Larson, Annotated Bibliography #3 1

Annotated Bibliography #3
Eric M. Larson
MBHR601
June 17, 2002

IT investments and riskless management describes both the need, and potential

solutions, for quantifying return on investment (ROI) in information technology

organizations. This issue is of particular importance to me at this time, because I believe

my team will soon be asked to explain or justify its existence and its purpose in

supporting faculty’s academic needs at the University. Our group knows, intuitively, that

we offer valuable services and that our faculty derive benefit from having us available as

IT consultants, and we have tools available to quantify our work itself – how many hours

spend with particular faculty or in particular departments or with particular applications

and services. However, we have no means to quantify the value of those services; if

faculty did not have our services available to them, would their lives end? If faculty were

able to continue teaching without dedicated IT support, how would their students’

educational experiences suffer, if at all?

Abrahami describes IT support (and implementation) costs in terms of risk, and

explains that companies ought to implement a decision-making infrastructure that

requires, “Understanding exactly what are the risks in a given course of action; knowing

the strategies available for managing these risks; (and) knowing the cost and effective of

each strategy” (Abrahami, 1999, p. 8). I believe this “risk-based approach” will be

valuable in my efforts to position our team as a valuable resource to the University

community. However, I am still confronted by the challenge of determining how, exactly,

our customer support is “cost effective”. In the absence of a control group within our

present support infrastructure (a group of faculty whose computing needs go

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unsupported), and in the absence of historical data from a time where academic

information technologies were identical but support was absent, I am unsure how we can

measure the benefit of our support services against a theoretical (but much less

expensive) environment without those services.

Abrahami continues with many valuable measurements of the “cost of expected

risk” but, once again, gives little information on how such costs might be determined. He

does acknowledge that “some of these factors and risks are difficult to quantify (e.g. the

loss of customers’ goodwill in case the system is down and customers’ urgent queries

cannot be answered)” (Abrahami, 1999, p. 9). However, the author does not offer any

insight as to how such “difficult to quantify” realities could be quantified. This lies at the

heart of the problem that I and my team fact; we know that our services have worth, but

have no idea how we might measure that worth.

Despite these shortcomings, Abrahami does offer some insight into the world of

financial justification in which my team and I now find ourselves. He explains that:

IT expenditure may be mandatory or discretionary. If it is mandatory, the benefits

of (or at least the reasons for) the expenditure are, by definition, self evident…
With discretionary expenditure, benefits need to be identified more clearly and
prioritised [sic] according to: "must have now", "should have soon", or "nice to
have in future", using `what if risk/impact analysis. Such analysis would include
three main scenarios, "do nothing for now", "go all the way with best longer term
solution", or "an interim shorter term solution". With discretionary expenditure,
IT may be competing with other projects for scarce resources. (Abrahami, 1999,
p. 11-12).

At this point in our department’s evolution, I do not have a clear understanding of

whether our administration sees our customer support roles as “mandatory” or

“discretionary”. If it is the former, the “self-evidence” of the need for support should

remove some of the burden for our team to “prove ourselves”; conversely, the current
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demand for objective data to justify our activities would seem to imply that our roles are

not seen as truly mandatory for the health and well-being of the University. Therefore, I

have found a renewed vigor to focus on the dozens of potential benefits that can come

from discretionary expenditure, as described by Abrahami (Abrahami, 1999, p. 12).

My new approach is not without its shortcomings, as Abrahami emphasizes, “It is

not sufficient that benefits are simply identified. They must also be measurable in some

way if Value for Money (VFM) is to be assessed and attained. This is one of [the] most

difficult areas in IT/finance” (Abrahami, 1999, p. 12). Knowing that the challenge that

lies ahead of me is a “most difficult area” is not particularly encouraging, but I am

reassured to know that others in the industry share my challenges and that, with

additional research, my team and I can begin to find solutions and document our worth to

our organization.
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References

Abrahami, A. (1999). IT investment and riskless management. Management Services,

43 (4), 8-13.