How to Tap IT’s Hidden Potential

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How to Tap IT’s Hidden Potential

This week’s Wall St. Journal Business Insight section looks at the glass wall between IT and the rest of the company, which can lead to missed opportunities and wasted money. The article, How to Tap IT’s Hidden Potential, is by Dr. Amit Basu and Mr. Chip Jarnagin.

I teach at
a university, provide training to IT groups and consult with companies on their
business intelligence and data warehousing issues, so a lot about this article
resonated with me. I appreciated that one of the authors’ recommendations was:

“Create
an IT portfolio by evaluating risks and returns. Just as an investor balances
risk and reward in constructing a portfolio of investments, management should
analyze the costs, benefits and risks of all IT projects to determine how to
get the most benefit from the dollars invested in technology.”

I’m
constantly telling my students and clients that enterprise data is a key business
investment, so it should be treated like an investment portfolio. They should
set priorities, determine budgets and expect a return on investment. The
portfolio should include any project that involves data – from its creation in
your transaction systems all the way through reporting and analysis.

It takes a
lot of preaching to make the students and clients who are enamored with
technology to realize that the business does not really care about the how
(technology) but the what (results). It takes continual reinforcement just like
any other addict who is trying to break a bad habit.

Apparently,
business intelligence/data warehousing is where a lot of IT dollars will be
allocated in 2008, so let’s hope companies “get” this investment connection and
make it more than just an analogy.

(Ron Dimon also blogged about this article.)

2 Comments

  1. Ron Dimon says:

    Hi Rick, I agree with your emphasis on a risk/reward approach to the IT portfolio (especially for BI & EDW initiatives), and I would add that the portfolio must be aligned with the key drivers of value in the business. So this probably all comes out in the wash: that which gives the highest reward must, in effect, be directly related to the key drivers of business (or else you wouldn’t get the reward).
    I say “probably” since occasionally you will embark on a BI initiative that may not seem to relate to company strategy (or drivers of current value) that may yield new, unknown, drivers of value and may even adjust the company strategy. For example, a BI initiative to measure new product introductions and cross-sell success in a services company.
    I also enjoyed the entire pull-out section in the WSJ today and blogged about this particular article at http://businessfoundation.typepad.com/bf_blog/2008/03/more-on-the-itb.html

  2. How to Tap IT’s Hidden Potential

    In the recent Wall Street Journal article How to Tap IT’s Hidden Potential, Dr. Amit Basu and Mr. Chip Jarnagin write that:…Analysts estimate that hundreds of billions of dollars are blown every year on IT projects that fail to achieve

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