What is the best way to measure the value of an information system investment?

The value of an information system investment is crucial for making informed decisions and justifying resource allocation. To measure this, define objectives, identify KPIs, establish baseline measurements, quantify benefits, calculate ROI, and benchmark against industry benchmarks. Monitor adoption rates, assess business process improvement, evaluate risk mitigation, and periodically review and adjust metrics. Regularly revisiting these measurements ensures the organization stays informed about the system's ongoing impact.

First step would be to ask the original team that developed the IS investment, then keep asking the question related to continued value to the Enterprise.

Measuring the value of an Information Systems investment is done through understanding how the investment achieved the expected outcome no matter how small or large. Having an "outcome" gives the IS investment an element of effectiveness. Did the expected benefits match the realized benefits for the project? If not, were resources optimized as effectively as you'd hoped.

Every system's ultimate purpose is to serve the process, and benefits realization captures this perfectly. By accelerating tasks, automating workflows, and generating data for analysis, each optimized second translates into potential large-scale gains. This highlights the critical need for clearly defined outcomes and measurable indicators from the outset. Tracking progress and assessing results becomes the vital feedback loop, ensuring our IS investments truly align with business strategy and generate tangible value. In essence, benefits realization shifts the conversation from mere cost justification to strategic optimization, ensuring every IS project propels the organization forward.

Benefits Realization defines/tracks your goals/metrics. Keep your IT projects aligned with your business goals, ensuring you're investing wisely and not just chasing the latest tech fad.

Where most people go wrong while calculating RoI is the inputs for calculating the net savings or profits. Why I am saying so is because Return or profit is not always quantitative, it can be qualitative as well which is not easily quantifiable. It needs tremendous details and expertise to calculate returns and include all points into it. To conclude I will say that while calculating returns dont just include returns which can be figurative measured, equally important is the intangibles to be included

ROI is a widely used financial metric to measure the profitability of an information system investment. It is calculated by dividing the net gain from the investment by the initial cost and expressing the result as a percentage. A positive ROI indicates a profitable investment. While ROI is valuable, it's essential to consider both short-term and long-term gains, as well as the associated risks. This method provides a clear financial perspective but may not capture the complete spectrum of benefits, making it beneficial to complement ROI analysis with other metrics.

Return on investment compares project cost to profit or savings. Just a heads-up: it doesn't cover everything, like non-financial gains.

The Balanced Scorecard approach for measuring the return on IT investment involves aligning objectives across financial, customer, internal processes, and learning & growth perspectives. By selecting key performance indicators (KPIs) within each perspective, gathering relevant data, analyzing results, and taking strategic actions, organizations can evaluate cost reduction, revenue growth, customer satisfaction, operational efficiency, employee skill development, and innovation to gauge the effectiveness and impact of their IT investments on overall business performance.

The Balanced Scorecard is a holistic approach that considers multiple perspectives beyond financial metrics to measure the value of an information system investment. It incorporates four key perspectives: financial, customer, internal processes, and learning and growth. By evaluating performance in these areas, organizations gain a comprehensive understanding of the impact of the information system on various aspects of the business. This approach ensures a well-rounded assessment, aligning IT investments with overall organizational goals and strategies.

A Balanced Scorecard is the way to go for viewing your investment from all angles. This way, you align your project with broader business objectives, track progress effectively, and spot areas for improvement.

In my opinion IT governance is somewhere also associated with the outcome of risk assessment. It has to take into account the various risks being posed to business and at a higher level, the IT governance should aim towards lowering down the risks and achieving the residual risk based on risk appetite of business To conclude always align governance towards reducing risk to business

IT Governance makes sure your IT aligns with business strategy, managing risks, and staying compliant. It's about clear direction, responsibility, and keeping everything transparent and in check.

The best way to measure the value of your information system investment is by the feedback you get from customers satisfaction. There is a saying that ‘ the end of every service is a smile”. Permit me to put it this way - if your customers ain’t smiling back at the services you provide through your information systems - then you loose big on ROI, benefit realisation and overall you loose VALUES… Measure these values by ensuring that you set up metrics to hear from your users both internal and external, if you get good feedback you know you have done well, if you get poor feedback, you need to go back to the drawing board…

User satisfaction tells you if your tech is hitting the mark, affecting how much people like and stick with it. Feedback shows its value and how it shapes your reputation.

Quality and Usability Assessment: High user satisfaction indicates that the IS delivers the expected quality and usability. Users are likely to be satisfied if the system is reliable, user-friendly, and meets their needs effectively. Functionality Evaluation: User satisfaction provides insights into how well the functionality of the IS aligns with user expectations. It helps identify whether the features and capabilities of the system contribute positively to the user experience.

Measuring IS investment value shouldn't just chase tangible numbers, it's about capturing the full symphony of benefits. Consider not just immediate cost savings, but how every second saved through automation translates to long-term growth. Think beyond customer satisfaction to the hidden melody of employee morale and brand loyalty boosted by streamlined processes. Remember, agility and innovation, fueled by effective IS, can be the competitive edge that keeps you dancing ahead. So, embrace a holistic approach. Invest in change management, let data analytics be the rhythm section, and keep everyone in tune with clear communication.

Don't forget that beyond numbers, real stories from users can spotlight your IS's impact. Think about how your tech changes their day-to-day. It's about the real-world difference your system makes, beyond just data and metrics.

it's not just about the numbers! Real stories from users shine a light on how your IS really rocks their world. Think about how your tech jazzes up their daily grind. It's all about the legit, real-life improvements your system makes, way beyond boring old data and metrics.