IT assets lead to business value through their impact on an IT value chain, which consists of the sequence of processes that create value: dreaming up a solution, building that solution, and then delivering the solution as a service that meets the business need or capitalizes on the business opportunity. The key inputs to the value chain are business opportunities and business needs that can be matched with potential IT solutions. The output of the value chain is a stream of solutions that solve business needs or capitalize on emerging opportunities. Another output of the value chain is future business opportunities that arise out of prior investments managed through the value chain.
In 1987, Cyrus Gibson, in his book, The Information Imperative, described the four basic value-chain activities of the IT organization as follows:
- Planning of applications and of technical infrastructure
- Development of applications
- Operations or use of developed applications
- Technical service and support of applications
Notice Gibson’s focus on the technical aspects of the IT value chain and his focus on applications. A significant change in mindset has occurred over the past decade. The term application has been replaced by the term solution. This is a good development because delivering a solution emphasizes that a business problem is being solved rather than just that another application of information technology is being deployed. At the same time, enterprises are increasingly coming to view their IT organizations as service organizations rather than product organizations.