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Love Them or Loathe Them, Good IT Business Cases Are of Inestimable Value to Good IT Portfolio Managers

Guy Pearce, CGEIT
| Published: 8/6/2018 3:16 PM | Category: Risk Management | Permalink | Email this Post | Comments (0)

Many struggle to pull credible business cases together. Business case mechanics aside, the hard work not only involves identifying the required data, collecting them and ensuring that they are of the right quality, it also involves receiving buy-in for the business case from stakeholders, hopefully without too much fudging. That business cases can be fudged highlights the importance of an explicit assumptions section; it is a vital component of a good business case because it can be used to assess the veracity of the business case’s inputs.

In spite of how hard building a business case can be though, properly assessing the contribution of new IT investments to the organization helps prevent wasting precious organizational resources on “investments” that yield little for the organization. A good business case also helps ensure a good understanding of the dependencies of the project on various organizational resources, all of which helps ensure the business success of the IT investment.

Furthermore, an IT business case is a key part of good IT governance, and good IT governance facilitates good corporate governance. Ultimately, corporate governance ensures that IT innovation—as a particular subset of IT investment—is suitably focused on the organization’s strategy and that it is appropriately resourced to fulfil its various promises.

One of the promises of IT innovation is high returns. Those in the investment community, however, know that high returns come at a cost: higher risk. Indeed, part of the reason many corporate IT innovations fail is because this risk is not identified, thereby compromising the innovation’s key promise: to advance the organization.

Interestingly, while IT innovation may be obvious in some organizations, in others, IT innovation is often relative. For example, in an organization still running on spreadsheets, the evolution to a database may be considered innovative. In most large organizations, there is a portfolio of IT investments that can be considered innovative, at least in their terms.

Given the previously mentioned riskiness, identifying innovative IT is key. In large organizations, categorizing it is something else. Usefully, investment-grade business cases communicate 2 things about a prospective IT innovation. First, it communicates its expected financial returns, and second, it quantifies the expected variability of those returns (riskiness). Armed with these 2 parameters, it becomes easy to identify the IT investments that are innovative in the context of the organization’s risk appetite. For these investments, actively managing the identified risk is a critical success factor.

My recent Journal article “The Power of IT Investment Risk Quantification and Visualization: IT Portfolio Management” expands on all this, and sheds new light on IT portfolio management as a tool for managing different parts of the IT portfolio for maximum organizational impact.     

Read Guy Pearce’s recent Journal article:
The Power of IT Investment Risk Quantification and Visualization: IT Portfolio Management,” ISACA Journal, volume 4, 2018.

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