Information Technology (IT) investments and IT management have become increasingly important for an organization’s success. The principles of IT Governance, the use of IT Governance Frameworks, the application of IT Portfolio Management, and IT Value Management are proven methodologies to lead private companies to a successful and efficient implementation of their ITT investments. However, due to the structure of public organizations, they seem to have their limits. This chapter shows the issues of IT Value Management in public organizations and discusses the usability of classic IT alignment methods.
TopIntroduction And General Research Question
Due to increasing budget pressures and public calls for transparency, governmental institutions realize that they have to justify their IT (Information Technology) projects not only by costs but also by benefits for the community (Di Maio, 2003a; Sethibe, Campbell, & McDonald, 2007). The principles of IT Governance, the application of IT Portfolio Management and IT Value Management methods like Return On Investment (ROI), Payback Period (PBP), or Net Present Value (NPV) are proven methodologies to lead private companies to a successful and efficient implementation of their IT investments. However, when applicable in public organizations they are limited in their use because of the different strategic goals and the non-commercial function of these organizations (Di Maio, 2003a, 2003b, 2003c, 2003d; Sethibe, Campbell, & McDonald, 2007). One can find a vast number of evaluation techniques for IT investments in the private sector but only a few in the public sector, because the public sector has its unique characteristics (Markov, 2006). Markov (2006) states in his paper that “future evaluations … should grant the public value of IT a higher degree of interest” (p. 26). In his opinion “researchers and public administrators should rethink the value of internally-oriented financial metrics” and focus on “external benefits of deploying IT for stakeholders such as individual citizens, the business environment or society as a whole” (p. 26).
Therefore, one has to discuss which of these proven methodologies can be used and where they have to be adjusted to meet the non-commercial character of public organizations, particular in terms of their community or public value. This chapter will analyze relevant literature about IT Governance, IT Portfolio Management, and IT Value Management in terms of how they could be used and adjusted to align the IT Portfolio of a public organization to the community values.