Assessing strategic impact of IT investment should be emphasized, report says

Insurers continue to struggle with capturing and evaluating the strategic impact of IT investments and setting IT project priorities, reports Celent.
In its report, Celent examines various IT investment evaluation methodologies (both traditional and alternative methodologies) and the rationales behind them.
“IT investment appraisal is more complex than traditional investment appraisal,” the report says. “IT initiatives often include intangible elements that can make evaluation difficult.
“This explains why evaluation questions have often been at the centre of tensions between CIOs and CEOs/CFOs when they set IT priorities or invest in infrastructure.”
Celent recommends that insurers consider three steps.
The first is to explicitly evaluate each project according to its impact on strategic goals. “Carefully analyze how core processes and value chain activities can be affected by IT investments,” the report suggests. “Cross-checking this analysis with tools such as balanced scorecards and gap analyses helps insurers better capture the strategic value of IT.”
The second step is to assess each project’s organizational impact. “Evaluate how IT initiatives can trigger changes to internal and external staff as well as customers’ day-to-day activities,” the report says. In addition, it is important to analyze potential modifications in communication patterns, functions and teams, since they can have a direct impact on how value is delivered to customers in terms of speed and quality.
Finally, Celent recommends selecting an evaluation methodology that best integrates the impact of strategic goals and organizational change.