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Valid measures for estimating financial IT benefits are conspicuous by their absence
IT systems business benefits are mainly evaluated with indirect and soft methods.
As the organizations IT costs grow, so does the pressure to measure the value they produce. Qentinels recent study IT systems value to business states that few, if any, valid measures for evaluating the benefits. The respondents of this qualitative study told that they measure the profitability of investments by either using the feedback from the users, the activity of using the system, or the problems that have appeared. On the other hand, they also tried to assess the changes the investment brings to the operation, result, or costs. When there is no way to reliably measure the value, many companies measure the costs. But the costs dont tell anything about the benefits the investment brings. The desire to measure and understand value is clearly increased. Although currently the measures are deficient, they do increase understanding, and gradually the measures are also improved. The study points out also that the more important factor IT benefits are seen as the influencer to the organizations success, the better they can be measured. IT and business management see both the value produced by information systems and the methods used in the measuring differently. The respondents who represent IT management were significantly more satisfied in both the value produced by information systems and the methods used in the evaluation. Different organizational roles have different information needs. Measurement results must be presented in a way that is meaningful to the person reviewing the results. 30 business and IT managers from 21 large Finnish companies were interviewed via phone for the IT systems value to business study during the Spring 2012. Please contact us for more information on the study.
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A project worth doing is always uncertain In order for a business venture to have rationale, the value of the outcome must be several times greater than its price. Since most business ventures these days require a unique IT project, it would seem detrimental to plan everything ahead of timelet alone request for tenderswith inflexible conditions. A project worth doing will take longer to realise and cost more than was budgeted initially. Our advice: be prepared to adjust your plans accordingly. Vendor benefits before the customer From the vendors perspective, the benefits of an IT system project become available when the first deliverables are produced and charged for. The customer, on the other hand, benefits as deliverables are put into production in the customers business. The unpolished truth is that charging for projects constitutes the vendors business, and hence the vendor will stay motivated until the project can be charged for. Customer bears a bigger risk than the vendor If an IT system is worth doing, its value to the customer is many times greater than its price to develop it. In practice, the vendors maximum risk is in not receiving the amount invoiced to the customer for delivery, whereas the customers maximum risk is in paying the vendor for the project to market and not receiving the desired benefits. This is a disparity that is fairly immune to elimination through severe sanctions.
Turnkey vendor disclaims responsibility for the entire delivery As it turns out, IT system projects where one system integrator supplies a turnkey solution do not really exist. Any turnkey solution is always based on the customers existing infrastructure, placed in a cloud service or data centre run by a third party, integrated into the customers existing systems and exposed to changes resulting from system updates. Every single IT system project is a multivendor project, and not all vendors are even aware that they are participating in it. Turnkey vendors are quick to deny overall accountability when problems caused by others emerge.
Vendors profit margin comes from changes It is possible to sell a project at a lowor even loss-makingprice, as any project will undergo changes resulting from the customer. The closer you are to the end of the project, the more pricing power the vendor gains. A wise customer plays the game with the vendors tactics. The customer starts off with a minimalist order and at the same time prepares to spend a significant amount of time and money on ordering and supervising changes. What is essential is that any change work is orchestrated and managed by the customer, not the vendor. Key project personnel only care about the project IT system acquisitions are organised as projects, as this has proven to be the most efficient way to carry them out. A project could be defined as a way of organising work within a tight range that lays the foundation for efficiency. A successful IT system project comprises clear goals, remuneration supporting the achievement of the goals and a leader who removes any obstacles. IT system project teams inherently devote their energies to what it says in the project plan in complete disregard for everything else. It is therefore pointless to imagine that IT system projects would observe future requirements, stakeholders or any other external hindrances. In a well-organised IT system project, there is literally no incentive to consider any of these things. This applies both to the vendor and the customers personnel.
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This is how AFLRA benefitted from the cooperation: An impartial view on the selection of the system vendor as well as answers to remaining questions Correlation between the critical functionalities of the recruitment system and AFLRAs requirements Timely deployment of the recruitment system Best practices to support project success Improvement suggestions to enhance service usability Common ground rules to help the customer and system vendor throughout the project
Fennia Mutual Insurance Company relies on Qentinel for ICT service monitoring
Fennia Mutual Insurance Company is owned by its clients. Fennia belongs to the Fennia Group, which invests in multichannel customer service. Clients can choose personal contact by phone or face to face or use the online services. Fennia has over 60 offices offering services to clients all over Finland. One of Fennias values is high-quality customer service. For years Fennia Mutual Insurance Company has entrusted Qentinel with ICT service level management as well as ensuring the reliability and development of Fennias ICT services. Thanks to comprehensive monitoring, we dont need to take just in case measures, and this has led to cost savings, says Elina Kotilainen, Director of IT services at Fennia. Monitoring produces facts that help bring up the right issues with vendors, business operations and IT specialists. For years Fennia Mutual Insurance Company has entrusted Qentinel with ICT service level management as well as ensuring the reliability and development of Fennias ICT services. Monitoring covers the entire ICT environment. Service level monitoring has enabled adding more focus to the development of Fennias ICT services, particularly with regard to capacity planning. In addition to continuous service level monitoring, Qentinel has provided Fennia with several different reports and surveys on a case-by-case basis. Qentinels services have also been used to enhance cooperation with vendors. Quality objectives have been defined for ICT services and service providers, and reports produced through service level monitoring have been offered to Fennias vendors. This is how Fennia is benefitting from the cooperation: Single tool that ensures both ICT service reliability and comprehensive basic monitoring Clear visual view of service level with automatic error messages Fast problem-solving through effortless fault isolation and allocation to the responsible party Support and facts for improving the management of ICT service providers Avoidance of unnecessary proactive costs through improved capacity management Facts for both decision-making and dialogue with business operations and IT specialists
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