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Understanding the Value of IT
Purpose: Use this job aid to help you determine the current value of IT in your organization.
Managers can use many different methods to help them determine the current value of IT in their organizations.
Methods for determining current value of IT
- Investigate all the ways IT is used in your organization, and for each one, identify the benefits that have been realized.
- Classify the benefits into categories:
- Automation
- Knowledge
- Organizational Improvement
- Innovation
- Review the results to see if all areas of benefits are being realized and which areas might be worth exploring further.
Analyze IT in management activities
- List the key management activities in your organization.
- Categorize each activity as either
- Operational
- Tactical
- Strategic
- Then identify how IT is used in that activity.
- After all activities have been classified, arrange the data by classification to see if one category of activity is getting more attention than others.
- Use the results to identify new possibilities for IT integration to support management activities.
Analyze IT in business processes
- List the business processes that are taking place in your company.
- Identify the extent to which IT is used in each business process.
- Decide which business processes rely heavily on IT and which are independent of IT.
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Assessing the value of IT
As you learned previously, IT can be beneficial to an organization. For example, it can result in the automation of processes that were previously conducted manually. It can aid in the collection and management of all kinds of information and knowledge. It can also result in a wide range of organizational improvements and an increase in creativity and innovation.
Drill Down Home Page
IT benefits generally fit into four categories.
Automation
Business processes that were previously conducted by people can be automated through the use of technology. For example, user-initiated electronic software distribution can eliminate the need to support individuals who manually install software on PCs. This can result in increased efficiency within the organization and a significant decrease in costs. Such benefits are known as rationalization benefits.
Rationalizing using automation can reduce direct demands on your organization. For example, if others look to your team for services that can be delivered through automation, your employees won't be distracted by these requests. The dependent organization gets service without delay, and you save direct costs for service delivery as well as the costs of disruption to your own ongoing development work.
With automation, employees are free to focus on higher-value tasks. However, if employees aren't assigned other tasks, automation may lead to unemployment.
A company who achieves mainly automation benefits is likely to be using IT to cut costs and increase productivity.
Knowledge
IT's capacity to collect, store, process, and disseminate information makes it easier to manage all kinds of knowledge. When employees are able to make better decisions and take better actions as a result of this knowledge, benefits occur in the organization. These benefits can result in cost reductions, greater efficiency, and increased revenues.
For example, problems reported by customers through an online issue-tracking system can be quickly and easily analyzed, enabling you to identify trends. This can result in employees proactively addressing the problems by carrying out modifications to the company's products and services.
A company that is focused on achieving knowledge benefits is likely to be using IT to manage information better and to increase the efficiency of its employees.
Organizational improvements
Organizational improvements occur when IT opens up the organizational structure of a business. This often leads to organizations being structured in a flatter, more decentralized way, where employees are supervised less and have more autonomy.
Wireless Internet, cell phones, and smartphones mean employees are no longer tied to the office. IT also allows some organizational tasks that were previously performed sequentially to be performed concurrently. For example, a project plan can be viewed on a collaboration space simultaneously by project team members in different locations.
As a result, employees feel empowered, are more motivated, and do better work. The organization itself is more flexible and usually attains better results.
A company that achieves mostly organizational benefits is likely to be using IT to improve the overall effectiveness of the organization and to create a flatter structure.
Innovation
Innovation benefits occur when technology makes an organization stand out and look different from its competitors. Technology can be used to provide the business with a competitive advantage that leads to increased revenues.
The Internet has created numerous opportunities for innovation through e-commerce. For example, an accounting firm could generate a new revenue stream by offering a range of online accounting services.
Remember, the value of a product is not only a reflection of its market price. It can also be measured by the value a customer perceives it to deliver.
A company that is focused on achieving innovation benefits is likely to be using IT to develop a competitive advantage.
Question
Match each benefit to the correct category.
Options:
- Employees are free to focus on high-value tasks, resulting in increased productivity
- Team members are making smarter decisions, which lead to greater efficiency
- A company is structured in a flexible way, which results in workers enjoying more autonomy
- New processes make a company's products stand out in the marketplace, resulting in increased revenue
Targets:
- Automation
- Knowledge
- Organizational improvements
- Innovation
Answer
When employees focus on high-value tasks and overall productivity increases, a company has achieved automation benefits. It has probably also reduced its costs.
When team members are making smarter decisions and are more efficient, a company has achieved knowledge benefits. These benefits are achieved when IT makes it easier to collect, store, process, and disseminate information.
When workers enjoy more autonomy and the organization is more flexible, organizational improvements have occurred. Such improvements occur when IT opens up the organizational structure of a business.
When a company employs new processes to make its products stand out in the marketplace, resulting in increased revenue, then innovation benefits have been achieved...
