know that your projects deliver results, but
if you can't demonstrate that fact, then - as far as many mangers and directors are
concerned - you might as well not be doing the work.
Without the merit of proof, your company is likely to decide that other projects - in departments willing to keep records and demonstrate their value - are more deserving of future funding. Unfortunately, it's a case where the onus of proof falls on you. The five steps above are a powerful way to prove your value in a way that non-IT business experts will be willing and able to understand.
Goal-setting for achievement
Even if you understand the importance of tracking and presenting coherent results
to leaders in your company, it's easy to slip up and let these five steps slide
as your project progresses. One way to stay on target is to focus on tangible goals
that consider the scope and components of the project. By including results tracking
as a necessary step in the project itself, you'll ensure that it won't be forgotten
or ignored. You'll also be more likely to budget for the time and resources you'll
need to properly engage with your results and create meaningful analysis of your
metrics.
Performance metrics must be linked to IT projects
The most challenging aspect of this five-step model, in some ways, is to define
performance. Which metrics should you measure in step 4? What matters most?
Although it can be tempting to focus on dollars and cents as a metric that's easy to measure and very clear to investors and bigwigs, it probably won't be the best indicator of project success. Money can be linked to any number of variables, and any rise or drop in revenue can be attributed to the sales department, a new product rollout, or even a shift in the economy. Which metrics and measures of success are specific to the impact of your IT initiative?
Identify measures of performance that can be more obviously linked to your work: anything from the length of customer service calls to the results of telephone surveys may be a relevant variable to track, depending on your specific project and your industry.
Create a schedule that encourages results
Although some projects will show results immediately, others won't. Don't expect
results overnight and plan your schedule accordingly: Allow applications time to
have an impact before pulling the plug on tracking. Some projects take weeks or
months to build momentum and fulfil their potential. The more meaningful and clear-cut
your results, the more powerfully you'll be able to present them to your managers,
board of directors, or other stakeholders.
Finally, once you've collected and analysed the relevant metrics, you may want to convert them to money before presenting your data. Your final report should not only summarise the actual benefit in terms of the metrics you've chosen to track, but should also explain how those metrics translate into cold, hard cash.
It's impossible to effectively maintain an IT department based on vague promises and unclear results. These 5 steps take the guesswork out of IT projects and bring relevant, useful facts into the boardroom, allowing you to prove your value and continue doing progressive and powerful work for your company. Value means not only contributing to business success, but also demonstrating in concrete and meaningful ways exactly where and how that progress has an impact.
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