Becoming the CIO – The Convergence of I.T. Strategy and Business Value Propositions

Show me the money value.

A fundamental business enabler for any business is their I.T. department. A business sponsor/stakeholder frequently approaches the I.T. decision makers and asks what value their I.T. team is providing to them. They have the obligation to do this because they need to maximize the return of the firm and make sure the services that are being provided to them are competitive and offer value to the business. In addition, they control the money and have the authority to spend it as they choose. If businesses are in business to create value and wealth for their customers, it’s only fair that we treat internal business units the same. You need to show them the value that your team provides, and they will pay the price that is required to capture that value.

Some questions business leaders ask are:

1. Why does everything take so long and cost so much?
2. Why are there so many changes to the environment?
3. Am I getting enough value for the services you provide to the business?
4. Are your services competitive enough or am I better served by consulting/out-sourced firms?
5. How are you measuring the value that your team creates?

These are valid questions that all I.T. executives better have the answers to. However, I want you to focus on the last question above as that is what things boil down to : demonstrating the value that your services provide to the business by measuring them quantitatively and then educating the business sponsors for their complete understanding. It will then be a business decision to determine if real value is being created based on their subjective theory of value derived by the numbers provided to them.

Strategic business people will want detailed metrics of how the I.T. team offers value to their business operations. Sometimes explicitly publishing a document in your organization to display your value can bode well for I.T. measurement. This removes the negative connotation that I.T. is about spending money and reducing costs. If people realize the value that I.T. creates, they will most likely look to involve I.T. earlier in initiatives for their expertise.

In this article, I outline the metrics that an I.T. shop should show to the business groups to demonstrate the value they bring to the organization:

Top 5 Measurements of I.T. value

1. Delivery. Are your projects delivered on time? How long does an average project span? In a time line driven world where pressure is very high to push quality products out the door, your team must be able to meet the delivery dates that you commit to.  Business cases can be invalidated if projects take too long to bring to market. Not delivering a project on time allows your counterparts to lose faith in your ability to execute.  In addition, projects that span larger than a year have a higher probability of being over budget. Try scoping out projects that are smaller in size with multiple releases. The benefits to this is accurately projecting costs, reducing risk of failure, and decreasing time to market(You don’t need all the bells and whistles on the first release).

• Value Indicator #1: Demonstrate that you can deliver on-time, within budget and establish a track record.

2. Competing I.T. Service Firms – Value is in the eye of the beholder. The value that the I.T. shop claims to be adding to the organization must be captured by the price that is being paid for the labour.  Can you prove that the work, experience  and deliverables that the in-house group provides adds better value in comparison to a competing  outsource group?

• Value Indicator #2: Demonstrate that your shop is the best damn shop in relation to the market and that the business can maximize their value by partnering with the internal I.T. team.

3. Strategy and Roadmap. There are two ways to look at roadmaps: one from a business perspective and the other from an I.T. perspective. The ideal situation is to have these two strategies aligned. Easy? Not in your wildest dreams. In I.T., you have to build systems to be extensible, manageable, and general enough to apply to multiple customer segments etc. Business leaders care about their own business not anyone elses. This is because they are measured on the performance of their business outcomes. However, the I.T. group has to partner with multiple business units to develop solutions that meet their needs. So imagine the I.T. group trying to attempt to please all these business units and not making one a priority over the other. It is definitely something that requires a lot of planning and understanding of each business to plan a long-term roadmap.

• Value Indicator #3: Demonstrate that your I.T. roadmap aligns with business objectives for the long run.

4.Disruption of Service & Business Continuity – If the business doesn’t have to worry about I.T. downtime,  service availability and degradation, it will allow them to focus on what they do best:  running their business. Business continuity is an important concept to the overall health of the company and success.  It has  direct impacts to client experience.

• Value Indicator #4: Demonstrate the system up-time, service availability and degradation and  how it impacts their business clients.

5. Innovation, Collaboration and Creative Thinking – How many new ideas/ concepts does the I.T. group bring forward? Your organization shouldn’t be a taker of projects and demands rather you should view yourself as a partner. You should never think that you are a silo of different groups, rather team members with certain expertise. Leveraging peoples expertise in specific domains and applying them to solve multiple business problems is more productive than having each group solve their own problems. It is the collaboration between I.T., Finance, and Business Units that make technology companies successful.

• Value Indicator #5: Use collaboration to drive innovation

Conclusion

In many companies, I.T. shops are viewed as cost units with the goal of maximizing operational efficiencies and driving costs down. However, there is a limit to which costs can be minimized. The business opportunity for businesses to leverage their I.T. groups is the areas where I.T. can create value for their counterparts. Creating value has infinite opportunity.

However, demonstrating value to business sponsors is no easy task. Even within the company, it is hard to  measure value as different business units measure success differently. However, the five measurements outlined above will give you a good starting point to demonstrate to your business partners that you are providing a valuable service. As a corollary, it also gives you a good measurement if you are not providing enough value so you can look for ways for your firm to correct the problem areas.