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IT Value within the Organisation

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     by Mr. Mark Fenech B.Sc. M.B.A. 
     email: mark_fenech@hotmail.com

1. Value and Utilisation Rates of IT systems 

With IT budget pressures on the increase, IT managers are today required to demonstrate the value IT is providing to the organisation.  In most cases, this value is intangible, and cannot be directly measured.  However, the benefits IT systems provide to the users are an indication of the value these IT systems add to the organisation. In turn the magnitude of the benefits gained by the users from using the IT systems is reflected by the utilisation rates of these systems. 

1.1 ‘Compulsory’ and ‘Optional’ IT systems 

A case study done on a large organisation in Malta shows that the IT systems within this organisation can be split into two types: ‘compulsory’ and ‘optional’ systems.  The ‘compulsory’ systems are the only systems available through which the employees can carry out their tasks.  Thus, even if the benefits to be gained from using such systems are perceived as low, the employees have no other choice but to make use of these systems. 

The ‘optional’ systems are presumed to add value to the employees while these carry out their daily tasks.  However these systems are not strictly necessary for the employees to carry out their work.  As a consequence an employee may opt not to make use of such a system.  This usually happens whenever he perceives the benefits to be gained from using an ‘optional’ system as low. 

Hence the focus of the study has been on the ‘optional’ systems, the usage of which reflects more the value they add to the organisation (as opposed to the ‘compulsory’ systems). 

Although the above describes the situation within the organisation studied, the concept of ‘compulsory’ and ‘optional’ systems can probably be applied quite easily to other organisations as well.  

2. Causes of Low Utilisation Rates

The two main causes of low utilisation rates identified in the study on the organisation mentioned earlier were: 

1. Having IT systems which do not address the employees’ needs
    
2. Having IT systems which do address the employees’ needs but the employees are unaware of or unable to exploit the benefits of these IT systems 

The above two scenarios are pictured in figure 1, where the organisational needs, the value of an IT system, and the user’s perception of this value are depicted as three arrows on a dial.
 

In either case, resources were allocated to develop a system whose benefits are not being reaped as originally intended.  This is waste, and hence must be eliminated.  However efforts cannot be directly focused to directly increase the rate of IT systems utilisation.  The focus must be on other factors that in turn affect the utilisation rates. 

The case study carried out on the Maltese organisation revealed that the factors to focus on are a number of problems (defined as ‘Root Problems’ by the author) that eventually give rise to low IT systems utilisation rates.  This relation is shown in figure 2 below.  It should be stressed that this applies only to ‘Optional’ systems.
 

2.1 Root Problems

About 15 root problems were identified within the organisation on which the case study was carried out.  These could be classified into four categories as below: 

• Lack of adequate marketing of the IT products and services
  (causing the users to be unaware of the benefits provided by the IT systems)
   
• Lack of user involvement during the development stages
  (causing IT products not to be aligned with the users’ needs)
   
• Lack of training
  (causing users to be unable to exploit the benefits provided by an IT system)
   
• Legislative requirements
  (limiting certain procedures to paper-based methods) 

The second and third categories are to a certain extent sub-categories of the first.  Marketing involves ‘taking a look’ at the customers’ needs and working backward to provide a product to address these needs.  In this scenario the consumers are the employees in the organisation. Hence marketing includes involving the users to get their ideas when developing new IT systems.  Similarly, if the needs are for more user training, by adopting a marketing approach such needs will be addressed as well. 

Unfortunately there is nothing one can do to address the fourth category, i.e. legislative requirements.  If it is required by law to have contracts signed on paper, no state of the art IT system will ever replace this procedure. 

3. An “IT Marketing” Team 

To address the two issues that cause low utilisation rates, i.e. having IT systems which are not aligned with the users’ needs, and having IT systems which address the users’ needs but the users are unaware of, the ‘Root Problems’ mentioned earlier must be systematically tackled. 

To achieve this the IT section needs to market its products and services, or rather, their value to the rest of the organisation.  This includes also the determination of the users’ needs and wants.  However it must be kept in mind that the IT section should neither in any way improve its position, nor exploit a strength it may have, to the detriment of the rest of the organisation. 

To this end, an “IT marketing” team, independent from the IT section, needs to be created.  This team will be responsible for: 

• demonstrating the value of the IT products and services to the organisation
   
• acting as an intermediary between the organisation and the IT section in order to align the organisation’s needs with the IT capabilities, and vice versa. 

Further to the above, it is recommended that this “IT marketing team” be within the marketing department.  This concept is similar to the “IT audit” team, which makes part of the auditing department.  By being within the marketing department, this “IT marketing” team will: 

• Leverage from marketing expertise from within the marketing department,
   
• In the future provide “IT-value marketing” experience when the organisation will need to market the value of its services provided through the Internet to other corporations, and
   
• Be independent from the IT section, and hence not subject to bias. 

4. Summary 

IT value, being usually intangible, cannot be measured directly. However with IT budget pressures on the increase, it has become critical to measure this value.  IT managers must demonstrate IT value so that senior management will not blindly cut IT costs. 

In the case of ‘optional’ IT systems, i.e. those systems that enable employees to perform a better job, but are not really necessary for the employees to do the same job, utilisation rates reflect the benefits of these IT systems as perceived by the employees.  Hence whenever these systems do not address the employees’ needs, or these systems address the employees’ needs but the employees are unaware of the potential benefits to be gained, the utilisation rates will be low. 

Consequently there is the need to systematically develop systems that address the employees’ needs.  However this is not enough.  It must also be ensured that the employees are aware of the potential benefits to be gained from using these systems, so that the benefits are actually reaped. 

Mr. Mark Fenech B.Sc. M.B.A.- 3rd April 2003

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