"IT decisions are no longer about efficiency or cost reduction but about effectiveness. In other words productivity."
is the one I am most interested in.
Effectiveness and productivity are very different terms to me. Productivity to me is a great way to say, "are we getting an ROI on employing this person to do this job?". How much are we paying out, and to get what return.
Effectiveness seems to be more of a ranking against some target. This could indeed be productivity, but could also be accuracy or others that don't yet spring to mind! :(
The question is, do either of these terms enable a solid value to be assigned to enable the calculation of a return?
I would say that there are other metrics that are equally important. Risk mitigation is one.
* compliance risk (fines, criminal, loss of license)
* risk of damage to brand (an important one for me based on my blogging about financial services technology, although is also applicable to Pharma and other industries requiring significant customer trust).
Only some of these risks are really quantifiable as a cash figure, but all could be assigned a significance value and likelihood of occurring, enabling an assignment of value. Mitigation of the risk (or partial mitigation) enables a return to be calculated. This is the stuff of risk experts, and I certainly do not claim to be one!
Although I agree that efficiency is not the primary concern, in some IT projects it is absolutely essential. Disclaimer: I came from an imaging and workflow background where projects could live and die by the 'per-click' improvements in individual data entry performance. Sad, I know.
I hope some of these thoughts are useful in your grand undertaking!
Cheers Phil
vinnie mirchandani
· 3 years ago
hard to disagree - but I find most of my clients glaze over when there are high level dsicussions of payback. We can help them scope costs much better now...they expect simialr tactical guidance on payback not a random walk down wall street...
David Tebbutt
· 3 years ago
This all reminds me of discussions about ROI on Knowledge Management projects. (It doesn't matter whether you believe that knowledge can be managed for this discussion.) So I figured that someone must have gone through this softer side of valuation. And they have. I Googled and first one up was a law firm:
It is written by "Kingsley Martin, formerly CIO at Kirkland & Ellis, a sharp guy when it comes to KM. He’s a lawyer (with law degrees from both Oxford and Harvard) who has been focused on KM-related issues for over 15 years."
I think you can climb on others' shoulders with this one Dennis.
Dennis Howlett
· 3 years ago
Phil: yep, there are variations that could be usefully applied Vinnie: OK - so how do you calculate payback? Isn't the whole point that we've bitched about value delivery for years but chosen not to approach the topic in a way that's meaningful to the business? If 'we' don't make the effort than who will? Or is it a case of: I suppose it's got to be done, hand me the fag packet? David: nothing new under the sun I guess. Thanks for the reference link, good stuff.
vinnie mirchandani
· 3 years ago
Dennis, in the end customer customers will always lean towards cookbooks, templates etc - at least at the project level. They have little time or interest in Strassamann type discussions (more of interest at C level).
Payback tools peaked around 2002. Every vendor appreared to be building their own - obviously biased.
Most recent clients I have worked with are back to practical, Excel based stuff. More than the method (IRR, ROI etc) they want to get a decnet handle on all costs (few surprises) and sources of payback so they can prioritize project steps in case of invariable delays, overruns etc
All Comments
I think that #8
is the one I am most interested in.
Effectiveness and productivity are very different terms to me. Productivity to me is a great way to say, "are we getting an ROI on employing this person to do this job?". How much are we paying out, and to get what return.
Effectiveness seems to be more of a ranking against some target. This could indeed be productivity, but could also be accuracy or others that don't yet spring to mind! :(
The question is, do either of these terms enable a solid value to be assigned to enable the calculation of a return?
I would say that there are other metrics that are equally important. Risk mitigation is one.
This can be:
* monetary risk (financial, litigation, regulatory fines, fraud, theft)
* compliance risk (fines, criminal, loss of license)
* risk of damage to brand (an important one for me based on my blogging about financial services technology, although is also applicable to Pharma and other industries requiring significant customer trust).
Only some of these risks are really quantifiable as a cash figure, but all could be assigned a significance value and likelihood of occurring, enabling an assignment of value. Mitigation of the risk (or partial mitigation) enables a return to be calculated. This is the stuff of risk experts, and I certainly do not claim to be one!
Although I agree that efficiency is not the primary concern, in some IT projects it is absolutely essential. Disclaimer: I came from an imaging and workflow background where projects could live and die by the 'per-click' improvements in individual data entry performance. Sad, I know.
I hope some of these thoughts are useful in your grand undertaking!
Cheers
Phil
So I figured that someone must have gone through this softer side of valuation. And they have. I Googled and first one up was a law firm:
http://www.llrx.com/features/kmroi.htm
It is written by "Kingsley Martin, formerly CIO at Kirkland & Ellis, a sharp guy when it comes to KM. He’s a lawyer (with law degrees from both Oxford and Harvard) who has been focused on KM-related issues for over 15 years."
I think you can climb on others' shoulders with this one Dennis.
Vinnie: OK - so how do you calculate payback? Isn't the whole point that we've bitched about value delivery for years but chosen not to approach the topic in a way that's meaningful to the business? If 'we' don't make the effort than who will? Or is it a case of: I suppose it's got to be done, hand me the fag packet?
David: nothing new under the sun I guess. Thanks for the reference link, good stuff.
Payback tools peaked around 2002. Every vendor appreared to be building their own - obviously biased.
Most recent clients I have worked with are back to practical, Excel based stuff. More than the method (IRR, ROI etc) they want to get a decnet handle on all costs (few surprises) and sources of payback so they can prioritize project steps in case of invariable delays, overruns etc