Measuring the Value of IT to the Business
Hello everyone and I hope you are continuing to stay safe and seeing some elements of normality return. It is 6 weeks since my last blog and time has been flying. I promised that I would cover in my next article another topic that I am very passionate about.
That is, measuring the value of IT to the business and how that needs to be reflected in an adaptive IT strategy.
Being honest this is a tricky topic. If anybody ‘googles’ what value is, or how to measure value, you get a lot of hits and options. However, the most generic example that I probably relate to is:
The Measure of value is the function of money that enables the values of different goods and services to be compared, also referred to as a unit of value. Simply put Value = Benefits divided by Cost.
So, if we stick with that notation of:
The value of an IT Strategy = The benefits generated from that IT strategy divided by the cost of the delivery of that IT Strategy
Then it is very clear that any IT strategy would not do anything that does not generate value from IT to serve a business outcome. Analysing this a bit further, then the question has to be asked. Why when we perform our independent reviews of the value that organisations get from IT, that the majority of clients that we work with, we hear the statement – ‘The value we are getting from our IT could be greater but we’re not sure how to increase that value’
In the reviews we deliver, we always insist that we meet the business consumers of IT i.e. the ones likely to be both feeling the pain and getting the real gain from IT. We talk through in the focus groups a series of questions in relation to the IT experience they receive. How IT works for them, what happens when things go wrong, how change is brought about, what is critical to them etc. We form a picture of the experience they receive, and we wrap this up with the critical killer question… How would you rate your experience of using your IT service? We ask the business consumers to score their perception of the value of the IT service they receive, scoring between 1 and 10, where 1 is that you are actively taking steps to avoid using the IT you are given, as it is not good enough, and 10 you love it so much you can’t wait to come back tomorrow and use it again!
The feedback we get in relation to IT is typically mixed, with different persons from different business units having different experience on which they draw on and of course each with different expectations and experience from other companies or services provided that they may have had outside of the current work environment, either with other organisations or in their own personal life. The lower the score is clearly a warning bell in terms of the value that is being obtained from IT.
At one end of the spectrum, there are business consumers that love the experience they get; things seem to work ok for them, and they have very few problems. However, at the other end of the spectrum, there are others that have experiences of poor change, poor IT service management, and generally IT not matching how they want to work or keeping up with where they see their business unit heading strategically. So why does this disconnect happen?
We often see people tolerate and accept poor performance and value from IT. Sometimes it is low expectations, a history of under-delivery and inflated expectation. Sometimes users not knowing what the IT can do for them. However, the biggest issue we find is that the IT Strategy is written in a way that is not aligned to the desired outcomes and needs of the business. At CoStratify we believe that an IT strategy must be aligned and signed off by the business to deliver the outcomes they need. IT is here to serve the business’ needs. Every statement and initiative in a modern adaptative IT strategy must be challenged in this way.
Where we see organisations being really successful in the provision of IT services, they have a business-aligned IT Strategy that is written and aligned and matched to the required budget. Not only that but in the operating model, there is the capability to adapt the strategy to continually fit the needs of the business and the budget. When a CFO or Finance Director sees a request for an increased IT budget, they can fully understand the outcome that will be achieved from that increased investment as it has defined business outcomes.
In a post-COVID19 world and in the current climate of cost challenges, with the business having to adapt, change weekly, monthly, lockdown, unlock, and reshape. The IT Strategy needs to respond and change at a frantic rate to meet these ever-changing scenarios and demands. Perhaps it is now time to check your IT strategy to see if it business aligned and adaptive?
At CoStratify we believe that the organisations that will survive, grow, and reinvent themselves are the ones that have business-aligned adaptable IT strategies, we form strong evidence for change to underpin the IT Strategy. Please get in touch to get assistance in creating a business-aligned and flexible IT Strategy.
So in answer to the original question… How do we measure the value of IT to the business? I would suggest organisations perform the benefits over cost equation and let us know in the comments below what you think.
If you are struggling with this you may want to read my previous blog post on Total Cost Of Ownership as the number that must go into the equation must be a TCO number and not just your IT budget. Hence why we say to everyone, a proper TCO baseline is the starting point for everything to move forward from.
Thanks for taking the time to read this post and I look forward to sharing with you my next article on :
“How we continue to deliver change as fast we did at the start of lockdown”
CoStratify – Forming strong evidence for change