By Mark Tonnesen
Associate
If you're a CIO you've probably heard the question before, usually asked by your company's CEO, finance executives or operations leaders: "What's the value of IT?" And chances are the people asking this question have expected a metrics-based answer involving a close look at the percentage of revenue spent on technology, the number of projects delivered, the percentage of on-time and on-budget deliveries, etc.
Stop Asking the Wrong Question
As far as I'm concerned, though, "what's the value of IT" is the wrong question to ask and the wrong way to look at IT's true value. Here's why.
IT today is a key part of a company's new product and service plan. But often times, the IT function is one of enablement. IT delivers value through others. Which means that the real value of IT is a function of the innovations that it helps the business deliver. IT enables new capabilities, new products and new services. It allows the business to do things better, faster, cheaper. It makes a significant contribution to the bottom line. But it does so indirectly.
For example, most companies today are working on creating a digital/mobile strategy. There are specific business reasons why doing this makes sense. But to make the shift to digital or mobile happen, there are key IT services or capabilities that need to be put in place. In this situation, IT's role is to enable the company to pursue the digital/mobile strategy.
Yes, you still need to have metrics. I absolutely believe that you need to have good fundamental measures of business outcomes for the money you invest. But focusing on the IT metrics alone, such as the number of projects delivered, is simply the wrong approach. What's important is the metrics relating to the outcomes that all of those delivered projects produced.
Start Looking at Business / IT Alignment
IT value realization lies in business / IT strategic alignment, and the recognition of this alignment. To move away from the "what's the value of IT" line of questions you need to turn things around and ask some high-level questions of the organization, such as:
- How is the business strategically leveraging technology to make the company more efficient and profitable?
- In what ways is technology fueling the organization's new products and capabilities and making it competitive?
IT can help the organization take advantages of the capabilities that are out there in the market, and it can be a huge aid in innovation. In fact, if innovation is a part of the thinking and how your organization evaluates alternatives and strategies, what tech can bring can be a real game changer. And that's value!
Engage Tech Leaders in Strategic Decision Making
So how do you get to the point where all of the executives in your organization start looking at things from this new point of view? How do you enable business / IT alignment? It starts with where the technology organization sits within the company. I don't mean this so much from the structural standpoint; it's really more of a mindset.
When strategic decisions are being made for the organization as a whole, is there a technology leader who is involved? Quite often what I've seen happen is that an organization decides to pursue a particular strategy and no one thinks to ask how technology might fit in. They'll consult with marketing, operations, finance or sales to figure out how to implement the strategy, without realizing the significant impact that IT can have. They're missing out on that game changing potential, and they're not realizing IT's value.
To remedy this, your organization needs to have a technology leader who is willing to get out of his or her chair and engage in the conversation. You need a culture (which is largely driven by the CEO) that allows this leader to ask the questions and lead those conversations about what technology can offer, how it can help in delivering better, faster, cheaper and maybe even completely different services that had not been thought about before.
From the highest levels of the company to each of the divisions, functions or geographies, the tech function needs to be a part of the strategic conversations. Once this happens, it will become clear that the best way to evaluate and realize the value of IT is to focus on all of the things that IT does to support the enterprise's success.
About Mark Tonnesen
As an experienced business and technology leader, Mark has proven that he can take on large-scale business and technology transformation challenges. Most recently, his success in driving business by scaling consumer-facing 24x7 services has made his expertise strategically important to two different businesses.
Mark's 25+ years of experience developing and implementing business and IT strategies has focused on driven top-line growth while optimizing both operational expenditure and gross margins. Mark is known for delivering quality results, even under difficult market conditions.
About CIO Professional Services
CIO Professional Services LLC is a top-rated IT (Information Technology) consulting firm, based in the San Francisco Bay Area, specializing in strategic IT consulting and business / IT alignment. Companies come to us seeking assistance with their information technology strategy as well as to source interim CIO / CTO employees or fractional CIO / CTOs.
