Über die Autorin bzw. den Autor

Tony J. Read has over twenty years of international IT management experience, across various industries. He is the managing partner of Read & Associates, an international IT value-based management and project delivery consultancy practice (www.readassociates.net). Prior to establishing Read & Associates, he served as CIO and IT senior vice president within several international corporations. Dr. Read is also a visiting professor at various universities, with several published papers on the subject of IT investment value, IT strategy, and IT governance. He graduated with a bachelor's degree in management science, and subsequently earned an MBA and an MEd in organizational change management. In 2005, he earned his PhD in information systems and was elected into the Honor Society of Computing Sciences, being awarded the Upsilon Pi Epsilon. Dr. Read is a dual U.K.-U.S. citizen, residing with his wife in Ontario, Canada; he regularly travels for speaker engagements at various conferences and corporate events.
 
The Vision = IT VALUE + Mission = VALUE IT

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How much should management care about IT investment and value? A lot. Many managers see IT as just a necessity of doing business or business enabler, not a powerful capability that can drive the business. The truth is, your organization won't see optimal results without effective IT value-based management. It's time to get the most bang from your IT buck.
 
Strategic and forward-looking, The IT Value Network: From IT Investment to Stakeholder Value offers an innovative perspective, challenging you to align IT spending more effectively to your company's business strategy, value system, and the business network for sustained competitive and network advantage.
 
A true road map for value-creation, realizing bottom-line dollars and intellectual capital, The IT Value Network: From IT Investment to Stakeholder Value reveals:
* A proven framework to unlock and realize IT value, bridging the value gap between the CIO and business partners, especially the CFO and the board
* How value needs to be triangulated using various financial-based and organization-based measures, applying the IT value index scorecard and the IT value portfolio
* Six degrees of IT value management to maximize stakeholder economic value
* Case studies demonstrating how four companies in the banking, financial, retail, and high-tech/telecommunications industries realized IT value
* IT value maturity model, checklist, and toolkit for easy implementation
 
Maximize stakeholder economic value. Gain sustained competitive advantage or network advantage from IT investment and spending. Lead your entire organization to new realms of success in today's challenging economic climate, through the visionary methods and techniques found in The IT Value Network: From IT Investment to Stakeholder Value.

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Praise For The IT Value Network
 
"This is probably the best 'up-to-date' executive information management resource since Strassmann's works of fifteen years ago. Tony Read provides a comprehensive and insightful assessment of the state of IT investment and the value of various technologies and information management in the modern enterprise. For corporate executives trying to navigate this rapidly changing landscape, this book is highly recommended."
--Paul A. Brinkley, Deputy Under Secretary of Defense (U.S.) for Business Transformation Agency
 
"Managing technology investments with a value-based approach just works--it has provided significant stakeholder value at Indigo. This book is a must-read for both IT and business managers who want to improve the return on their IT investments."
--Michael Serbinis, President, Shortcovers, CIO & EVP, Indigo Books & Music Inc.
 
"Difficulty proving the business value of IT remains a key barrier to IT executives. IT Value Network provides a clear road map to chief information officers interested in moving beyond simply aligning business and technology strategies. It is a must-read for IT executives who wish to become true partners to the business."
--Gary Beach, Publisher Emeritus, CIO magazine
 
"This book is a complete study of how value is derived and measured from IT investments. All IT strategy professionals should read it and have access to it. I strongly recommend it."
--Ali Hamza, Partner, PricewaterhouseCoopers (PwC)
 
"IT spending continues to climb, but IT value is invariably left on the table. Tony's new book will enlighten both the practitioner and academic to new approaches and techniques for capturing and realizing stakeholder economic value--with a great perspective to sustaining competitive advantage or as the book promotes network advantage, across the firm's value system."
--Edward Lieblein, PhD, Dean and Professor, Graduate School of Computer and Information Sciences, Nova Southeastern University
 
"Tony Read's book provides excellent insight and strategies for maximizing shareholder return from IT investments. The book gives a timely response to the challenges every CIO and CFO face in the current economic environment. It is now more important than ever to demonstrate IT return on investment and this book is a valuable aid for Cx's looking to leverage every IT dollar to secure maximum business return"
--Albert R. Hitchcock, CIO, Vodafone Group

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The IT Value Network

John Wiley & Sons

Chapter One

Sticker Shock

Walking through the virtual IT "car lot," it is not hard to see why a CXO would challenge the Chief Information Officer (CIO) with respect to IT costs. Too often an IT Ferrari would be proposed when an IT Volvo could meet the required needs. The daunting task of justifying technology direction and spending variances, let alone the need for investment in the first place, is a challenge unto itself.

IT investments are becoming more than just business enablers or assets on the books; they are indeed a capability that can drive the business. IT thought leadership should transition from a traditional technology investment model to an information investment approach, getting a bigger bang for the buck from the "I" in IT and from the "I" in CIO. In today's world, the business impact of effective IT investments is potentially exponential and needs to be governed accordingly, not just as cost savings enablers.

IT costs typically constitute 2 percent of a company's revenue, but they can be as large as 12 percent, perhaps the single most manageable cost after labor. According to Gartner, this culminates in a global 2008 IT investment of some $2.6 to $3.0 trillion, with half spent on telecommunications and the rest on IT hardware, software, and services. Such annual spending is comparable to the gross national product (GNP) of the United Kingdom or France, or nearly thrice that of India. In other words, globally we spend on IT nearly three times what India's 1,135 million people (20 percent of the world's population) spend on consumption, gross investment, government expenditure, and exports less imports. But the value of information is invariably unknown.

This chapter focuses on IT investment growth and trends. Six decades of IT investment are considered, from early computing to the World Wide Web. IT investments are classified according to a four "S" category model, which will be useful for IT evaluation further on in the book. Finally, future IT investment considerations are explored, which sets the context for IT value network measurement and management.

Six Decades of IT Investment

IT investment has consistently grown from the modern computing era in the early 1940s to the present information age. Spending on IT has expanded from fundamental computing and telecommunications infrastructure to enterprise application systems and to information and service management. Within just 60 years, IT investment went from a select few to the masses, from large organizational spending to individual spending.

Sixty Years of Growth

The modern computing era started more than 60 years ago with the advent of early digital technology. There is no one inventor who can lay claim to the first modern computer, as many contributed to today's foundation of basic computing. In 1941, the German technologist Konrad Zuse developed the Z3, which become the first functional program-controlled, all-purpose, digital computer. Subsequently, the British Colossus was created in 1943; considered the first electronic computing device, it was used in decrypting German World War II messages. A series of computing advancements then occurred in America, with the advent of the ABC, Harvard Mark I, and ENIAC I computers. The latter, designed by John Presper Eckert and John W. Mauchly, became the first all-purpose electronic computer in 1945. The design was based on John Von Neumann's report on unified storage of data and programs.

Arguably the first modern computer, evolved from the collective, was Federic Williams's and Tom Kilburn's Baby computer, built in Manchester, England. In 1948, 60 years ago, the components or characteristics of the basic computer were complete, memory had been added, and programs could be stored. With a random access memory of 32 words (128 bytes) and a computer speed of just over one millisecond per instruction, it may not have been fast, but it could perform many applications. It was a far cry from today's fastest supercomputer, IBM's BlueGene/L, which can process 360 trillion transactions per second or a 1GB DRAM chip, which can store 8 billion bits.

The Baby or Manchester Mark I eventually became the first commercial general-purpose computer, named the Ferranti Mark I. In 1951, the UNIVAC (Universal Automatic Computer), a derivative of the ENIAC 1, became the first mass-produced computer, providing a memory of 1,000 words for a sizable $1 million investment. IBM entered the arena in 1953 with the 701 Electronic Data Processing Machine (EDPM)-the first mainframe. Then IBM developed Fortran, the first high-level computer programming language. The first generation of computing started to gain momentum. IT investment started to grow, moving from university and government institutions to commerce. But at $10,000 per megabyte for an IBM magnetic disk system (currently, one-fiftieth of a cent per megabyte), it was an expensive proposition. Many thought computing was for the limited few.

The second generation, triggered by transistors, started a wider commercial interest in more affordable computing. The vacuum tube was dead. Between 1960 and 1964, the IBM 1401 captured one-third of the world market, selling over 100,000 computers. The third generation, driven by integrated circuits or the "chip," further transformed computing application. Jack Kilby and Robert Noyce independently created the microchip, in 1958. Into the mid- to late 1960s, IBM introduced the System/360 mainframe, and Data General started selling one of the first 16-bit minicomputers, the Nova, for $8,000.

The fourth generation exploded onto the market with the advent of the microprocessor, invented in 1971 by Ted Hoff, Federico Faggin, and Stanley Mazor at Intel. From the late 1960s, competition grew, with mainframe and minicomputer offerings from IBM, Data General, Hewlett-Packard, Sperry Univac, Olivetti, Burroughs Machines, and ICL. In the background, the ARPAnet and the original Internet were born in 1969. These were quickly followed by Robert Metcalfe's and Xerox's Ethernet computer networking in 1973. Packet switching and internetworking, using standard communication protocols, provided computing power across boundaries.

The personal computer revolution followed, from the early Scelbi and Mark-8 Altair, in 1974-1975, to the Apple I and II, TRS-80, and Commodore Pet in 1976-1977, followed by the IBM PC in 1981. Add Microsoft's MS-DOS operating system and Windows, and from the early 1980s computing became a commodity for the masses. The more recent exponential computing and telecommunication utility is, of course, associated with the growth of the World Wide Web. The introduction of the Mosaic Web browser in 1993 by a University of Illinois team, led by Marc Andreessen, sparked the networking revolution. Today, voice and date have been successfully merged over the network. New all-in-one handset devices are enabling mobile commerce and social networking (e.g., Facebook). Commercial applications are going virtual, through software as a service (SaaS) and managed services. The next generation is around the corner.

IT investment grew exponentially from the late 1950s as technology significantly advanced from the first computing generation. Global IT investment grew from tens of millions in 1950 to $2.6 to $3.0 trillion in 2008, as depicted in...