Maximize value of tech

The Ultimate Question

Nigel Fenwick
Vice President, Principal Analyst
June 15, 2012

As fans of The Hitchhiker’s Guide to the Galaxy will recall, the answer to the ultimate question of life universe and everything is something a group of hyper-intelligent pan-dimensional beings demand to learn by building the ultimate computer — Deep Thought. It takes the computer 7.5 million years to compute and check the answer.

Of late I’ve been considering a more mundane version of the ultimate question — what is the ideal metric to use when evaluating business technology strategies? The challenge is that we already have a diverse set of investment metrics from which to choose. There’s Return On Investment (ROI), Net Present Value (NPV), Internal Rate Of return (IRR) and Payback period to name a few of the most common. Yet I can’t help feeling they all lack a little something — the ability to connect the project with the desired business outcome, which for a strategy is the attainment of the goal.

Recently I’ve been working with clients to apply a different measure — the T2BI ratio:

BI/T2BI*CRC

This takes into account both the business impact of a strategy and the time it takes to achieve the desired business impact into account. By multiplying the time-to-business-impact by a score for cost * risk * complexity, we end up with a useful ratio which helps select the best strategies to achieve the goals while also taking into account today’s reality (reflected in the cost/risk/complexity score).

I’ll be discussing this and other aspects of business technology strategic planning at next week’s CIO Forum in Paris. I hope to see you there. In the meantime, I’d love to hear your thoughts on the T2BI ratio — would it work in your organization? If not, why not and what other measures are you using instead?

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