Executives must Rethink

Manage IT as a competitive weapon

Executives must Rethink

Many companies and institutions focus on the investment side of the business case as they assess their information technology (IT) investments. In some cases, IT investments are even treated as costs. The return, i.e. IT enabling business benefits in line with the strategic agenda, is seldom understood as well as the correlating IT expenditures. Nor is it assessed to a similar level of detail. Hence, significant imbalances between IT spend and return are built into the business case.

Many companies and institutions have large capability gaps to value the IT solution portfolio throughout the lifecycle. They build business cases that cover IT development and the deployment of single projects. However, they cannot conclude on a portfolio level whether or not the portfolio is right today or for that matter tomorrow. A recent example from the Swedish social insurance office unveils the importance in making the right IT investment choices:

“The social insurance office has spent tens of millions of EUR on a new IT system. It is considered a failure when approximately 15 MEUR of value is being depreciated… The entire system may be phased out, it is ‘too expensive and difficult’”, says Cristine Husmark, Swedish Minister for social security

Why did this solution fail? How well were the business requirements understood and specified? How was the application and vendor due diligence conducted? Was the implementation project cut into small pieces? If so, why was the project not abandoned earlier?