Benefits realization falls under the third domain of ISACA’s Certified in the Governance of Enterprise IT (CGEIT) exam and covers 16% of the overall objectives of the exam. This domain helps ensure that IT-enabled investments are managed to provide optimized business benefits. It also ensures that the outcome and performance measures of benefits realization are set up and evaluated, and that progress is reported to the key stakeholders.
What Topics are Covered in This Domain?
There are eight (8) tasks in this domain and CGEIT students must understand how to perform them. Below, we see the detailed description of these eight tasks:
Ensure that IT-enabled investments are managed as a portfolio of investments
Ensure that IT-enabled investments are managed through their economic life cycle to achieve business benefit
Ensure that business ownership and accountability for IT-enabled investments are established
Ensure that IT investment management practices align with enterprise investment management practices
Ensure that IT-enabled investment portfolios, IT processes, and IT services are evaluated and benchmarked to achieve business benefit
Ensure that outcome and performance measures are established and evaluated to assess progress towards the achievement of enterprise and IT objectives
Ensure that outcome and performance measures are monitored and reported to key stakeholders in a timely manner
Ensure that improvement initiatives are identified, prioritized, initiated and managed based on outcome and performance measures
In addition to these eight task statements, CGEIT candidates must know each of the twelve (12) areas delineated by the knowledge statements below:
Knowledge of IT investment management processes, including the economic life cycle of investments
Knowledge of basic principles of portfolio management
Knowledge of benefit calculation techniques (for example, earned value, the total cost of ownership, return on investment)
Knowledge of process and service measurement techniques (for example, maturity models, benchmarking, key performance indicators [KPIs])
Knowledge of processes and practices for planning, development, transition, delivery, and support of IT solutions and services
Knowledge of continuous improvement concepts and principles
Knowledge of outcome and performance measurement techniques (for example, service metrics, key performance indicators [KPIs])
Knowledge of procedures to manage and report the status of IT investments
Knowledge of cost optimization strategies (such as outsourcing or adoption of new cost-saving technologies)
Knowledge of models and methods to establish accountability over IT investments
Knowledge of value delivery frameworks (such as Val IT)
Knowledge of business case development and evaluation techniques
What Do I Need to Know About Benefits Realization?
Managing Successful Programs (MSF) defines benefits realization as “the process for a definition, identification, realization, tracking, and optimization of benefits for ensuring that benefits originating from the program of change are realized effectively.”
Traditionally, IT managers used to evaluate IT projects on the basis of whether they were completed in a timely manner, within budget, and in accordance with technical specifications, without considering whether such projects deliver an expected benefit to the business.
These days, benefits realization ensures that the success of any IT project is determined by the benefits it delivers to a business. Therefore, the focus should now be on planning, demonstrating, and communicating benefits so that projects achieve the IT investment objectives that they set out to reach. These benefits include measurable business value (both individually and collectively), the delivery of required capabilities (services and solutions) within the budget and on time, and the assurance that IT assets and other IT services continually contribute to the business’s value.
IT Investment Management: Each IT asset, including servers, storage media, systems, and applications has a lifespan during which it remains useful, provides optimal business value, and meets business targets. In the aftermath of this lifecycle, IT assets do not produce optimal output and may lead to a hardware fault or malfunction. The timespan during which IT assets provide optimal output is known as their “Economic Life.” The physical life of an IT asset can be much longer than its economic life. When making any investment choice on IT assets, it’s imperative to consider their economic life to achieve maximum optimal business value.
Business Accountability: Business accountability is critical to benefits realization. Accountability helps in ensuring that the enterprise workforce is diligently working to deliver expected results that are laid out by the business model. It needs a coordinated effort, follow-up, and oversight to make sure that the enterprise realizes its expected benefits.
Managing and Reporting of IT Investments: Effectively and efficiently managed and reported IT investments that fulfill business needs can generate huge revenue, create vital competitive advantages, improve performance and productivity, and reduce costs. Conversely, unmanaged and poorly aligned IT investments can damage the enterprise. Many enterprises employ IT portfolio management, which assists in managing IT investments during times of both economic downturn and robust growth.
Cost Optimization: Gartner defines four discrete levels whereby cost optimization can be applied. These four discrete levels include:
Cost savings within IT
Joint business and IT cost savings
Enabling innovation and business restructuring
The first two are lower levels that focus on the mitigation of cost within IT. The last two are upper levels that enable business restructuring and innovation and involves IT and business team-up to mitigate operating costs.
Value Delivery Framework, or Val IT: This is an IT governance framework that concentrates on value delivery and makes certain that the management of IT-enabled investments is done through their full economic lifecycle. Value delivery practices should be continually evaluated, monitored, and enhanced. In addition, these practices should engage all the stakeholders and assign proper accountability for the realization of business benefits and delivery of capabilities. Furthermore, value delivery practices also describe and monitor key metrics and respond promptly to any deviations or changes.
What Do I Need to Know About Performance Measures?
In the past 20 years, enterprises have been adopting new techniques to transform their operations to use IT for providing an increased level of customer service. The pace of adopting new techniques is swift. The top management of such enterprises relies heavily on vendors and technology resources to deal with the speed of this transformation, resulting in their increased dependency on skilled resources and technology. As a result, such dependencies and pace can trigger lack of enterprise control and, thus, enterprises employ Key Performance Indicator (KPI) to measure a performance of IT service delivery. A KPI measures how well the process is performed in enabling the goal to be reached. In addition to KPI, various enterprises also use Total Cost of Ownership (TCO) calculations into the business case and conduct Return on Investment (ROI) analysis of new IT projects.
TCO and ROI alone are not sufficient measurement factors. However, they can assist in the decision-making process. Above all, the enterprise should perform a cost/benefit analysis that requires both qualitative and quantitative indicators.
To meet business targets and objectives, it is important to define outcome and performance measures so that necessary progress can be assessed. When deriving IT objectives and targets from enterprise goals, we are required to define expected outcomes for each IT objective and the means by which the performance will be measured. In this way, IT investments and initiatives can be evaluated and driven in the right direction to achieve maximum business benefit.
Monitoring and Reporting of Performance Measures: A formal mechanism to measure, monitor and report the performance of IT initiatives must be agreed upon among stakeholders. There can be two types of stakeholder, termed Internal or External from an enterprise viewpoint. The identification of key stakeholders is vital when reporting frequency and time plan. Key stakeholders would be able to guide necessary changes in IT initiatives if performance deviates from its desired track. In this way, the potential risk of initiative failure can be thwarted.
Improvement Initiatives: Improvement initiatives are crucial to ensure that IT goals achieve their target. These initiatives are taken typically to enhance the value of IT delivery. Most improvement initiatives are identified at the last stage of the IT lifecycle and involve these steps: Plan, Do, Act, and Check.
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Where Should I Focus My Time Studying in this Domain?
Though taking any exam is stressful, candidates can make it easier by improving the way they study. Whether the student is a morning person or a night-owl, he/she should study with a proper time schedule for each day, rather than relying on last-minute cramming. Studying for the CGEIT exam efficiently and effectively will keep the candidates from feeling unprepared and set them on the path to success. Doing so requires the candidates to review the CGEIT syllabus, paying attention in the class, preparing good notes, and make studying as a part of habits. In addition, the candidates should also focus on some additional tips listed below:
Use diagrams and flowcharts, as needed
Practice with old CGEIT exams
Explain answers to others – this helps you to truly understand the theory, not just the answer
Take regular breaks
Try to get rid of all types of distractions and sit in a quiet atmosphere
More importantly, candidates should pay heed to use CGEIT-approved material, which is available at ISACA’s Official Bookstore. In addition, candidates can utilize this “CGEIT Resources” article in order to find the best preparation material for the CGEIT exam.
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