Primary business objectives
According to Cannon (2020), stakeholders typically define value through:
- Revenue/value creation
- Cost optimization
- Risk mitigation
How to measure IT’s impact on business success?
Neu-Ulm University of Applied Sciences
March 31, 2025
Value created by IT is—in a business context—usually referred to as IT/IS business value.
IS business value is the impact of investments in particular IS assets on the multidimensional performance and capabilities of economic entities at various levels, complemented by the ultimate meaning of performance in the economic environment. Schryen (2013, p. 141)
The ultimate meaning of performance refers to what is subsequently derived if the outcome is exploited, e.g.
According to Kohli & Grover (2008), organizations struggle to articulate the full business value of IT beyond cost savings.
Challenges of IT value determination and subsequent relization include:
CIOs must first understand how business stakeholders define value. Usually it is based on their highest priority business objectives. Cannon (2020)
This implies that
According to Cannon (2020), stakeholders typically define value through:
IT investments can contribute to firm performance through revenue enhancement mechanisms (Melville et al., 2004).
Metrics to quantify value potential
Strategic IT investments yield cost benefits through process optimization rather than simple cost-cutting (Mithas et al., 2011).
Options to quantify the scope of cost optimizations
Investments in IT significantly reduce the likelihood and financial impact of risks by enhancing security, compliance, resilience, and operational stability.
Options to quantify positive outcomes of IT investments on risk mitigation:
Adopting a balanced scorecard approach (Kaplan & Norton, 2004), a measurement framework should consider following insights:
Before assessing the business value of IT solutions, following questions should be considered:
Ward & Daniel (2006) advocates for a mixed-method approach to IT value assessment reflected by balanced IT value scorecards.
Quantitative:
Qualitative:
Value messages need to be tailored to business stakeholders (Peppard, 2016), such as
C-Suite:
Business unit leaders:
End users:
Built a rich business case based on the insights you have gained:
Ward & Daniel (2006) discusses as set of tools and frameworks that many organisations are using to increase the benefits realised from their investments. These have great potential to enrich the development of IT business cases.