“Value” — The New Measurement for IT Success

Doug Reeder

As we have discussed here previously, a number of major trends—consumerization of IT, the Cloud, social media and mobility—will continue to disrupt IT organizations for many years to come.

As technology becomes simpler to use and more democratized, organizations recognize they no longer need the priests in the temple of IT, at least to the extent they did in the past. End users and business units now handle much of what once required the scarce talents and knowledge of computer scientists. Shared services organizations and third-party outsourcers are taking on more of the management of the specialized functions that traditionally have been the sole domain of IT. If we play this trend out over time, enterprise IT organizations will find themselves left with a smaller scope of responsibilities with fewer things to do. However, that doesn’t mean they will be any less pressed to create value. Success in this brave new world will require being selective in what responsibilities they retain and careful in how they coordinate and manage the entities that will inherit those traditional IT functions. This evolution will leave CIOs and IT leaders in a position to focus on those areas where they can support the business strategy and bring innovative and differentiating ideas to achieve greater value.

The innovation gap

We see this trend in research we conducted with the Economist Intelligence Unit. We surveyed CEOs from leading companies and found that of the 37% of respondents who say their CIO is actively involved in setting business strategy, nearly half (47%) describe their company’s financial performance as superior to their industry peers. However, a recent survey conducted by Avanade indicates that 79 percent of C-level executives believe they can make technology decisions better and faster than IT staff. The survey also found that fewer than one in four executives say IT staff proactively suggests new technology solutions on a regular basis. This reveals a huge disparity between what IT organizations think they can offer, and what they can actually deliver when it comes to value and innovation. A common reason given to explain why IT struggles to deliver innovation is the ongoing lack of skilled labor. Historically, many organizations have struggled to find and engage the appropriate talent. Despite an apparent “new normal” of high unemployment, organizations continue to import skilled labor to fulfill their needs. Finding the right talent to help the organization create business value is certainly an issue, and leading edge organizations are experimenting with new approaches and models to engage labor differently.

Turning technology into value

But beyond solving the labor issue, bringing the level of value that business leaders want will require a conscious shift in IT leadership, and not just by the CIO—the entire IT leadership team must start thinking differently. They need to understand business better, and to shift their focus away from bits and bytes. They need to connect what they do to what customers want, what the business needs, and how IT can facilitate new value creation in a proactive way. IT should focus on enabling revenue and meriting a seat at the investment table, rather than being reactionary and a barrier to the business. The latter certainly makes it easier to have the IT budget slashed because it is seen as a cost center. “Strive not be a success, but rather to be of value.” Albert Einstein This really constitutes a major evolution in how IT brings value. But more importantly, it represents a necessary reappraisal of what is recognized as providing value. Albert Einstein once said, “Strive not be a success, but rather to be of value.” In Einstein’s mind, he saw the importance of value over accolades — because success is something you realize, while value is what others recognize. In the same way, IT can move from a technical mindset to a business mindset, where the celebration of traditional “uptime” metrics and “on-time delivery” of IT projects gives way to measuring real value. This means enabling things that ultimately add value, like a better customer experience, competitive differentiation of products and services, and increased revenue, margins and market share.

Questions to Consider

  1. Are you seeing a shift of focus in your IT organization towards business outcomes rather than technical and uptime metrics?
  2. Does your organization have a clear way of measuring value delivered to both internal and external customers?

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