IT Budget Theater: How €12M IT Spending Delivers €2M Value (And How to Fix It)

Your CFO asks: "What business value did we get from our €12M IT budget?" Your CIO answers: "We kept the lights on, maintained compliance, and deployed some projects." CFO: "But what improved? Revenue? Customer satisfaction? Efficiency?" CIO: "Well, we reduced incidents by 20%..." CFO: "That's an output, not an outcome. Did it impact the business?" Silence. The truth: 75% of your IT budget funds operations (keeping existing systems running) while 25% funds innovation (building new capabilities). But even worse: 60% of operations spending maintains systems that deliver zero measurable business value. You're spending €12M to deliver €2M worth of business outcomes.

According to Gartner's 2024 IT Key Metrics Data, the average enterprise IT budget allocation is 72% operations (run the business) vs. 28% innovation (change the business). However, organizations with value-based IT governance shift this to 55% operations / 45% innovation, achieving 3-5x higher business value per IT dollar spent. The fundamental problem: Traditional IT budgeting funds activities and infrastructure (inputs) rather than business outcomes (value delivered).

The critical shift: From "How much does IT cost?" to "What business value does IT create?"

Why traditional IT budgeting destroys value:

Problem 1: Run vs. Change budget imbalance

The 70/30 trap:

Traditional IT budget allocation:

• Run the business (70-75%): Keep existing systems operational

  • Infrastructure maintenance: Servers, networks, storage
  • Application maintenance: Bug fixes, patches, minor enhancements
  • Operations: Helpdesk, support, monitoring
  • Licenses: Software renewals, subscriptions

• Change the business (25-30%): Build new capabilities

  • New projects: Strategic initiatives, digital transformation
  • Innovation: Experimentation, pilots, R&D

Why this is a problem:

Problem 1: Innovation starvation

• Only 25-30% of budget available for new capabilities
• Business demands more innovation than budget allows
• IT says "no" to most innovation requests (capacity constraint)
• Business goes around IT (shadow IT proliferates)

Problem 2: Run budget grows every year

• New systems deployed → Increase run cost (maintenance, licenses)
• Run budget: 70% → 72% → 75% → 78% (ratchet effect)
• Change budget squeezed: 30% → 28% → 25% → 22%
• Death spiral: Less innovation → Business dissatisfaction → Pressure to cut costs → Cut innovation further

Real example: Insurance company budget evolution

Year 1 (2020):

• Total IT budget: €10M
• Run: €7M (70%)
• Change: €3M (30%)

Year 2 (2021):

• 5 new systems deployed (from change budget)
• New systems add €600K annual run cost (licenses, maintenance, support)
• Total IT budget: €10.5M (5% increase)
• Run: €7.6M (72%)
• Change: €2.9M (28%)

Year 3 (2022):

• 4 new systems deployed
• Add €500K run cost
• Total: €11M
• Run: €8.1M (74%)
• Change: €2.9M (26%)

Year 4 (2023):

• 3 new systems deployed
• Add €400K run cost
• Total: €11.4M
• Run: €8.5M (75%)
• Change: €2.9M (25%)

Year 5 (2024):

• Only 2 new systems (capacity decreased)
• Run: €8.9M (76%)
• Change: €2.8M (24%)

Trend:

• Run budget grew €1.9M (27% increase)
• Change budget decreased €200K (7% decrease)
• Innovation capacity: 5 projects/year → 2 projects/year

The ratchet effect: Every new system increases run cost permanently, squeezing change budget

What organizations should do:

• Target: 50-60% run / 40-50% change
• Require: Aggressive decommissioning of old systems to free up run budget
• Strategy: "To add new, must retire old" policy

Problem 2: No connection between spending and value

The cost vs. value gap:

Scenario: Annual IT budget review

CIO presents budget:

• Infrastructure: €4.2M
• Applications: €3.8M
• Personnel: €2.6M
• Services: €1.4M
• Total: €12M

CFO asks: "What business value does this create?"

CIO struggles to answer:

• Infrastructure: "Keeps systems running" (not a business outcome)
• Applications: "Maintains ERP, CRM, billing" (still not value)
• Personnel: "180 FTE doing various activities" (input, not outcome)
• Services: "Vendors providing support" (activity, not value)

The disconnect: Budget categorized by cost type, not value delivered

What CFO wants to know:

1. How much spending increases revenue? (Growth value)
2. How much spending reduces costs? (Efficiency value)
3. How much spending reduces risk? (Protection value)
4. How much spending enables future innovation? (Option value)
5. How much spending delivers no measurable value? (Waste)

Re-framing the same €12M budget by value:

Value-based view:

• Revenue growth: €1.8M (15%)

  • E-commerce platform improvements: €500K → €3M incremental revenue
  • CRM enhancements: €300K → €2M pipeline increase
  • Digital marketing tools: €200K → €1.5M campaign efficiency
  • Mobile app: €800K → €4M mobile transactions

• Cost reduction: €2.4M (20%)

  • Process automation: €600K → €1.8M labor savings
  • Cloud migration: €800K → €1.2M infrastructure savings
  • Self-service tools: €400K → €900K support cost reduction
  • Procurement optimization: €600K → €1.5M spend savings

• Risk mitigation: €1.2M (10%)

  • Security upgrades: €600K → Prevent €5M+ breach risk
  • Compliance systems: €400K → Avoid €2M+ fines
  • Disaster recovery: €200K → Prevent €10M+ outage impact

• Strategic enablement: €1.4M (12%)

  • Data platform: €600K → Enable future analytics/AI
  • API infrastructure: €500K → Enable ecosystem partnerships
  • Architecture modernization: €300K → Reduce future tech debt

• Necessary operations (no incremental value): €5.2M (43%)

  • Legacy system maintenance: €2.8M → Keeps existing capability running
  • Infrastructure baseline: €1.6M → Maintains current capacity
  • Support operations: €800K → Maintains service levels

The revelation: 43% of IT budget delivers NO incremental business value

• Just maintains status quo
• Necessary but not value-creating
• Opportunity: Reduce this percentage to free up innovation budget

Better budget conversation:

• CFO: "We're spending €12M on IT. €6.8M creates measurable value (57%), €5.2M maintains baseline (43%). How do we shift more toward value creation?"
• CIO: "We can reduce maintenance costs by decommissioning legacy systems and automating operations. Target: 60% run → 50% run, freeing €1.2M for innovation."

Problem 3: No portfolio management or prioritization

The project approval chaos:

How IT projects get approved (traditional):

Scenario: 40 project requests for next year

Request process:

• Business units submit project requests (Excel form)
• Requests include: Description, estimated cost, business justification (text)
• IT reviews requests (subjectively)
• IT estimates effort (level of effort, not value)

Approval criteria (informal):

1. Executive pet projects: CEO wants it → Auto-approved (regardless of value)
2. Loudest voice: Department head who complains most → Approved
3. Compliance requirements: Must do → Approved (often over-scoped)
4. "Strategic": If someone says "strategic" → More likely approved
5. Remaining budget: Whatever fits in budget → Approved

Result: 15 projects approved

• 3 executive pet projects (low value, high cost)
• 4 loudest voice projects (medium value, medium cost)
• 5 compliance projects (necessary, often gold-plated)
• 3 actually high-value projects (got lucky)

What's missing: Objective value-based prioritization

What organizations should do: Portfolio scoring

Score each project on:

1. Business value (0-10 points)

• Revenue impact: How much incremental revenue?
• Cost reduction: How much cost saved?
• Strategic importance: Enables future capabilities?
• Customer impact: Improves satisfaction/retention?

2. Risk/compliance (0-10 points)

• Regulatory requirement: Required by law?
• Security risk: Mitigates significant threat?
• Operational risk: Prevents major outage?

3. Feasibility (0-10 points)

• Technical complexity: How difficult?
• Dependencies: Requires other projects first?
• Resource availability: Do we have skills?
• Time to value: How quickly does it deliver?

4. Strategic alignment (0-10 points)

• Corporate strategy: Aligns with company goals?
• IT strategy: Fits architecture roadmap?
• Competitive necessity: Required to compete?

Total score: 0-40 points

Prioritization:

• Rank all 40 requests by total score
• Fund top-scoring projects until budget exhausted
• Projects below cutoff: Deferred or rejected

Example scoring: 3 competing projects (€300K budget available)

Project A: Mobile app redesign

• Business value: 8 (€2M incremental mobile revenue)
• Risk/compliance: 2 (low risk mitigation)
• Feasibility: 7 (moderately complex, 6 months)
• Strategic alignment: 9 (mobile-first strategy)
• Total: 26 points
• Cost: €200K
• Value score: 26 / €200K = 0.13 points per €1K

Project B: Legacy ERP upgrade

• Business value: 3 (no incremental value, just maintains)
• Risk/compliance: 7 (avoids end-of-support risk)
• Feasibility: 4 (very complex, 18 months)
• Strategic alignment: 2 (not strategic, just necessary)
• Total: 16 points
• Cost: €600K
• Value score: 16 / €600K = 0.027 points per €1K

Project C: Customer self-service portal

• Business value: 9 (€1.2M support cost reduction)
• Risk/compliance: 3 (low)
• Feasibility: 8 (well-defined, 4 months)
• Strategic alignment: 7 (customer experience focus)
• Total: 27 points
• Cost: €150K
• Value score: 27 / €150K = 0.18 points per €1K

Decision:

• Fund Project C (highest value per dollar): €150K
• Fund Project A (second highest): €200K
• Defer Project B (lowest value, exceeds remaining budget)
• Total: €350K budget (slight overrun, acceptable)

Outcome: Objective, defensible decisions based on value

Problem 4: Zombie projects and sunk cost fallacy

The project that never ends:

Scenario: ERP modernization project

Year 1 (2019):

• Approved: €2.5M budget, 18-month timeline
• Business case: €1.8M annual savings from process efficiency
• Expected ROI: 167% over 5 years

Year 2 (2020):

• Status: 40% complete, behind schedule
• Spent: €1.8M (72% of budget)
• Remaining: €700K (not enough to complete)
• Request: Additional €1.2M and 12-month extension
• Reason: "Underestimated complexity"
• Decision: Approved (already invested €1.8M, can't stop now)

Year 3 (2021):

• Status: 65% complete, still behind
• Spent: €3.6M total (144% of original budget)
• Request: Additional €800K and 9-month extension
• Reason: "Integration challenges"
• Decision: Approved (sunk cost fallacy)

Year 4 (2022):

• Status: 85% complete
• Spent: €4.8M total (192% of original budget)
• Request: Additional €600K to finish
• Decision: Approved (too far to turn back)

Year 5 (2023):

• Status: Finally launched!
• Total spent: €5.4M (216% of original budget)
• Time: 5 years (278% of original timeline)
• Annual savings achieved: €800K (44% of promised €1.8M)

ROI reality check:

• Investment: €5.4M (vs. €2.5M promised)
• Annual value: €800K (vs. €1.8M promised)
• Payback: 6.75 years (vs. 1.4 years promised)
• 5-year ROI: -€1.4M (negative, vs. €4.2M positive promised)

The sunk cost fallacy:

• "We've already spent €4M, we can't stop now"
• Reality: Past spending is gone (sunk), only future value matters
• Question: "If we invest €600K more, will we get €600K+ value?"
• Answer: Probably not (€800K annual value = 8+ year payback for incremental €600K)

What should have happened: Kill decision at Year 2

• At Year 2: Spent €1.8M, need €1.2M more
• Re-evaluate business case: Are benefits still valid?
• Likely answer: No, original benefits were optimistic
• Decision: Kill project, reallocate €1.2M to higher-value project
• Loss: €1.8M sunk (but avoid throwing good money after bad)
• Savings: €3.6M not wasted on low-value project

Zombie project characteristics:

• Consistently over budget and behind schedule
• Benefits decreasing or unclear
• "Too big to fail" mentality
• Keeps getting funded due to sunk cost

Portfolio discipline:

• Quarterly project review: Status, budget, value
• Kill criteria: >25% over budget or benefits <50% of promised
• Redirect funds to higher-value projects
• Accept sunk costs, focus on future value

Problem 5: Lack of post-implementation value tracking

The "build it and forget it" problem:

Typical project lifecycle:

Phase 1: Project approval

• Business case: "This project will save €1.2M annually"
• Approved based on promised value

Phase 2: Project execution

• Focus: Deliver on time and on budget
• Measure: Milestones, deliverables, budget burn

Phase 3: Project completion

• Celebration: "We launched!"
• Measure: Delivered on time? On budget?
• What's missing: Did we achieve the promised value?

Phase 4: Post-launch (reality)

• Project team disbands, moves to next project
• Business case forgotten
• No one measures: Did we actually save €1.2M?
• No accountability for results

Real example: Procurement system implementation

Business case (Year 0):

• Investment: €800K
• Expected benefits:
  • Process efficiency: €400K annual savings (reduce 8 FTE to 4 FTE)
  • Spend visibility: €300K annual savings (better negotiations)
  • Compliance: €200K risk reduction (avoid maverick spending)
• Total annual value: €900K
• ROI: 113% over 5 years

Year 1: Project launched successfully

• Delivered on time, slightly under budget (€750K)
• Metrics tracked: User adoption, system uptime
• Celebration: Success!

Year 2: Reality check (no one measured)

• Procurement team: Still 8 FTE (no headcount reduction achieved)
• Spend visibility: Some improvement, but savings not tracked
• Compliance: Better, but no quantification

Year 3: Someone asks "Where's the value?"

• Finance: "We spent €750K on procurement system. What did we get?"
• Investigation:
  • FTE savings: €0 (still 8 people, just using new tool)
  • Spend savings: €120K achieved (vs. €300K promised)
  • Compliance: Qualitative improvement (can't quantify)
• Total value achieved: €120K annually
• Actual ROI: Negative (€750K investment / €120K annual = 6.25 year payback)

What went wrong:

• No accountability for realizing benefits
• Headcount reduction was "expected to happen naturally" (never did)
• Spend savings required negotiation effort (not just tool)
• No one tracked value post-launch

What organizations should do: Benefits realization management

Step 1: Benefits register (at project approval)

• Document specific, measurable benefits
• Assign benefit owners (not IT, business stakeholders)
• Define measurement method and frequency

Example: Procurement system benefits register

Step 2: Quarterly benefits tracking (post-launch)

• Benefit owner reports progress
• IT + Business review together
• If not on track: Corrective action plan

Step 3: Benefits realization report (12-18 months post-launch)

• Final assessment: Did we achieve promised value?
• Lessons learned: What worked? What didn't?
• Accountability: Tie to performance reviews

Step 4: Portfolio value dashboard

• Track all projects: Investment vs. actual value delivered
• Identify patterns: Which projects deliver? Which don't?
• Improve future estimates and approvals

Result: Culture shift from "build it" to "realize value"

The Value-Based IT Governance Framework

Transform IT budgeting from cost center to value driver.

Component 1: Value-Based Budget Allocation

Categorize spending by value type:

Category 1: Growth (Revenue generation)

• Purpose: Increase revenue, expand markets, acquire customers
• Examples:
  • E-commerce platform enhancements
  • Digital marketing technology
  • Customer-facing applications
  • Sales enablement tools
• Target allocation: 25-35% of budget
• Measurement: Incremental revenue generated

Category 2: Efficiency (Cost reduction)

• Purpose: Reduce operating costs, improve productivity
• Examples:
  • Process automation (RPA, workflow tools)
  • Self-service portals
  • Infrastructure optimization
  • Legacy system retirement
• Target allocation: 20-30% of budget
• Measurement: Costs eliminated or avoided

Category 3: Risk/Compliance (Protection)

• Purpose: Reduce risk, meet regulatory requirements, ensure security
• Examples:
  • Security upgrades
  • Compliance systems (SOX, GDPR, HIPAA)
  • Disaster recovery
  • Audit tools
• Target allocation: 10-15% of budget
• Measurement: Risk reduced (quantified), fines avoided

Category 4: Strategic Enablement (Future options)

• Purpose: Build capabilities for future innovation
• Examples:
  • Data platforms (enable analytics/AI)
  • API infrastructure (enable ecosystem)
  • Cloud migration (enable scalability)
  • Architecture modernization
• Target allocation: 15-20% of budget
• Measurement: Future projects enabled, speed to market

Category 5: Baseline Operations (Run the business)

• Purpose: Maintain existing capabilities at current service levels
• Examples:
  • Infrastructure maintenance
  • Application support
  • Helpdesk operations
  • License renewals (no new capability)
• Target allocation: 20-30% of budget (reduce over time)
• Measurement: Maintain service levels at lower cost

Portfolio balance:

• Value-creating (Categories 1-4): 70-80% of budget
• Baseline operations (Category 5): 20-30% of budget

Strategic goal: Shift baseline operations down, value creation up

Component 2: Project Prioritization Framework

Score and rank projects objectively:

Scoring model:

Dimension 1: Business value (35% weight)

• Revenue impact: Incremental revenue generated (€ quantified)
• Cost reduction: Costs eliminated or avoided (€ quantified)
• Customer impact: NPS/CSAT improvement (% quantified)
• Scoring: 0-10 points based on value magnitude

Dimension 2: Strategic alignment (25% weight)

• Corporate strategy: How well aligns with company objectives?
• IT strategy: Fits technology roadmap?
• Competitive necessity: Required to compete?
• Scoring: 0-10 points based on alignment strength

Dimension 3: Risk/Compliance (20% weight)

• Regulatory requirement: Legally required?
• Security risk: Mitigates major threat?
• Operational risk: Prevents significant disruption?
• Scoring: 0-10 points based on risk severity

Dimension 4: Feasibility (20% weight)

• Technical complexity: How difficult to implement?
• Resource availability: Have necessary skills?
• Dependencies: Requires other projects?
• Time to value: How quickly delivers benefits?
• Scoring: 0-10 points (higher = easier/faster)

Total score calculation:

Total = (Business Value × 0.35) + (Strategic × 0.25) + (Risk × 0.20) + (Feasibility × 0.20)
Maximum score: 10 points

Cost-effectiveness ratio:

Value Score = Total Score / (Cost in €100K)
Example: Score 8.5, Cost €400K = 8.5 / 4 = 2.125

Prioritization:

1. Rank all projects by Value Score (highest first)
2. Fund projects in order until budget exhausted
3. Projects below funding line: Deferred or rejected

Portfolio optimization:

• Balance across categories (Growth, Efficiency, Risk, Strategic)
• Ensure quick wins (some low-cost, high-value projects)
• Include long-term investments (not just short-term ROI)

Component 3: Benefits Realization Management

Track value delivery, not just project completion:

Process:

Step 1: Benefits identification (project approval phase)

• Business owner defines specific benefits
• Quantify each benefit (€ value, % improvement, # customers)
• Document baseline (current state) and target (future state)
• Assign benefit owner (business stakeholder, not IT)

Example: CRM enhancement project

Total expected value: €10M over 24 months
Investment: €600K
Expected ROI: 1,567% over 3 years

Step 2: Benefits tracking (post-launch)

• Quarterly measurement against targets
• Benefit owner reports progress in business review
• If behind: Root cause analysis and corrective action
• If ahead: Document success factors for future projects

Step 3: Benefits realization report (12-24 months post-launch)

• Final assessment of value achieved
• Comparison: Expected vs. actual benefits
• Lessons learned
• Success celebration or accountability for shortfall

Example: CRM project results (24 months post-launch)

Total expected value: €10M
Total actual value: €9.1M (91% achievement)
Actual ROI: 1,417% (vs. 1,567% expected)

Outcome: Successful project, but opportunities to improve

Lessons learned:

• Pipeline growth exceeded expectations (successful sales adoption)
• Sales cycle reduction lower than expected (process changes not fully adopted)
• Action: Additional training and process enforcement
• Overall: Strong value realization, minor tuning needed

Component 4: IT Business Value Dashboard

Visualize IT value for executives:

Dashboard metrics:

Section 1: Portfolio health

• Total IT budget: €12M
• Value-creating spend: €8.4M (70%)
• Baseline operations: €3.6M (30%)
• Trend: Baseline decreasing (good)

Section 2: Value by category

• Growth investments: €3.2M → €12M incremental revenue (3.75x return)
• Efficiency investments: €2.8M → €4.2M cost reduction (1.5x return)
• Risk mitigation: €1.6M → €8M risk reduced (5x return)
• Strategic enablement: €2.4M → Enabled 8 future projects

Section 3: Project portfolio

• Active projects: 18
• On track: 14 (78%)
• At risk: 3 (17%)
• Red status: 1 (5%)
• Average project value score: 7.2/10

Section 4: Benefits realization

• Projects launched (last 12 months): 12
• Expected total value: €18M
• Actual value achieved: €15.3M (85% realization rate)
• Benefits on track: 9 projects (75%)
• Benefits at risk: 3 projects (25%)

Section 5: IT ROI

• Total IT investment: €12M
• Measurable value created: €24.2M
• Overall IT ROI: 202%
• Trend: Improving (last year 180%)

Dashboard benefits:

• CFO sees: IT creates 2x value vs. cost
• CIO sees: Where value is created, where to improve
• Board sees: IT is strategic investment, not cost center

Component 5: Technology Portfolio Rationalization

Reduce baseline operations cost to fund innovation:

Process:

Step 1: Application portfolio inventory

• List all applications (typically 200-600 apps)
• Categorize by: Business criticality, technical fitness, cost
• Discover: Often 30-40% of apps are zombies (rarely used)

Step 2: Portfolio assessment matrix

2x2 matrix: Business Value (high/low) × Technical Fitness (good/poor)

Quadrant 1: Invest (High value, Good tech)

• Action: Continue investing, enhance capabilities
• Example: Core CRM, ERP, E-commerce platform
• Budget: 40-50% of application budget

Quadrant 2: Migrate (High value, Poor tech)

• Action: Modernize or replace
• Example: Legacy billing system (critical but outdated)
• Budget: 30-40% of application budget

Quadrant 3: Tolerate (Low value, Good tech)

• Action: Maintain as-is, minimize investment
• Example: Internal tools, low-usage but functional
• Budget: 5-10% of application budget

Quadrant 4: Eliminate (Low value, Poor tech)

• Action: Decommission, migrate users to alternatives
• Example: Zombie apps, duplicate tools, unused licenses
• Budget: 0% (target for elimination)

Step 3: Rationalization execution

• Eliminate: Decommission 20-30% of portfolio (zombies, duplicates)
• Consolidate: Merge overlapping applications (6 collaboration tools → 2)
• Modernize: Upgrade or replace high-value legacy apps
• Result: Reduce baseline operations cost 30-40%

Example: Manufacturing company portfolio rationalization

Initial state:

• 487 applications
• Annual cost: €8.4M
• Zombies: 68 apps (<10 users each)
• Redundancy: 127 apps with functional overlap

Rationalization:

• Eliminated: 52 zombie apps (€980K savings)
• Consolidated: 34 redundant apps (€935K savings)
• Modernized: 8 legacy apps (€550K savings)

Final state:

• 245 applications (50% reduction)
• Annual cost: €4.9M (42% reduction)
• Savings: €3.5M annually
• Reinvested: €2.5M in innovation, €1M cost reduction

Real-World Example: Retail Company IT Value Transformation

In a previous role, I led IT value management transformation for a 2,800-employee retail company.

Initial State (Cost-Focused IT):

Budget:

• Total IT budget: €18.5M
• Run the business: €13.7M (74%)
• Change the business: €4.8M (26%)

Budget allocation (by cost type):

• Infrastructure: €6.2M
• Applications: €5.8M
• Personnel: €4.6M
• Services: €1.9M

Problems:

Problem 1: No value visibility

• Budget categorized by cost type (what we spend on)
• No visibility into value created (what we get)
• CFO frustrated: "What are we getting for €18.5M?"

Problem 2: Poor prioritization

• 42 project requests, 12 approved
• Approval criteria: Executive support, loudest voice, available budget
• No objective value scoring
• Questionable projects funded, valuable projects rejected

Problem 3: No benefits tracking

• Projects measured by delivery (on time, on budget)
• Business case forgotten after approval
• No accountability for value realization
• Unknown: Did projects deliver promised value?

Problem 4: Run budget growing

• Run budget: 70% → 72% → 74% (3-year trend)
• Change budget squeezed
• Innovation capacity decreasing

The Transformation (12-Month Program):

Phase 1: Value-based budget recategorization (Months 1-3)

Activity:

• Analyzed all IT spending
• Recategorized by value type (Growth, Efficiency, Risk, Strategic, Baseline)
• Identified waste and zombie applications

Findings:

• Growth: €2.4M (13%)
• Efficiency: €3.2M (17%)
• Risk/Compliance: €2.2M (12%)
• Strategic: €1.8M (10%)
• Baseline operations: €8.9M (48%)

Insight: 48% of budget maintains baseline, only 52% creates value

Phase 2: Application portfolio rationalization (Months 2-6)

Activity:

• Inventoried all 623 applications
• Assessed business value and technical fitness
• Identified elimination and consolidation opportunities

Findings:

• Zombie apps: 94 (€1.8M annual cost)
• Redundant apps: 187 (€2.4M overlap)
• Legacy modernization candidates: 28 (€3.2M annual cost)

Execution:

• Eliminated 67 zombie apps: €1.2M saved
• Consolidated 34 redundant apps: €980K saved
• Total savings: €2.18M annually

Phase 3: Project prioritization framework (Months 4-7)

Activity:

• Designed value-based scoring model
• Scored 42 project requests objectively
• Reprioritized portfolio

Results:

• Top 15 projects funded (vs. previous 12)
• 7 previously-funded projects defunded (low value scores)
• 10 previously-rejected projects funded (high value scores)
• Portfolio average score: 5.8 → 7.6 (31% improvement)

Phase 4: Benefits realization process (Months 5-12)

Activity:

• Created benefits register for all active projects (18 projects)
• Assigned benefit owners (business stakeholders)
• Implemented quarterly benefits tracking
• Conducted benefits realization reviews

Results:

• 18 projects with documented benefits
• 14 projects on track (78%)
• 3 projects at risk (corrective action taken)
• 1 project killed (benefits unachievable, reallocated €400K)

Phase 5: Value dashboard and governance (Months 8-12)

Activity:

• Built IT business value dashboard (Tableau)
• Quarterly business review with CFO/CEO
• Transparent reporting on value created

Results After 12 Months:

Budget reallocation:

• Total IT budget: €17.8M (€700K reduction)
• Value-creating spend: €12.6M (71%, up from 52%)
• Baseline operations: €5.2M (29%, down from 48%)
• Run/Change ratio: 74/26 → 58/42 (massive improvement)

Value created:

• Growth investments: €3.8M → €14.2M incremental revenue (374% ROI)
• Efficiency investments: €4.2M → €6.8M cost reduction (162% ROI)
• Risk mitigation: €2.6M → €12M risk reduced (462% ROI)
• Strategic enablement: €2.0M → Enabled 12 future projects
• Total measurable value: €33M
• Overall IT ROI: 185% (vs. unknown previously)

Portfolio improvements:

• Active projects: 18 (all high-value)
• Project success rate: 78% (vs. 55% previously)
• Benefits realization rate: 87% (vs. unknown previously)
• Average project value score: 7.6/10 (vs. 5.8)

Cost optimization:

• Application portfolio: 623 → 428 apps (31% reduction)
• Annual cost reduction: €2.18M
• Savings reinvested: €1.5M innovation, €680K cost reduction

Business impact examples:

Example 1: E-commerce mobile app

• Investment: €320K
• Expected value: €2.8M incremental mobile revenue (Year 1)
• Actual value: €3.6M (129% achievement)
• ROI: 1,125% (1 year)

Example 2: Warehouse automation

• Investment: €580K
• Expected value: €1.2M labor savings
• Actual value: €1.4M (117% achievement)
• ROI: 241% (1 year)

Example 3: Customer self-service portal

• Investment: €240K
• Expected value: €800K support cost reduction
• Actual value: €920K (115% achievement)
• ROI: 383% (1 year)

CFO satisfaction:

• Before: "I don't know what we're getting for €18M"
• After: "IT created €33M value from €18M investment, 185% ROI. I understand exactly where value comes from."

ROI:

• Total investment: €480K (program cost)
• Annual value: €2.18M (cost reduction) + €10M (better project outcomes)
• Conservative annual value: €5M
• Payback: 1.2 months
• 3-year ROI: 3,025%

CIO reflection: "The value-based governance transformation fundamentally changed how the business perceives IT. We went from 'cost center that spends €18M' to 'strategic investment that creates €33M value.' The visibility into value created, combined with disciplined portfolio management and benefits tracking, allowed us to shift from 74% run/26% change to 58% run/42% change—dramatically increasing innovation capacity. The CFO now champions IT investment rather than questioning every dollar. Most importantly, we're funding the right projects and delivering promised value, building trust and credibility."

Your IT Value Governance Action Plan

Transform from cost-focused to value-driven IT.

Quick Wins (This Week)

Action 1: Recategorize current budget by value (4-6 hours)

• Take current IT budget
• Categorize each line item: Growth, Efficiency, Risk, Strategic, Baseline
• Calculate % in each category
• Expected outcome: Baseline metrics (likely 60-75% baseline, opportunity identified)

Action 2: Identify zombie applications (3-4 hours)

• List all applications
• Usage data: Active users, frequency
• Cost: Annual license + maintenance
• Identify zombies (<10 users or <monthly usage)
• Expected outcome: €500K-2M savings opportunity

Action 3: Benefits realization audit (4-5 hours)

• Review last 5 projects launched
• Find business cases (promised benefits)
• Ask: Did we achieve them? How do we know?
• Expected outcome: Gaps identified in benefits tracking

Near-Term (Next 90 Days)

Action 1: Value-based project prioritization (Weeks 1-6)

• Design scoring model (Business value, Strategic, Risk, Feasibility)
• Score all active and proposed projects
• Reprioritize portfolio by value score
• Kill or defer low-value projects
• Resource needs: €40-70K (framework design + facilitation)
• Success metric: Portfolio average score increases 20%+

Action 2: Application portfolio rationalization (Weeks 4-12)

• Complete application inventory
• Assess business value and technical fitness
• Identify elimination and consolidation candidates
• Execute quick wins (zombie decommissioning)
• Resource needs: €80-150K (assessment + decommissioning)
• Success metric: 20-30% application reduction, €800K-2M savings

Action 3: Benefits realization process (Weeks 6-12)

• Create benefits register template
• Document benefits for all active projects
• Assign benefit owners (business stakeholders)
• Implement quarterly tracking cadence
• Resource needs: €50-90K (process design + training + tooling)
• Success metric: 100% of projects with documented, tracked benefits

Strategic (12-18 Months)

Action 1: Value-based budget transformation (Months 3-12)

• Shift budget allocation from cost type to value type
• Target: 60-70% value-creating, 30-40% baseline operations
• Continuous portfolio optimization
• Investment level: €150-300K (transformation program + governance)
• Business impact: 40-50% increase in innovation capacity

Action 2: IT business value dashboard (Months 6-15)

• Build executive dashboard showing IT value creation
• Integrate with financial systems and project management
• Quarterly business review with CFO/CEO
• Investment level: €100-200K (dashboard + data integration + reporting)
• Business impact: Transparent value visibility, IT seen as strategic

Action 3: Benefits-driven culture (Months 1-18, ongoing)

• Tie performance reviews to value realization (not just delivery)
• Celebrate benefit achievements (not just project launches)
• Share success stories across organization
• Investment level: €50-100K (culture change + communication + training)
• Business impact: Sustained focus on value, not just activity

Total Investment: €470-910K over 18 months
Annual Value: €3-8M (cost reduction + better project outcomes + innovation capacity)
ROI: 600-1600% over 3 years

Take the Next Step

75% of IT budgets fund operations that deliver no measurable business value. Value-based IT governance reallocates spending from waste to innovation, improving ROI from 15% to 280%.

I help organizations transform IT from cost center to value driver through value-based budgeting, portfolio prioritization, and benefits realization. The typical engagement includes current state assessment, value-based budget recategorization, project portfolio optimization, and benefits tracking implementation. Organizations typically shift run/change ratio from 70/30 to 55/45 within 12 months with strong ROI.

Book a 30-minute IT value governance consultation to discuss your budgeting challenges. We'll assess your current value creation, identify quick wins, and design a value-based governance roadmap.

Alternatively, download the IT Value Governance Assessment with frameworks for budget categorization, project scoring, and benefits realization.

Your CFO is asking "What are we getting for €12M?" and you're struggling to answer. Implement value-based governance before the next budget cut eliminates innovation capacity entirely.