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Innovation @ Copperleaf: Stan Coleman on Using the Copperleaf Value Framework to Value IT Investments

We speak to Stan Coleman, Chief Architect, about how the Copperleaf® Value Framework can be used to evaluate different types of investments—beyond physical infrastructure. In fact, if we look to the ISO 55001 standard, an asset is defined very broadly as an “item, thing or entity that has potential or actual value to an organization.” The same asset management principles can therefore be applied to hardware and software assets. In this article, we will focus on how the Copperleaf Value Framework can be used to value portfolios of Information Technology (IT) investments.

Q: How has the Copperleaf Value Framework evolved over time?

“As the market has matured in Asset Investment Planning and Management, the demands from clients in terms of what they want to be able to value have also matured.

We have seen a transition from condition-based, to risk-based, to value-based decisions. The approach used by organizations varies by industry and geography, but globally we’re seeing a trend towards a more holistic approach to decision making, where all types of value are being included to inform planning.

Many of our clients now look at a much wider spectrum of value—from hard financial benefits to societal and environmental benefits. This evolution has driven the need for more sophisticated calculations and a more flexible framework, as well as various tools and visualizations to communicate all of these decisions with stakeholders.”

Q: How did we first begin using the Copperleaf Decision Analytics Solution to value IT portfolios?

“IT departments actually have very similar challenges to their asset management counterparts. They need to manage a pipeline of candidate projects, and allocate their limited funds and resources to get the best results. We had experience taking a value framework from one business unit within an integrated utility and expanding it to the enterprise level, so we extended this approach to include the IT environment. We now have a strong community of clients like Manitoba Hydro and Salt River Project (SRP) that have a corporate value framework that spans the entire organization, including all of their physical asset lines of business and now also their IT spend.”

We have seen a transition from condition-based, to risk-based, to value-based decisions. The approach used by organizations varies by industry and geography, but globally we’re seeing a trends towards a more holistic approach to decision making, where all types of value are being included to inform planning.

Q: What are the factors typically used to evaluate IT projects?

“In the Copperleaf Value Framework, we call these factors “value measures”. For IT projects, there are some common value measures that we typically apply, such as investment cost, financial benefits, IT capacity risk, security risk, license risk, innovation premium, business continuity risk, etc.

For example, if your organization’s IT system isn’t available, what impact will that have on employees to do their jobs? What efficiencies (time and money savings) can you obtain by upgrading your technology? How can you optimize customer experience and maximize value across different business functions by collecting and using your data in a more holistic way? These are all important questions that our clients want to examine.”

Q: Do organizations typically evaluate both software and hardware investments together in one capital portfolio, or is their spend evaluated independently? Is this trending in one direction or another?

“A little of both. The trend is for organizations to want to have a comprehensive view of what they’re doing in IT which allows for more consistency and efficiency in decision making. Hardware investments tend to be transactional and sustainment-based, such as desktop refresh programs and programmatic type of investments. Software spend incorporates big system implementations like outage management upgrades and significant digital transformation initiatives. Usually the capital is from the same budget, so organizations want to perform tradeoffs between those sustainment-type initiatives vs. the larger transformations—it’s a key capability of Copperleaf’s solution that we can support this type of analysis.”

If your company’s IT system isn’t available, what impact will that have on employees to do their jobs? What efficiencies (time and money savings) can you obtain by upgrading your technology? . . . These are important questions to examine.

Q: What other industries can benefit from a value framework? Any ideas about what’s next on the horizon?

“The Copperleaf Value Framework applies to any company that needs to make informed decisions. Because there are so many similarities and common issues around financial performance, safety, ESG-driven initiatives, and reliability for industries with large infrastructure, the Framework expands most naturally to industries like oil and gas, mining, transportation, pulp and paper, telecommunications, and of course, IT across a wide range of industries.”

The Copperleaf solution provides dynamic Enterprise Portfolio Management specifically suited to the needs of organizations managing large numbers of physical assets. It uses the Copperleaf Value Framework which is configured to measure the key things that deliver benefit to the organization. To learn more about Enterprise Portfolio Management and how it can help you effectively make cross-enterprise IT investment decisions, download our white paper on this topic.

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