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By Ellen Pearlman
Strategic Thinkers: John Ward, Elizabeth Daniel, Joe Peppard
Credentials:
Ward is Professor of Strategic Information Systems at Cranfield School of Management at Cranfield University in Bedford, U.K., he has published many papers and books, worked in industry for 15 years and is a past-president of the U.K. Academy for Information Systems; Daniel is Professor of Information Management and Associate Dean for Research and Enterprise at the Open University Business School in Milton Keynes, U.K., she is an author and also worked in industry; Peppard holds the Chair in Information Systems at the Cranfield School of Management and is Director of the Information Systems Research Centre at the school, he also leads the IT Leadership Programme for CIOs.
Big Idea: Benefits-led business cases offer organizations a way of significantly improving the success rates of those investments.
Article: "Building Better Business Cases for IT Investments," published by MIS Quarterly Executive, March 2008.
Abstract
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The number of IT projects that deliver on their promised benefits is disappointing. Depending on what research study you look at, the number is generally around 30%. And the authors of "Building Better Business Cases for IT Investments" say that recent research suggests that even that figure is "optimistic."
After surveying more than 100 European organizations to determine how business cases are developed for IT investments and how those practices relate to successful outcomes, the authors - John Ward, Elizabeth Daniel and Joe Peppard - determined that business cases are often poorly done, with the benefits exaggerated in order to get approval. Moreover, a lack of understanding about the business changes needed to achieve the benefits, coupled with a lack of commitment from business managers and a failure to review results to determine if benefits were even realized led to unsuccessful results.
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Certainly the dismal results are not due to a lack of business cases to justify making the investments in the first place. Ninety-six percent of survey respondents are required to produce a business case in order to get IT investment approval. But two-thirds of respondents said their companies were not satisfied with their ability to identify all benefits in the case and 69% said they don't adequately quantify and place a value on the benefits included in the case. Moreover, 38% said they frequently overstated the benefits to get the funding.
The authors say that the purpose of a business case must go beyond seeking funding approval and be used for:
- Setting priorities among different investments.
- Identifying how the benefits will be realized through both IT and business changes.
- Ensuring commitment from business managers.
- Creating a measure for assessing realized benefits.
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