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IT Value Management - IT Value Management By Steven R...

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IT Value Management www.acornsys.com By Steven R. Anderson and Lawrence S. Maisel
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Executive Brief: A better understanding of the value of IT drives smarter demand for services, better manage- ment of costs, and better utilization of IT resources. Learn how several leading companies are deploying a new framework that aligns their strategies with their technology assets and abilities to plan, measure, and manage operational performance with complete transparency and financial integrity. IT organizations and their management teams are being challenged to select IT’s true value discipline to meet the needs and expectations of its customers while also optimizing the use of available resources. “The selection of a value discipline is a central act that shapes every subse- quent plan and decision a company makes, coloring the entire organization, from its competen- cies to its culture. The choice of value discipline, in effect, defines what a company does and therefore what it is.” 1 According to Forrester Research 2 , value disciplines for IT organizations are evolving into three (3) distinct business models: Solid Utilities that focus on cost control; Trusted Suppliers that focus on services and projects: and Partner Players that focus on business competitiveness and innovation. Each of these value disciplines requires its own set of strategies to align its business mandates, quality of information to drive operational and managerial actions and decisions, and perfor- mance management capabilities to manage resources and achieve its strategies. Additionally, each model requires that IT resources including cost, capital, and capacity be deployed to yield their greatest returns on these expenditures. This is particularly critical in the Financial Services indus- tries where IT expenditures often approximate 7% of a company’s revenues. 1 The Discipline of Market Leaders by Treacy & Wiersema, Addison-Wesley, 1995 2 Forrester Research, What’s Important to IT Management in 2006? by Laurie Orlov, Sept 2005
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Several leading financial service companies, like Charles Schwab, Deutsche Bank, and Citigroup have adopted the IT Value Cycle framework and have used Acorn Systems’ software as part of implementing more effective IT Value Management systems. The IT Value Cycle framework, shown in Exhibit 1, involves three interrelated building blocks: 1. An ability to define an IT organization strategy that is coherent, concurrent, and responsive to the needs and expectations of its business “customers”; 2. An ability to offer and deliver core operations, applications and projects, and manage outside service providers; and 3. An ability to continually plan, measure and manage strategic and operating performance.
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