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firms fail to measure IT value fully

Two thirds of IT professionals surveyed said enterprises fail to fully measure the value they are realising from their IT investments.

A nine-country survey of 1,217 IT professionals, by the Information Systems Audit and Control Association (ISACA), reveals half of respondents believe they are realising between 50 and 74 percent of the value they expected from their IT investments.

Nearly 20 percent believe they are realising between 75 and 100 percent. Yet, only half of the firms measure the actual value only "to some extent", whilst one in ten do not measure IT value at all.

"The results of this survey reinforce findings from earlier studies that, while most enterprises feel they are realising value from IT, few have a clear understanding of what value means, and even fewer measure it," said John Thorp, chair of the Val IT Development Team for ISACA and president of the Thorp Network.

"This raises the question: 'On what basis are spending decisions made?'," Thorp added.

By failing to fully measure value, enterprises are unable to determine which investments are successful and which need to be cut. Thorp said these enterprises are likely to miss out on revenue-generating opportunities and will pursue unsuccessful investments but neglect competitive advantage.

"Organisations will not come close to realising the full value of their IT investments until they adopt effective value management practices and assign accountability for the realisation of value from those investments to the board and CEO, rather than abdicating it to the CIO," he said.

UK firms are more concerned about the recession, and more likely to slow down spending, according to ISACA's survey results. Overall, 30 percent of firms plan on increasing their IT investments this year, with only 14 percent intending to freeze it at the current level and 13 percent planning to reduce spending. But in the UK, only 19 percent of organisations intend to increase their investment while 20 percent plan to cut spending across the board.

ISACA also found a lack of business accountability for significant and complex IT-related investments, with 49 percent of respondents stating that the CIO or IT managers are responsible for ensuring return on investment. Only 15 percent said responsibility lies with the board, 11 percent the CEO and nine percent the CFO.

Remarkably, eight percent said no one was responsible.

ISACA's international vice president Robert Stroud, said that organisations should be careful not to ignore the value-generating opportunities of IT in favour of cost cutting, since "IT has the power to add competitive advantage and significant business value, so it is critical to focus on those opportunities—particularly in troubled economic times."

The Val IT framework, chaired by Thorp, helps firms focus on the investment decision to measure, monitor and optimise the business value of IT-related investments. It is tightly integrated with COBIT, the collection of approved 'best practice' processes for IT governance.

ISACA polled 1,217 IT governance, security and assurance professionals across Australia, Canada, France, Germany, Hong Kong, India, Mexico, the UK and the US.

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