STAMFORD, December 5, 2000 — Gartner’s Executive Programs has developed a methodology that helps management link the value of IT investments to overall business value. Designed to make IT contributions to business more visible, Gartner’s approach also makes IT’s value easier to understand among nontechnical executives and other business stakeholders in enterprise management.

The Gartner concept is based on the development of an IT value scorecard for each business unit or enterprise level. By combining sets of indicators, and using terminology and business measures that are readily familiar to business executives, a clearer picture emerges on how IT contributes to business value and the overall “bottom line.”

These types of scorecards have a powerful effect on reporting and improving performance, according to Gartner researchers. Serving as vital management tools, they form the foundation for communicating across all levels of the enterprise.

According to Gartner vice president and research director Chuck Tucker, the approach is based on creating of a trail of evidence that links business value to IT investments.

“The starting point for the evidence trail is to define the key business value of each business process,” explained Tucker. “If the business process is developing products, the key business value might be to bring a new product or service to market faster. The final link in establishing the trail of evidence from business value to IT contribution is to develop IT indicators for each business measure.”

Tucker explained that for each business value, business and IS management need to work together to identify key business measures. For example, in the new product development process, the business measure could be reducing the time from concept to availability. If the measures do not exist they should be developed jointly with the process manager, he said.

One way IT adds value to accelerate time to market is to provide support for product development collaboration, both within the business and between collaborating businesses, while enhancing the coordination of concurrent design activities.

The nature of the collaborating infrastructure becomes an IT indicator. A narrow range of collaborative support services might include only e-mail. A broad range would include videoconferencing and net meeting facilities. The ready availability of collaborative support services contributes greatly to the product development process.

Marianne Broadbent, vice president and head of Gartner’s Executive Programs research, explains, “One way to construct the scorecard is to list the most important IT value indicators for each business process and the goal negotiated for each IT indicator. Each goal should also include periodic measurements so that progress can be monitored over time.”

“The focus should be on a manageable number of IT value indicators that are meaningful to business executives. They should be linked to familiar business measures and show both current status and progress-to-date,” she concluded.

Dr. Broadbent added that a new business value emerging among leading enterprises, which traditional business processes might not cover, is the IS organization’s capacity to anticipate and act quickly. This is particularly important where there is an environment that contains a high level of uncertainty, such as volatile economic climate.

She emphasized the importance of creating a family of IT value scorecards, tailored to each stakeholder group, including business managers, board members and process managers.

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