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Scott Alan Miller :: A Life Online

Overview of Measurable Organizational Value (MOV)

January 22nd, 2008 by Scott Alan Miller

Measurable Organizational Value or MOV is a term coined by Jack Marchewka as an alternative tool to the more popular Return on Investment or ROI concept which has become a buzzword within the industry over the last ten years and has existed for many more. Marchewka defines measurable organizational value as being “the project’s overall goal and measure of success.”

Marchewka further breaks down the term MOV and says that it must implicitly include the following: be measurable, provide value to the organization, be agreed upon and be verifiable. Let’s look at each of these.

Measurability is obvious yet extremely difficult. Many benefits of IT projects are “soft” and inherently unmeasurable. For example, a project that makes employees more happy cannot be measured as it is never possible to determine how much happiness is the result of any one project and how much other organizational efficiencies can be attributed to employee happiness and morale. And yet we almost all agree that happy employees work better, are more loyal, cost less and interact better with each other.

The idea behind measurability is that no project decisions should be made without a consideration towards how they will affect the project’s MOV. If a new feature is being considered, for example, then that feature should be compared against the MOV. If the feature will not increase the MOV then it should not be included. A relatively straightforward concept, but it basically states that only measurable value should be considered. This is not always intuitive.

Project Management by MOV should provide value to the organization. This is the underpinning of the MOV concept and is analogous to the concept of ROI. ROI, however, is a measurement of the difference between expenditure and the expect value to the organization. MOV does not seem to take into account the cost of its own provisioning and only looks and the measurable business value after project completion while ROI takes into account the cost of providing the MOV as well as having the potential to consider the non-measurable organizational value which may be the driving force or a project.

A project MOV must be agreed upon. Marchewka states that all project stakeholders should agree upon the MOV of a project before the project starts. This requirement includes making business stakeholders as well as technology stakeholders, such as analysts and developers, agree to the MOV before a project begins as a later measurement of project success. This is a difficult task as it is in one group of stakeholders’ interest to make the MOV high while it is in the interest of the technology stakeholders to make it low. This is especially difficult as it benefits the business side to trick or take advantage of the lack of business acumen from the technology side and requires the technologist to allow themselves to be judges of something that they neither understand nor ultimately control.

Verifiability of the MOV is key. Since the project’s MOV is measurable by definition it must then be verifiable. After the project has been completed the MOV is to be verified to determine if the project was successful or if it was not. However, Marchewka does not seem to address the issues of ongoing organizational value. A typical IT project will deliver negative value up front and will increase in value over time and then, eventually, decrease in value until it is replaced. True MOV would not be verifiable until the end of its lifespan.

For example, since code from IBM’s System/360 project from 1964 is still widely in use one would assume that IBM has not yet been able to determine the final MOV for that project. If their initial estimates had been extremely accurate and had taken into account a lifespan that might even top fifty years then the MOV would not yet be able to be verified as having quite reached its full value. Therefore a useful MOV is one that takes into account an acceptable lifespan of measurement but this introduces many more factors.

Posted in Essays, Tech