In 2009 the IT budgets were cut as a reaction on the worldwide economic crisis. Not very surprisingly, »Reducing the IT costs« was ranked second on the CIO Top Priority List 2009 – after rank ten and twelve in 2008 and 2007 (Source: www.gartner.com).

In these days the budgets for 2010 are planned. After massive IT budget cuts and a (at best) constant IT service performance some CEO’s may come up with the idea to cut the budgets again. In this case, the IT department may have difficulties with being an innovation leader and with supporting changed business processes efficiently.

So, how to break the never-ending cycle of »Reduced IT Budget« and »Expected Service Improvements«? How to avoid the sqeezed »IT-Lemon«? The answer is: The IT value proposition must be visible in the organization.

To increase the IT value transparency, I want to present a four-stage approach:

1. Aggregate the critical success factors within a strategy map. Find out which strategic objectives you should focus on. Let me give an example. To increase stakeholder value, your organization wants to expand the revenue opportunities. What you may need is a new product! You need to add new functionality to your existing products or develop brand-new products. To enable the organization to reach this strategic objective, the information technology must support the innovation process.

2. Take stock of the existing asset portfolio. Analyze how the IT portfolio is assembled. What projects have you planned? What projects do you currently implement? What are you assets (e.g.: Systems, Infrastructure, …)?

3. Make a model-based value analysis. Use context specific approaches such as Value Chains, Performance Measurement Systems, the McFarlan Matrix or the Gartner Business Value model, to give just a few examples.

4. Identify alignment gaps. Are there any non-considered risk scenarios left? For example, does the organization culture clash with the governance? Do you want to offer a »pay-per-use« option to your customer but your IT does not support the SaaS concept?

Note: The presented approach is just a framework. To make the IT value proposition visible, this four-stage approach must be used individually. I tried to give some examples to make the approach more tangible. In the end you need to find and apply applicable tools to make the IT value visible in your unique organization.