Information Technology : of value or a vulture?
By: TIERNAN, Chris
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Contributor(s): PEPPARD, Joe.
Material type: 
ArticlePublisher: Oxford : Pergamon, December 2004Subject(s): IT value; Value creation; IT investment; IT evaluation; Charge-backEuropean Management Journal 22, 6, p. 609-623Abstract: The value derivable from IT continues to be elusive, with most executives disappointed with the return achieved on their IT expenditure. Part of this stems from a lack of understanding of the nature of value creation through the use of IT. In this paper we present an approach that considers the journey from envisioning new uses for IT through to the actual realization of the potential value. This vision-to-value (V2V) vector captures both magnitude and direction, in a mathematical sense, of the journey towards value realization as both must be considered when addressing IT value. It proposes a definition of value, a financial formula, and identifies who should be responsible for securing value from IT investments. The analysis also considers the ongoing costs associated with IT service delivery and the issue of charge-back
The value derivable from IT continues to be elusive, with most executives disappointed with the return achieved on their IT expenditure. Part of this stems from a lack of understanding of the nature of value creation through the use of IT. In this paper we present an approach that considers the journey from envisioning new uses for IT through to the actual realization of the potential value. This vision-to-value (V2V) vector captures both magnitude and direction, in a mathematical sense, of the journey towards value realization as both must be considered when addressing IT value. It proposes a definition of value, a financial formula, and identifies who should be responsible for securing value from IT investments. The analysis also considers the ongoing costs associated with IT service delivery and the issue of charge-back
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