Creating business value from IT investments

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CREATING BUSINESS VALUE FROM IT INVESTMENTS
With increased competition, IT has become the differentiator for organizations across the world. Senior executives of organizations take strategic value of information technology much more seriously than before and think of how to use IT for creating competitive advantage. Because of these advancements, there has been increased focus on the business value of information technology investments.
Right IT Investment
Traditional IT developments were different than Enterprise Systems (ES) of today. Earlier IT developments were restricted to particular function or domain because of which there was lesser change that had to be accommodated in the existing business model. However it was less complex and often required some re-work as requirements changed over time. The new ES which includes CRM and ERP, is large in scope, scale, complexity, and involves different functions of the organization. Hence, before making a decision for investment in IT the business context of the investment must be analyzed. If the investment is made without proper understanding, IT projects become technology projects rather than being business change projects with IT component (Peppard, Ward, 2005).
How IT can enable change
There are three different types of changes which can be enabled by IT. These are:
1. Organization stops doing some of the activities which were earlier considered important but with usage of IT these activities are redundant
2. Organizations continue with what it has been doing but in a better way. It could mean processes are done faster or there is some cost saving associated with ...