Why an IT assessment is a valuable exercise

* Determining the value of an IT implementation

As technical people, we tend to want to charge full steam ahead when our organizations propose a major new IT implementation.  Whether it's an ERP system or CRM, we're ready to get certified, install the software and roll out the application to everyone.  How quickly and easily we do this is often the measure of our success.

But with such a large investment in money, time and resources, and with major impact to the whole organization, it's better to take a breather and conduct an IT investment analysis and assessment first.  If your corporate officers aren't asking for such an assessment, they should be.

Just what is an IT assessment?  It is a thorough look at all aspects of the proposed implementation of a technology, which gives the top decision-makers a good sense of the business value that can be derived from the investment.  And in some cases, the assessment may prove that the investment could negatively impact business, or add so little value to the company as to be not worth the cost of deployment.

I recently had the opportunity to discuss the IT assessment process with two of the founders of IT Executive Partners, P. Bruce Guthridge and Bill Parker.  Together with their third partner Jerry Hignite, these gentlemen have nearly a century worth of experience in objectively analyzing and assessing major IT investments that companies are about to make or have already made.  Today, Guthridge shares some of his experience and thoughts with you.

"When a client asks us to conduct an IT assessment project, we always tell him up front that we don't believe that all IT initiatives are worth the undertaking," Guthridge says.  "We are not there to justify a planned implementation; we are there to discover the business value."  In some cases, he adds, the value just isn't there.

Guthridge sees the need for a detailed assessment when the scope of the intended implementation is very broad, such as enterprise-wide, and/or likely to impact some very strategic business processes, such as customer service or manufacturing.  There are three prime times to launch a study.  One is prior to the investment; a second is during a pilot project; and the third is after the technology has been put in, but before a larger-scale rollout, such as to the entire enterprise.  The basic premise is to determine if the implementation is going to support the overall business goals and strategies.

So what can you expect to learn from the assessment?  Guthridge tells us that by the end of the process, you should have a good understanding of:

* What business changes the IT solution will enable or support, and what they would be.

* The value of these business changes.

* What business strategies these changes support.

* The risks of implementing the technologies.

There are risks of implementing technology?  "Of course," Guthridge says.  "It's possible to successfully install the technology and botch the organizational changes that are needed with the new system in place.  For example, with an ERP implementation, the company might need to reorganize around the processes and workflows enabled by the technology."

Not surprisingly, IT assessments are rarely initiated by an IT organization.  "Usually it is the top decision-makers of the company that call for an assessment.  The IT department might suggest an assessment if they want to do a major project and the decision-makers haven't gotten involved yet."

If the IT department isn't calling the shots on an IT assessment, does this mean you should fear the process?  "Not at all," Guthridge says.  "This is an opportunity for the IT organization to move in concert with the business stakeholders.  Everybody wants to be successful and do the right thing to support the business.  An assessment jointly conducted by the IT group and the line of business managers gives both groups the opportunity to learn how IT might support the business strategies and goals."

Guthridge's company, IT Executive Partners, uses a computer model to analyze the expected value of an IT implementation.  "The model factors in all assumptions, which are the criteria by which we calculate the business value of the IT project," Guthridge says.  "This way, we can anticipate the outcome of the project, even if one or more of the basic assumptions changes.  For instance, what if we originally assume that the IT project will reduce business costs by x dollars, and then change that factor to y dollars instead? We can see if the project is still worth doing."

An IT investment assessment can give you the big picture before you start a major IT project.  It can be worth its weight in gold to set proper expectations and to fully understand how IT can and should support the business goals and strategies.

Linda Musthaler is vice president of Currid & Company.  You can write to her at mailto:Linda.Musthaler@currid.com

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