4 Steps to Proving the Value of IT to Business

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David Vidoni wants to make sure all employees at his company know “how IT can transform business.”

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Vidoni, vice president of IT at tech company Pegasystems, gets the word out using a variety of channels, from reports on metrics to easily accessible dashboards.

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They also launched a quarterly newsletter that, in addition to sharing tech tips, displays information about available technology tools and new initiatives – showing how IT is improving company operations.

“It’s about making sure there’s universal awareness of the work we’re doing, how IT affects individual employees and departments, and how IT helps us work better as a company. ,” says Vidoni.

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“It’s another level of engagement, putting IT stories in context and making them available to all employees in a way that’s meaningful to them,” he says. “We want this newsletter to bring more visibility into what we are doing, how IT helps the business and how IT aligns with us. [corporate] strategy. It helps to raise awareness of the value we are providing them.”

Vidoni’s actions pose a long-standing challenge for CIOs: how to effectively demonstrate the value of IT.

And this is a broad issue. Research firm Gartner found that 63% of surveyed CIOs struggle to communicate the value of IT; 14% of them said that they rarely succeeded in this task.

Similarly, Info-Tech Research Group’s CEO-CIO Alignment Diagnostic Survey found that 80% of CIOs and CEOs experience frustration with IT’s failure to deliver value, even among C-suite IT leaders. To provide profit as the most important goal.

Vidoni says a newsletter helps him avoid being a part of such statistics, noting that while that approach is working for him, other strategies may prove equally effective for CIOs.

In fact, researchers, CIO consultants and experienced IT executives say that a multi-pronged strategy is needed for CIOs to demonstrate the business value of IT and to demonstrate how positively IT affects business outcomes.

“CIOs are figuring out what’s really worth, they’re constantly tracking it and they’re connecting directly to improvements to various initiatives and actions, and they’re saying, ‘Here’s the numbers to prove it. ,” says Ross Armstrong, principal research director of the Info-Tech Research Group.

Here are some steps IT leaders can take to ensure that IT gets the business credentials it deserves.

First, ensure business-IT alignment

Many experts say that CIOs who want to more effectively communicate how IT brings value to the business must first actually deliver that value.

“Delivering value is more powerful than not talking about it,” says Andy Sealock, senior partner at consulting firm West Monroe.

However, it remains a challenge for many. For example, the Info-Tech Research Group has found that two-thirds of CIOs are misaligned with their CEOs when it comes to targeted roles for IT.

“The role of an IT leader is not to provide technology, but to enable the delivery of business value and benefits through technology,” says Armstrong. “So the challenge for the CIO is to understand what the business really needs when it says, ‘You need to deliver value.'”

The CIO has been getting this message for some time, says Armstrong, but many people haven’t lived it up yet. He points to info-tech data that shows that only 25% of business leaders in struggling IT organizations believe that IT has an effective understanding of business goals, compared to 72% of leaders in expanding and transforming organizations. Believes that understands IT goals effectively.

Larry Wolfe, who as founder and CEO of consulting firm Wolfe Strategy Partners has long focused on the “IT value journey,” says CIOs who want to leap into that latter category of transformational IT departments, they should first This should be done by building credibility. Earning the trust and respect of and among your business-unit associates.

This means delivering the fundamentals flawlessly, identifying opportunities to grow business operations, and developing programs that replace them.

“If you’re all [the] To Maintain it [category], then you are not providing value. So promote it by increasing IT services – for example, by providing better services at lower cost or by upgrading software and infrastructure. And then partner with business leaders to build transformational projects that will keep the dollar up or down the line,” Wolff says. “IT will always be doing some maintenance and enhancement but hopefully some level of change as well. So what you’re talking about here is a shift in balance, where you’re able to continually make more changes in which Has a positive ROI.”

Deliver business results, not IT projects

Bobby Cameron, vice president and principal analyst at research firm Forrester, says most organizations still talk about funding IT projects. He recommends funding specific business results instead.

However, CIOs and their IT teams “need to plan, manage, and report from a business standpoint,” Cameron explains. And it also requires business function leaders to stick to the initiative and stay afloat.

Cameron says this approach means executives — including CIOs — must recognize and clarify how the technology actually supports a business purpose. This in turn helps everyone involved understand the purpose of the technology, and it allows everyone to identify if and how much of the effort was successful.

He cites the case of a CIO at a B-to-B property casualty company who unsuccessfully lobbied for money to upgrade its technology stack to increase flexibility and speed. The CEO declined the request because he felt the legacy technology was still in the works. But the CIO got the approval of the CEO and the backing of the executive suite when he shifted the focus of the project, saying it was designed to support sales and marketing objectives that could improve revenue and profitability.

Thomas Phelps, CIO and senior vice president of corporate strategy at software maker Laserfetch, has a similar view.

“Where CIOs may struggle is communicating how a new digital initiative creates business value that resonates with the C-suite and across the board,” he says. “Similar to a Shark Tank pitch, put yourself in the shoes of an investors and speak in the language the C-suite will respond to. Be prepared to explain — and with the right set of visuals and compelling storytelling — in a few minutes. How a digital initiative can increase revenue, reduce costs, reduce risk or otherwise achieve desired business results,” he says, adding that even something as technical as a containerization initiative , which typically does not garner interest in the C-suite, could gain traction when it is positioned as a key to a specific business outcome such as cost reduction.

Identify IT metrics that demonstrate business success

IT has traditionally used metrics that measure how well a technology performs but does little to show how well it supports business results, so Cameron and others advise CIOs that Find more business-oriented ways to determine how technology delivers.

Cameron says he believes objective and key results (OKRs) are effective in demonstrating how technology delivers business results.

Benjamin Rehberg, managing director of Boston Consulting Group and leader of its technology leverage practice in North America, also supports the use of OKRs.

Rehberg explains that OKRs describe what CIOs are trying to do and enable them to measure whether IT achieved its goals, by how much, and the impact of those achievements. For example, an objective might be to reduce the time required to run a transaction by a certain percentage, with OKRs showing how close IT came to hitting or exceeding the target and what its performance is worth.

Mark Taylor, CEO of the Society for Information Management (SIM), a professional association for CIOs and IT leaders, says return on investment (ROI) and other financial measures of a technology initiative’s success — such as how much it drives revenue, profitability Increasing, or decreasing costs – is just the beginning.

He says CIOs can and should now determine how technology initiatives affect other business functions – for example, how quickly it accelerates closing a deal and how much additional “stickiness” it adds to customer relationships. “Produces. Taylor says CIOs can also use business-outcome metrics such as days sales outstanding (DSO) to show the value of back-end technology such as enterprise resource planning (ERP) systems.

“Those are all measurements that can affect technology, and it’s up to the tech leader to know them,” Taylor says, noting that systems today actually provide CIOs and business-unit heads with a more exhaustive list of metrics. Enables the collection of data for “You have to demonstrate the value of IT in a measurable way, and technology will help you measure some of the things we’re talking about.”

Salesforce CIO Juan Perez also believes that it is important to identify and use the metrics that determine the successful impact of IT on business objectives.

“The rationale for IT investments should be closely aligned with business objectives, and IT strategies should be aligned with business strategies to maximize return on such investments,” he says. “For CIOs, it is important that both IT and business professionals agree on the metrics that define a successful investment and work together to jointly and monitor results.”

As an example, he points to business interest in using automation to reduce low-value manual tasks so that workers can spend more time on customer-focused activities that drive growth and revenue. So the CIO here can determine how many hours of automation are saved and what it’s worth.

Share the story of IT’s impact

Experts say that using metrics to measure the value of IT is just half the equation. The other half is using them to tell the story of IT – another area that has traditionally been a struggle for tech leaders.

“The value of technology investment is not communicated properly, and this is a huge pain point for IT as well as business, even with IT as a cost center and IT as a cost center. Viewed as price has moved away from the center,” Armstrong says. “IT still misses out on being seen as a strategic partner for the business because it isn’t measuring properly and it’s not communicating. So it’s about what’s really of value to both IT and the business. I have a misalignment.”

To be clear, the CIO doesn’t need a full-scale marketing campaign, or even a newsletter—though, as Vidoni testifies, it can be helpful. Rather, experts say it’s about the CIO sharing details on IT successes and putting them in a business context; They should not assume that their business-unit partners can see for themselves how technology provides business value.

“IT doesn’t have enough focus on storytelling,” Armstrong says. “So remember, words matter; Don’t be too technical. Secondly, know your audience. And third, know who your hero is and what conflict they’re trying to resolve. Telling how you helped them overcome that struggle is what makes for a great story. ,

Business IT Alignment, ROI and Metrics

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