An introduction to Benchmarking

Changing Requirements for Measuring IT Value

 Organizations are Struggling to Measure
the Value being Created through IT

~$2T In Digital Transformation & Technology Spend by 2022*

of major enterprises globally have Digital Transformation initiatives underway. However, only 16%
~88% are “thriving”: 40% abandonment.

of Fortune 2000 CEOs surveyed have little or no confidence in their ability to measure Technology
~90% Investment results.

of these CEOs expect their technology leaders (CIOs, CTOs and CDOs) to ensure value realization
~85% from their digital transformation investments – and intend to hold these executives accountable
for the results.
*https://www.businesswire.com/news/home/20181113005054/en/Worldwide-Spending-Digital-Transformation-2-Trillion-2022

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Measuring Technology Investment:
Observations
Measuring Technology Investment Requires a New Set of Metrics
Organizations are struggling to make critical business decisions due to a lack of comparative analytics
and visibility into the effectiveness, adoption pace and business impact of their technology programs.

Technology Investments Across

Digital Capabilities @ Scale Business Value Realized
the Business Value Chain

Is your organization adopting and Is your organization investing in Is your organization recognizing
scaling the right digital capabilities at technology at the right levels and the expected value and returns from
the right pace? on the right capabilities? your technology investments?

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Managing Technology Investment:
Funding Models are Changing
 Multiple Delivery Models within IT = Multiple Financial Responsibilities
As product-oriented delivery drives multiple delivery models (horizontal and
vertical in various combinations), so to the financial responsibilities become more complex.

IT Products (= full stack of

capabilities that are consumed to
support a specific business function
Many IT capabilities are or process) are driven by the needs
shared across business of the business

Product Team

Product Team

Product Team

Product Team
constituencies Business Process
Vertical IT Products: full stack
User Interface consumption and cost (regardless
of delivery model), financial
Horizontals: Management Architecture
management of full stack P&L,
of financials,
Application drives/funds majority of
benchmarking, volume
investment, etc..
leverage for price
Integration Layer
reduction, etc.
Data/Database

Storage

Compute/Platform

Network/Security

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 Investment Needs May Best be Driven by Product, not by Project
IT Products have a lifecycle that require some level of continual investment to support continuous
improvement of the business function. Yet this has implications as well (including labor capitalization challenges).

Labor capitalization is Scope Schedule Budget

relatively clear (budget
and actual)
Fixed
Product
Project
Product
Temporary
Product A discernable and
endeavor with a
tangible capability
defined beginning
that has a life (and
and end Project
a lifecycle)

Variable Labor capitalization

is very murky (budget
Schedule Budget Scope and actual)

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Measuring Technology Spend Holistically
 ’s IT Business Value Performance Framework Measures
across Multiple Dimensions: Business, Development, and Operational

Business Perspective Operational Perspective

Product Business Outcome Customer Experience Predictability

Quality Throughput Organization/Skill

Development Perspective

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 Financial Model End-State

Lines of Business| Business Objectives

Product Model Value Chain Established: Verticalize

consumption and performance requirement
Products
Product ⬤ Technology costs for both Common and Unique
Common
Map Consumption
to Business Common Products
Products
Construct products/services drive more precise
consumption-based cost to business consumers

Business
View
⬤ Performance Requirements driven from business
Enabling Services
objectives

Component Resource Towers (labor, hw, sw, etc.) ⬤ Component costing becomes technology product
Cost Views performance reporting

Finance View
Cost Pools
Business Value: Lines of business have joint
accountability for technology alongside IT – priority
General Ledger (Charts of Accounts) setting and performance. Business value is defined
Cost Model
and tracked as part of a performance framework.
Cost Data

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 Current challenges and opportunities for CI/F/DO
Digital Opportunities
Digitization and Automation
opportunities must be exploited

oning, Organ
ositi iza
Business Value P

tio
Non-Transparency

lls,

n an
Roles, Ski
The Value of the Tech-
CXO Existing systems hinder

d Gov
Dollar needs to be
agility and right-invest,

e
ing
understood and

rn
lack of market insights

an
an
transformed

c
e+
Ch ++
+++

Funding Constraints
Funding needs to come from within
Requiring to optimize legacy
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What to improve and to communicate is what to benchmark
IT Reporting and Comparative Analysis typically covers all Performance Perspectives
IT Fi
nan
ci
Cost
e

als
Value

alu
Communi Budget
cation

IT V
Agility Volumes

Innovation Reporting & Provider

Benchmarking
Perspectives

Customer
Services
Satisfaction

Assets Processes

ce
Work-
Projects an
force
r m
e rf o
IT P
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