Demonstrating IT Value

The last year or so has been difficult and somewhat paradoxical year for IT executives: the very worth of IT has been in question yet demand for IT services continued to increase; budgets have been tight but emphasis on new technologies (security for example) is ongoing; the importance of the CIO’s role has often been challenged yet strategic and operational dependence on IT continue to increase. Although many of these challenges will no doubt continue into 2004 (and probably beyond) they cannot be allowed to have a negative effect on the CIO’s real priorities: selecting the most appropriate projects, getting the requirements right, and then delivering on time and on budget. IDC suggests that the following areas will require unbroken attention through 2004:

Leadership and Accountability. Around the world, IT and business executives are required to work together to resolve the complex issues associated with leadership and accountability in the context of a tangled web of regulations, ethics, corporate policies, deadlines penalties and compliance.

Responsibilities and Roles. Today’s successful IT executive is an excellent negotiator, resolving internal conflicts, managing external relationships, and bringing internal and external customers and suppliers together; knowing which relationships are strategic and which are tactical is an important element of keeping this complex in balance.

Management Processes. Organizations still need sophisticated management processes if they are to meet financial targets, manage day-to-day operations and service customers.

Operational Excellence. There appears to be less money to spend, fewer people on staff, less time to do everything – this means that IT and business executives must work together to eliminate redundant and repetitious processes.

It is important for CIOs to look back and capitalize on the lessons learned, particularly those that are fresh in their minds. Suppliers of IT and IT-related services also need to pay attention, as Frank Gens pointed out in IDC’s Predictions for 2004, it will be important, albeit difficult, for them to put on the “business face” that is required in order to develop deep and lasting relationships with customers.

As suppliers, consumers and users of IT we have faced the following issues and, in some instances, have conquered them:

• The need for IT to become much better at anticipating the business future
• The potential for delivering IT services using a utility model
• The ups and downs of outsourcing contracts
• The need to develop a new type of IT/business professional
• IT as an enabler for public sector organizations
• Mitigating risk in large, complex IT initiatives
• Using tools and techniques such as ITIL
• The CIO’s role as a business influencer
• Linking global strategy and IT value
• The extended enterprise
• Changing from a product focused organization to a customer focused organization
• Service level agreements
• What the services organizations think about IT/business alignment.

It is worthwhile to reflect on what contributed the most to making the issues work for us. In many cases it is the excellent relationships formed between suppliers and buyers of IT; in others it is the continued partnership between IT and business; and in most it is a combination of both. Building and maintaining interactions between and amongst such disparate individuals and groups takes commitment and time. It also requires a foundation of honesty and trust.

IDC’s research indicates that organizations that are successfully leveraging the investments made in IT are the same ones with senior IT executives that are committed to developing and sustaining internal and external relationships. In some instances a key role of the CIO is that of an ambassador – the key spokesperson for IT both inside and outside the organization. A CIO who is perceived by his or her peers (both IT and non-IT executives) to be a leader in the business community will, by default, send the message that IT is a key component of the organization’s business success and that he or she is a significant contributor.

In much the same way, the power wielded by sales executives who represent IT suppliers is much improved as they increase their sphere of influence in the business community. But this means they have to be able to speak the language. In several recent conversations with suppliers, when they were asked to explain the business context in which the product they were promoting best performed there was a silence and then an explanation of the technology’s technical capabilities. This isn’t good enough any more, business people want to hear how the technology will help them succeed in business terminology.

As we move towards the second quarter of 2004, along with the issues that remain from previous years there are others that both buyer and seller will need to think about. Developing strategies, policies and procedures in the following areas will guide and drive our efforts to leverage further investment in IT. It is important for these issues to be understood and, more importantly, their relationship with making best use of existing and new technologies:

• Building an IT organization for tomorrow
• Dealing with regulatory and legislative compliance issues
• Balancing the IT budget
• Spreading IT goodwill – the CIO as ambassador
• Goal-driven performance measurement
• Strategic sourcing management
• IT asset management
• Managing IT-enabled transformation
• Managing human capital as a strategic asset
• Doing more with less – managing IT’s tangibleand intangible assets
• When and how to benchmark IT
• Linking planning with action in the day-to-day management of IT
• Getting the requirements right

These issues are discrete but very much inter-related. Understanding the interdependencies and their implications is very important to deciding on a successful implementation approach and equally important in developing a balanced approach to performance measurement. It is just this issue of interdependence that has proven to be the biggest barrier to successfully identifying appropriate goals and targets and also to assigning appropriate accountabilities. Suppliers and buyers both have a vested interest in developing a solution to this problem. Without one, it will be difficult for an organization to demonstrate and reward success and, worst case, organizations will reward failure. To put something as complex into a digestible format, IDC suggests that buyers and suppliers pursue the use of practical and logical frameworks to develop the structure and consistency fundamental to deriving value from IT.