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September 18, 2005

IT Economic Impact Management

ROI continues to be interpreted in a variety of ways. The main reason for the differences is the variety in the definition of stakeholders and of beneficiaries. Users and providers are both stakeholders, but because IT is not accessible except through implementation, users must actually spend on the current and future effectiveness of both the IT deployment and the IT use. Deployment and use usually involve assumptions and concerns about how scale and scope can be exploited, and spending will take place on developing and defending those aspects. The key issue is whether the spending is both smart and well managed -- and the challenge is the complexity that characterizes utilization of most implementations in distributed, heterogeneous operations environments.

What becomes increasingly important is to understand where and how dollar inputs affect the states and events that have direct consequences of economic significance. The table below identifies four major areas (columns) of leverage by which economic impact can be optimized. Each area can be addressed individually; but the combined spending improvements of multiple areas allow more effective overall throughput of investments towards beneficial conditions having economic importance. While the reality is that high benefits can accompany high risks, most organizations want agility and continuity from an ability to minimize risks that divert attention and resources from pursuing benefits. In that regard, the economic throughput of spending-to-benefits can be seen as a combination of lower erosion and misdirection of investments during the lifespan of the dollar commitments aimed at fueling benefits.

Posted by Malcolm Ryder at September 18, 2005 7:18 PM

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