IT Success!: Towards a New Model for Information Technology

7.6. Benefits as part of the P&L and annual planning

Benefits should appear in the P&L (when direct financial benefits are possible) and as part of the annual planning process, otherwise it's just a subjective number that could be inflated to produce a positive cost–benefit analysis to enable a project launch. So if, for example, part of a business case is to reduce costs by 30%, or to increase revenue by 10% over a number of years, then those benefits – or the incremental parts thereof – should be reflected in the annual budget from the next year on. If not, then we might as well all go home, because the numbers ultimately mean nothing and are merely a means to an organizational/political end, which is getting a project launched.

The regulation of demand in a company will receive an exponential boost the day the CFO asks a BU head why there isn't a line item for the benefits which were supposed to accrue from that too-good-to-be-true business case which she put together last year for that IT project...

Apparently, Federal Express does just that. In his book 'Managing Information Technology for Business Value' (see 'Further reading' in Chapter 9), Martin Curley writes that 'Federal Express stresses IT accountability in its IT planning process. When a business division signs up for an IT investment, that division states the expected impact explicitly – either in terms of revenue increase or cost savings, and these figures are then integrated into both business and IT operating ...