Are You Assessing Your IT Business Value Correctly?
Today, it is common for firms to invest extensively in new technology after learning its benefits from many other businesses. Most companies fail to receive an adequate return on their investment even after months or years after implementation. This is a well-known issue among businesses that has intensified due to the epidemic and hasty adoption of technology. This article by Eileen Rojas at CHRON speaks about how companies can measure their IT business value.
Importance of Assessing IT Business Value
Assessing the IT business value to an organization’s commercial objectives may contribute to its strategic success. To demonstrate its critical role in enhancing the company’s success, the value of the IT department can be accounted for in terms of return on investment, net present worth, and increase in employee productivity. To illustrate the impact of IT on a company’s bottom line, you can provide both quantitative and financial data.
Four Measures to Determine IT Business Value
The business value must be comprehensive based on revenue generated, product or service accessibility, and consumer experience. An example would be a website redesign to optimize the user experience and provide instant customer service. You can compare the upkeep cost of this website to the value it generates.A project’s ROI can help management understand what they stand to gain from supporting new or ongoing IT investments. A rate of return on an IT project is calculated by subtracting the investment from anticipated revenues. Then divide the result by the investment cost and multiply it by 100.Use NPV to arrive at a present cost number to remove some uncertainty about investing in a long-term IT project. You should utilize appropriate cost, revenue, and discount rate estimations to compute the NPV using the NPV formulae accessible in many spreadsheets.Employee productivity is challenging and elusive to measure. A simple way to illustrate this is to measure the time-based efficiency gained by employees.
To read the original article, click on https://smallbusiness.chron.com/measure-business-value-42674.html
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