Microsoft Consulting Services helps IT pros speak the business speak

Microsoft Consulting Services (MCS) South Africa has released a solution for IT professionals wanting to convince their financial bosses of the value that IT infrastructure investments add to the company. The Rapid Economic Justification (REJ) Framework bridges the language gap between the IT and finance departments, demonstrating the total cost of ownership (TCO) benefits in mutually understandable terms, by showing bottom-line results.

Technology has for too long been regarded by financial departments as a liability, rather than an asset, because the value-add has been explained only in technical terms. With the importance that it is playing in business today however, financial directors are increasingly taking an interest in what chief information officers are doing. IT managers therefore need a tool that will allow them to demonstrate the business value and TCO benefits of an IT investment, since they are increasingly being asked to ensure the optimisation of resources and capital appropriation for IT projects. Some companies are even asking IT managers to explain how a project creates shareholder value.

Many IT projects have successfully built an economic justification identifying benefits and costs only to have failed to live up to the expectations of senior management or other stakeholders. "The Microsoft REJ framework builds a bridge of common language between IT professionals and senior executives to demonstrate how investments in IT benefit the business," says Bill Renaud, MCS practice manager. "The trick is to ensure that the cost / benefit analysis done matches the needs of the business. The REJ cost framework is designed to provide enough of the appropriate data, avoiding the `paralysis by analysis` that often occurs when developing a business case. This means that the benefits can be demonstrated quickly, ensuring that decisions can be made before the information gets too old, because of the rapid developments in IT."

The REJ framework provides templates for written documentation, as well as a presentation format for economic analysis of the IT infrastructure. It also helps identify opportunities for better managing the IT solution, effectively increasing the overall value of the investment.

The business assessment REJ roadmap consists of the following five elements:

Understand the business:

The business assessment roadmap identifies the key stakeholders, critical success factors, the strategy to achieve them and key performance indicators that demonstrate success. In this step, owners of key processes that can be improved by IT are identified.

Understand the solution:

Flow charts, fishbone and process analysis procedures are used to identify ways of applying technology solutions which increase alignment with the organisation`s critical success factors. Understand the cost / benefit equation:

The calculation in REJ is more than just an itemised list of TCO benefits for IT budget owners. Benefits may be expressed in many ways and a variety of tools are used to ensure that they demonstrate a match with the business needs, ensuring that executives understand the value. Modelling tools that leverage rich databases from the Gartner Group, CNI, IDD and BRG are used to optimise the cost / benefit analysis.

Understanding the financial metrics:

The impact of the IT initiative in financial terms is projected on a balance sheet, expressed in marginal earnings per share and economic value added. Options such as to lease vs buy, outsource vs hire, or return on investment from other opportunities may be compared to maximise value. These adjustments take into account factors such as the cost of funds and tax laws.

Understand the risks:

This step helps identify the various forms of risk, develops migration solutions and adjusts cost or savings benefits accordingly. Risks are profiled by using magic quadrants and quantified using charts that describe a sensitivity analysis for the most critical variables to adjust the solution and economic impact of the project.

"With the REJ, IT managers will now always be able to answer the following question: what is the impact or economic value add of the technology investment?" says Renaud. "IT is a strategic asset to any company and by proving it through economic justification, it can be grown to provide further business benefits."

Companies interested in contacting Microsoft Consulting Services for more information on the REJ can call the following number: (011) 257 0233.