There are undoubtedly a number of critical success factors (CSFs) for the successful introduction of value management practices, based on a structured framework such as The Val IT Framework 2.0.¹ This article describes what the authors consider the top five CSFs.

Introducing Val IT shifts the business’s focus toward value creation and retention and affects the whole life cycle of investment management, from selection to post-evaluation. There are many reasons for introducing a structured value management framework such as Val IT. Enterprises may experience one of the common ‘tipping points’,² but each will have its own set of circumstances and cultural behaviours. Whatever their current position, there are five CSFs that must be considered by organisations looking to embark upon the Val IT journey.

Before Starting the Journey

Once a business has established the need to change and to make the journey, there are two foundational CSFs to consider:

• Enlist senior executive sponsorship. There is often a gap between the real and the desired level of senior executive understanding and sponsorship for adoption of value management practices. Many attempts to introduce value management fail when they are pushed bottom-up with insufficient sponsorship from appropriate senior executives. Without senior executive-level sponsorship, value management may be perceived as a passive administrative role, perhaps buried in IT reporting or business operations. However, getting real value from investments starts with the decision on what to invest in and this is usually made by senior-level executives. Accountability for delivering a return on an investment should lie with the same group of people. Delegation does not work. The move to adopt value management must be actively sponsored by business executives who are accountable for the delivery of value. Already busy executives must be informed about what is involved. They must understand:
  – How value management will improve the evaluation, selection and management of investments, so as to maximise their contribution to strategic goals
  – What the journey entails, i.e., the behavioural change, maturity steps, challenges of adoption and risks
  – Their roles and responsibilities in both the journey and the end state
  
  Additionally, a business must be prepared to sustain sponsorship in light of significant organisation shifts, i.e., when the keenest sponsors could be displaced.
• Recognise that introducing Val IT is about behavioural change. Introducing Val IT involves more than publishing the framework and conducting awareness and training sessions. It is a major operational transformation programme that affects how IT governance works and changes how people think, manage and act. Decision makers, sponsors, programme managers, finance departments, audit departments and even third-party suppliers are all significantly impacted. Behavioural change requires adoption of structured value management principles, such as Val IT’s seven guiding principles.³ Taking a more structured and disciplined approach to value management involves:
  – Focusing on delivery of value as the basis for investment decisions. This is different from authorising expenditure and then just managing the plan.
  – Transparency of decision making and acceptance of the need to manage investments as a portfolio, perhaps for the first time at an enterprise level rather than in a silo view
  – Willingness to accept accountability for decisions and the achievement of value

Whilst the prize of realising maximum value from the portfolio of IT-enabled investments is big, the organisational change elements may deter some. It is often seen as ‘too hard to do’ and beyond the enterprise’s ability to deliver. A Val IT journey must begin with a well-mapped and funded change programme in place.

Managing the Journey

Once the initial CSFs have been addressed, the following CSFs will help ensure success.

• Chart the destination and decide where to begin. The Getting Started With Value Management⁴ executive primer, based on The Val IT Framework 2.0, identifies approaches to address pain points most often identified in enterprises. Indeed, there may be many pain points exhibited such as:
  – Limited or no understanding of IT expenditures
  – Business abdication of decision making to the IT function
  – Communication gaps between the IT function and the business
  – Business questioning the value of IT
  – Major investment failure
  – Decreasing funding
  – Shifts in the market or the economy
  
  Not all pain points will be addressed at the start or at once. The starting point for introducing value management must recognise:
  – The urgency of business need and where the most immediate value will be delivered
  – The need to observe and measure early success to provide early ‘good news’ stories
  – The need for executives to be engaged and demonstrate early support
• Take an incremental approach. Introducing Val IT needs to be undertaken as a change programme with many small incremental steps. The ‘big bang’ approach does not work. Again, from Getting Started With Value Management, understanding the current maturity levels and future desired state scopes the entire value management journey and identifies the steps to get there. The key point about an incremental approach is to build confidence. Small successes need to be advertised and leveraged. It is tempting, but discouraged, to go straight for the end state without first putting the building blocks in place. For example, portfolio management tools can be an important enabler, but no tool is a substitute for portfolio management discipline. Instead, small value-adding steps must be taken.
• Avoid bureaucracy. It is easy to get carried away with establishing layers of processes, structures and templates that look good on paper but add little value and alienate stakeholders when put into practice. Changes of this type must be kept ‘light’, especially at the introduction stage. Where possible, it is best to modify what exists rather than start from scratch. It is best to integrate changes into existing processes and not let value management processes be isolated or removed from normal operations. The purpose of value management is to drive value, not to add burden to how an enterprise delivers and manages its programmes and portfolio.

The Results

The CSFs identified in this article are necessary for the successful introduction of value management practices. Adoption of the Val IT framework will contribute to the delivery of real business value by:

• Increasing the understanding and transparency of costs, risks and benefits
• Increasing the probability of selecting those investments with the highest potential return
• Increasing the likelihood of success in implementing the selected investments, such that they realise or exceed the expected return

By adopting a tried and tested framework such as Val IT for the value management journey, the road may be a long one, but it will be well marked and the destination well worth the effort.

Endnotes

¹ IT Governance Institute, Enterprise Value: Governance of IT Investments, The Val IT Framework 2.0, 2008, www.isaca.org
² Harrison, Peter; Sarah Harries; ‘Recognising the Need for Val IT: Identifying Tipping Points for Value Management’, Information Systems Control Journal, vol. 3, 2008
³ Op cit., The Val IT Framework 2.0, page 11
⁴ IT Governance Institute, Enterprise Value: Governance of IT Investments, Getting Started With Value Management, 2008, www.isaca.org

Authors’ note:

The authors invite feedback on this series of articles. They are keen to hear about experiences in implementing value management and Val IT, and what has worked or not worked for Journal readers. They can be reached at valitcomments@isaca.org.

The authors would like to thank John Thorp for his contribution to these articles.

Sarah Harries
was with Fujitsu Services (UK) until February 2008 specialising in value management, where she also chaired Fujitsu’s global VM community of interest. She is now head of value management at Openreach, a BT Group Business.

Peter Harrison, CGEIT, FCPA
is a member of the Val IT Steering Committee, and the value management leader within IBM Australia’s strategy and change practice.

Opinions expressed in the ISACA Journal represent the views of the authors and advertisers. They may differ from policies and official statements of ISACA and/or the IT Governance Institute and their committees, and from opinions endorsed by authors, employers or the editors of this Journal. ISACA Journal does not attest to the originality of authors’ content.

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