Companies invest in IT, but do not measure IT value

In a survey of 1217 IT professionals from nine countries, ISACA found that half of respondents believe they are realising 50-74% of expected value from their IT investments, and almost 20% believe they realise 75-100%. However, only half measure the actual value “to some extent”, and 10% do not measure the value of IT investments at all.

Half of the respondents said accountability for measuring the value of IT investments was delegated to the IT department or provider, instead of within the business. 49% said the CIO or IT managers are responsible for optimising returns on IT investments. Only 15% said responsibility lies with the board, 11% the CEO and 9% the CFO. Perhaps most worryingly, Infosecurity notes, 8% said no one was responsible.

Despite this lack of measuring the return and value of IT investments, 30% of the companies are increasing their investments in IT this year. Only 13% plan to reduce spending and 14% plan to freeze IT investment at current levels.

John Thorp, chair of the Val IT Development Team for ISACA and president of Thorp Network, said: "The results of this survey reinforce findings from earlier studies that, while most enterprises feel they are realising value from IT, few have a clear understanding of what value means, and even fewer measure it. This raises the question, ‘On what basis are spending decisions made?’

“Additionally, enterprises that do not fully measure value are unable to determine which investments are successful and which need to be cut – and thereby are likely to miss out on revenue-generating opportunities, pursue unsuccessful investments and neglect competitive advantage.”

Thorp said that most decisions related to the value from IT is subjective, and often based on perception rather than facts.

So what are companies hoping to get in return from the IT investments? 35% said “improved customer service” and 24% said “cost reduction” were the most important reasons. Only 16% hoped to get “new or improved products and services.”

India ahead of rest

Of the countries covered by the ISACA survey, Indian respondents were the most advanced in adopting effective IT value management practices and assigning responsibility for these to the business, ISACA said.

A clear majority (70%) of respondents in India said their organisations had a framework for selecting IT investments that would yield the greatest value, and 57% fully measure the value of IT investments.

Almost half said they would increase IT investment based on evaluations of added business value, and 63% said there is a cross-departmental understanding of what constitutes value in IT investment. A third said responsibility for optimising IT investment was at board or board chair level.