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together to improve the impact their IT resources have on the financial per-
formance of the company. In simple terms, we answer questions like: “Are we
spending our resources in the right places?” and “Are we spending the right
amount on IT?” These questions are preparatory to “How can we get results
from IT?” and, ultimately, “How can we drive our business strategies to effec-
tive IT actions?” These are important, critical issues for management. The key
part is that these are practical solutions. Business and IT management can get
the answers to these questions and, therefore, produce action and impact ” the
right business results ” from IT. See Exhibit 13.16.
The five NIE practices have developed and evolved in the two decades since
the original Information Economics book. The core concept has remained as
powerful as when we started in 1985: that IT has to fundamentally improve
how the business1 performs, and to do this, business management must be
directly involved in IT decision making. The NIE goals further elaborate this
core concept, defining exactly what the business goals are, assessing and prior-
itizing alternatives, and implementing the right ones and measuring the results.
The five practices implement the ways and means for achieving the goals.
Right Decisions/Right Results is an integrated approach to connecting and
integrating an enterprise™s strategic intentions with the IT capabilities and activ-
ities that can enable them. New Information Economics is a complete and

EXHIBIT 13.16 IT Improvement Zone
Impact Increase from New

Cost and Cost

Impact Reduction
Cost Zone Operational
(“Lights-On” )

Cost Cost and
Lower Higher
Impact Impact

proven suite of tools to coordinate planning, innovation, prioritization, align-
ment, and performance measurement activities within the enterprise. We have
seen these methods help companies make major advances in their business.
The individual methods can also be applied as stand-alone activities to address
specific issues, and they can be applied to all areas of the business, not just IT.
All five of the activities use the same techniques to develop management con-
sensus and produce implementable action plans that support enterprise strate-
gic intentions.
However, even though we offer five practice areas to deal with the issues,
this is not merely a management practice book. The basic problems we face, and
their solution, are at least as much a management culture problem as a practice
problem. Consequently, we address culture directly, and address these problems
as being of equal importance. The most elegant and well-defined practice means
nothing if the management team is unwilling or incapable of applying it.
In Chapter 1, we set the basic framework for the book, in these terms:
Right Results: The “right results” we want are to control IT™s cost and at
the same time improve bottom-line impact.
Right Decisions: The “right decisions” lead to the management actions
needed to produce the right results. These right decisions lead to:
Creating better investment alternatives, or in IT terms, creating better
ideas for development projects
Choosing the right investments and projects from the alternatives
Conclusion to Chapter 13

Eliminating nonperforming and poorly performing existing IT resources
from current spending
Improving the performance of the remaining existing IT resources
Producing the right actions by business and IT managers to implement
and follow through on the right investments and performance improve-

The book carries through in presenting frameworks, concepts, and processes
to make the right decisions and produce the bottom-line impact and controlled
IT expenses.
We expect that companies and management teams can apply the frameworks
and processes to place themselves in the IT Improvement Zone. The character-
istics of the IT Improvement Zone ” the Right Decisions/Right Results Out-
comes ” are shown in Exhibit 13.17.

EXHIBIT 13.17 Right Decisions/Right Results Outcomes
NIE Practices Process” Business”
and Support Desired Outcomes Desired Outcomes
Strategic IT and business planning are fully The company improves strategic and
Demand/Supply connected and integrated. bottom-line impact from its IT
Planning investments.
Innovation IT-enabled innovations impact The company excels in innovating
business planning and offer new through IT, in products, processes, and
strategies. performance.
Prioritization IT investments are prioritized against The company chooses the most
business strategy. valuable IT investments in terms of
bottom-line impact.
Alignment The entire IT spend is aligned with The company improves returns from its
business strategy. IT activities in terms of bottom-line
impact. The total IT spend is effectively
Performance IT business and technical Performance measures lead to
Measurement performance is tracked. improved IT and business performance.
IT Impact Business and IT management teams IT™s contribution to bottom-line impact
Management execute the processes that improve is improved. The total IT spend is
IT™s contribution to business effectively controlled.
Portfolio Planning and management All IT investments and resources
Management processes focus on the entire IT contribute to bottom-line impact.
Culture IT and business managers IT™s contribution to bottom-line impact
Management participate effectively in all is improved through the effective
NIE-enabled processes. application of NIE practices.

The Strategy-to-Bottom-Line Value Chain and NIE practices, and the man-
agement processes we have introduced, are listed by chapter in the table below.

Chapter Chapter Title Key Framework or Process

1 Define the Goals Right Decisions/Right Results Templates

2 Ask the Right Questions The Right Questions

3 Connect to the Bottom Line Shareholder Value and Bottom-Line Principles

4 Understand Costs and Resources Por tfolio Management

5 Focus on the Right Things Right Decisions/Right Results Goals and

6 Adopt Effective Process to Strategy-to-Bottom-Line Value Chain
Produce Action

7 Tackle the Practical Problems IT Impact Management

8 Make the Right Decisions Prioritization and Alignment Practices

9 Plan for the Right Results Planning and Innovation Practices

10 Keep Score Performance Measurement Practice

11 Deal with Culture Culture Management

12 Char t the Path to Implementation The Business Value Maturity Model

13 Define What™s Next IT Impact Management

14 Answer the “So What?” Question The IT Improvement Zone

The book™s website contains additional information:
Website Note 4: Tests for Connected Business and IT
The appendices also contain related information for Chapter 13:
Appendix A: The Role of Enterprise Architecture in Right Decisions/Right
Appendix B: Management Team Roles in Right Decisions/Right Results
Appendix E: The CFO Role in Right Decisions/Right Results

1. Although the terminology here and throughout the book is in “business” terms,
the concepts and practices apply with equal force to government and nonprofit
organizations. While business is concerned with competitive strategy and finan-
cial outcomes, government is just as concerned with strategy and performance
to organizational mission.

Answer the “So What?” Question


T he Right Decisions /Right Results message is straightforward: First, tell
people what the business is trying to accomplish in simple, actionable state-
ments, and second, get business and IT
people to use a common and integrated
Control Spending and Maximize
set of management tools to get those Impact on the Bottom Line
things done. The result is also straight-
1 Define the Goals
forward: The business ends up spend-
2 Ask the Right Questions
ing money and focusing people™s
efforts on activities that most fully sup- 3 Connect to the Bottom Line
port the business™s strategies and goals, 4 Understand Costs and Resources
and stops spending resources on things 5 Focus on the Right Things
that don™t. The IT budget is more 6 Adopt Effective Process to Produce Action
effectively controlled and IT™s impact
7 Tackle the Practical Problems
on the bottom line is improved. Using
8 Make the Right Decisions
NIE practices moves the company
from business strategy to IT action to 9 Plan for the Right Results
bottom-line results in an efficient, con- 10 Keep Score
sistent way. 11 Deal with Culture
After almost 50 years of IT being 12 Char t the Path to Implementation
used in business, these messages may
13 Define What™s Next
be commonly understood but are infre-
quently put into practice. Companies ¤ 14 Answer the “So What?” Question
continue to take an anecdotal, piece-
meal approach to IT investments, and the business“IT connection, while improv-
ing, remains fragmented in most organizations. However, NIE practices improve
the business“IT connection by providing processes and tools for translating
business strategies into actionable IT goals, choosing the IT activities that best
support those business strategies, and helping IT measure performance against
those goals.
Integrating these processes leverages the entire range of IT activities and
turns every dollar spent on IT into a carefully considered investment in making the

company successful. By taking a complete view of IT investment, from business
strategy to performance measurement, company management can be sure that
IT is doing what the company wants, when it™s wanted, and having a significant
impact on the company™s intended business performance.

It is clear what CEOs, CFOs, CIOs, and anyone who is interested in the bottom
line of the company want: controlled costs and better results from IT. To achieve
that, we need to look at two parts of IT: lights-on expenses and new develop-
ment projects (including both impact and cost). Although we split IT budgets
this way, clearly a dollar is a dollar everywhere in the business. Dollars spent on
IT are dollars not spent on other parts of the company (and, more critically, are
not profit), and dollars spent on unnecessary lights-on expenses are dollars not
spent on new projects that will improve IT™s impact.
The key to controlled budgets and better impact is hitting the IT Improve-
ment Zone (see Exhibit 14.1). No budget in any company is without “excess”
expenses. By focusing NIE practices on the alignment, service level, and qual-
ity of lights-on budgets, management can improve the overall cost structure of
IT by eliminating or redeploying “excess” resources (and improving the bottom-
line impact as well). In conjunction, by focusing all new IT development on the
highest bottom-line impact projects, IT™s contribution to the business can be
increased dramatically.
Obviously, no company will hit the ideal of the “Achievable Cost and Impact”
target due to cultural, process, and other constraints. But, by using NIE practices

EXHIBIT 14.1 The IT Improvement Zone
Impact Increase from New


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