What's IT Worth?

FRAMINGHAM (05/01/2000) - With the clock running on Internet time, you may think you're too busy to assess the value of IT. But valuation is more important than ever.

Your ERP implementation is finally done. Y2K is history. Time now to tackle that backlog of applications, starting with e-commerce. Speed to market is the name of the game, so you'd better act fast. No time to spend on measurement and valuation? Oh well, your CEO won't care, as long as you get the new stuff rolled out. Right?

Wrong. It may be true that the pressure to implement quickly is fierce in this internet era, but that doesn't mean it's any less important to assess the value contribution of your IT investments. In fact, a number of forces are combining to make valuation more important than ever, and the net may even be one of them. First, the post-Y2K backlog means companies must be especially selective in prioritizing and choosing among new IT investments. Most larger companies have now also completed their ERP implementations, and for many the payoff doesn't look good. That tends to make CEOs sit up and take notice. Similarly, just about everyone is now online, thanks to what originally looked like a no-brainer decision: Competitive necessity combined with what promised to be a relatively small investment. But today, the ongoing costs of hastily built e-commerce systems can add up faster than the payoff, causing upper management to wonder what happened.

It all creates extra pressure on the CIO to prove the value of IT--both for individual investments and, on a higher level, for the IS organization as a whole. In this CIO Special Report, we've done our best to help you sort through and make sense of the challenges, methods and possible actions. Because when you're asked "What's IT worth?" you'd better have an answer. And a good one.

Got Value? Share your frustrations and successes in sizing it up with CIO's value and measurement expert Katherine Noyes at knoyes@cio.com.

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