Taking into account the corporate impact and dynamics of ICT, investment proposals in ICT should be considered with appropriate care, diligence and soundness. Concerns of the board and management often arise not from the size of the investment per se but from issues that stem mainly from the degree of confidence that can be attached to, for example: the suitability of the recommended technology vis-à-vis the needs of the institution and its strategic plan; delivery of the promised capacities and services; anticipation of the impact on and interaction with existing ICT platforms; and any hidden and indirect costs attached to complementary or maintenance products and services.
Social security institutions have to face the challenges of managing investments in ICT-related elements, which consist of a complex mix of hardware, software licences, software applications and services. This includes not only the acquisition of the elements (“one-time” investment) but also periodic (e.g. annual) payments corresponding to software licence renewal, technical support services and contracts on ICT services in general. To address these issues, a total life-cycle costs model for ICT products and services should be thorough applied in the institution as recommended in the ISSA Guidelines on Good Governance.
All these ICT elements (hardware, software, services) provide the means to achieve the institution’s mission and specific goals. Therefore, decision-making on the opportunity provided by ICT investment must take into account the expected return on investment (ROI) as well as cost–benefit ratios.
In order to better manage the return on investment and cost–benefit of ICT investments, the “value of the expected results” of ICT-based activities involving investment has to be analysed and defined.
This section begins with definition of the concept of value for the main ICT-based activities and identification of approaches to optimize its realization. The concept of value aims to measure the importance of (i.e. assign a value to) the outputs to be achieved by the institution through ICT-based activities. When these results are quantitative (e.g. number of persons, number of employers, number of transactions, amounts to be collected or paid), defining the value is relatively straightforward. However, value may also refer to achieving public policy outcomes, improvement in the quality of services provided to those whom the organization exists to serve, managing risks, and complying with legislation and regulations. While the concept of value relates to achievement of the institution’s strategic plans with the resources used to do so, value delivery concerns executing the value proposition throughout the delivery cycle, ensuring that ICT-based activities deliver the promised benefits against the strategy, concentrating on optimizing costs and proving the intrinsic value of the ICT elements (hardware, software, services).
The aim of ICT-related value management is to optimize value and enable an organization to:
- Clearly define and communicate its view of what constitutes value, and to whom;
- Select and execute investments;
- Manage its assets and optimize value with the affordable use of resources and an acceptable level of risk.
Other important characteristics of the ICT elements in which institutions invest are their diversity, interrelationships and life cycle features. In order to deal with them as consistently as possible, the overall set of ICT elements can be managed as a portfolio of enablers of ICT-based social security services. Thus, an ICT portfolio can be defined as the overall “objects of interest” (hardware and software, ICT services, ICT projects, other ICT assets or resources) managed and monitored to optimize business value. For social security institutions, managing the ICT portfolio in a systematic way is crucial to achieving the expected return on investment for ICT-related investments and to satisfy cost–benefit relationships. Therefore, these guidelines recommend managing ICT investments by applying a portfolio-based approach and following a total life-cycle costs model. Managing ICT investments, through procurements and contracts, constitute challenges by themselves.
Finally, but no less importantly, managing ICT investments involves permanent monitoring and evaluation of results. These guidelines recommend doing this at different levels: monitoring and evaluating the overall value of the ICT-enabled activities, the ICT-portfolio performance and the specific outcomes of ICT-based activities based on the institutional total life-cycle costs model.