Rethinking “Time To Value” For BT Initiatives

 

I had an interesting conversation with a Forrester client in response to an inquiry about the definition of “time to value” for technology solutions. When I received the question, I thought, “That’s easy!” While there is no “GAAP” definition of time to value, I was ready to say that it would be one of two things:

1-      The time from project start to the start of business benefit accrual. So, if a project took 12 months to implement, and then three months for the business to adapt to it, the time until business benefits began to accrue would be 15 months.

2-      The time from project start to the date at which cumulative business benefits exceeded the cumulative costs. In other words, the time until the “payback” of the investment.

However, in trolling around to make sure that I hadn’t missed anything, I stumbled upon a potential third definition (and I wish I could point back to the source). One commentator on the Web suggested something a bit different – and something that has a great deal of merit as we rely more and more on technology to drive business gains. In his definition, time to value represented the time until the business targets for the solution were achieved. So, rather than looking at the start of benefits, or the date we’re no longer cash-negative, we are now looking at the time until the full desired benefits are achieved. So this becomes:

3-      Time to value is the time from project initiation until the projection of total business benefits is achieved.

This change in perspective has a number of implications:

  • We may reconsider different implementation choices. A solution that may take longer from an IT point of view, but accelerated business benefit achievement may be the best for the organization.
  • We emphasize the tie between technology, business processes, and business goals – leading to potentially better alignment between all three.
  • We tie our business technology implementations to the ultimate business goals – moving an organization from internally IT-focused to externally BT-focused.

Please share thoughts here, and/or join us for CIO Forum (#CIOF12) in Las Vegas on May 3-4 or CIO Forum EMEA (#CIOE12) in Paris, France, on June 19-20. You’ll learn how rethinking IT strategic planning and innovation can change the way IT and the business partner for overall business success.

Comments

Project Start

There's another place to look for opportunity to decrease "Time to Value" - what is happening before the official project start? Organizations need to look the period from the idea to the official project start - their business case and capital allocation process. This can be just as long as the project time.

Project Start

I agree Paul, reducing the time it takes to move from idea to kickoff can significantly reduce time to value. Unfortunately we rarely get to consider this because likely business impact (value) is only determined after we have digested the idea and developed the strategy.

Agile

Agile methodology may also provide the advantage to improve time to value, via faster release, continuous communication with teams, and iterative interaction with customers.

Agile

You're right Pearle. Anything which reduces the time to market (implementtaion) can potentially increase value - but not always. Iterative implementations may not yield the full business impact and so the time to business impact may be longer. That's why in BT Staretgic planning we talk about time-to-buiness-impact (T2BI) as a critical way to weigh strategy choices. And a key part of a strategy is how you develop/implement the technology. For any strategy to achieve specific business impact goals there are four key factors to weigh: cost, risk, complexity and T2BI. The length of time it takes to achieve the expected results is factored into measures such as net present value (NPV) and discounted cash flow (DCF).

You talk about

You talk about develop/implement the technology... there is some interesting research going on in the Air Force. The research used LED technology as a case study, but could be applied to many fast changing technologies. It gives a differant perspective on the time value of technology.

TIME-VALUED-TECHNOLOGY: A LIGHT-EMITTING DIODE CASE STUDY FOR DETERMINING REPLACEMENT STRATEGY FOR HIGH TECHNOLOGY INFRASTRUCTURE ITEMS

http://www.dtic.mil/dtic/tr/fulltext/u2/a558288.pdf