July 2006 Survey: Most Companies Struggle to Measure the Value of ITBy Allan Alter | Posted 07-25-2006
If most companies really know how to measure the business value of IT, we'd see a clear consensus on which metrics to use, and IT executives would feel those metrics accurately capture business value. But our data indicates just the opposite: Companies use many different metrics, and the most popular metrics are used more often by companies that aren't very good at measuring value. Companies that have developed their own metrics fare somewhat better, but many of those are also dissatisfied. It appears companies aren't picking the right metrics, don't know how to go about measuring, or both.
Finding 5: How best to measure IT's value?
No one "right way" to measure the value of IT emerges from our study. The most common and simple measures, such as time-to-payback and savings-minus-costs, are the ones most often used by companies that lack accurate measures of value. And except for balanced scorecards, more sophisticated measures such as internal rate of return and net present value, though also used fairly often, don't clearly correlate with accuracy. A reason for the jumble: In four out of five companies, different executives want to see different metrics, forcing IT to provide this potpourri.
Read our previous surveys on ROI and business value: