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Business Value and IT - Is it Time to Get More Involved?

Having spent nearly half my life in IT, I occasionally fall into the "been there, done that" trap. After all, when you're old enough to remember time-share and service bureaus, the case for cloud seems old hat.  Still, I often wonder about "Big Picture IT" questions, such as: After years of spending billions of dollars on technology, why are companies struggling to measure and maximize the business value of their IT-enabled investments?  After all, it's been an area of concern and an occasional source of controversy for years.

The last big kerfuffle about IT and ROI was in 2003 with the publication in the Harvard Business Review of IT Doesn't Matter by Nicholas Carr (actually, there are HBR articles on IT value going back to the 1990s).  However, in spite of the attention and controversy generated by the Carr piece, IT spending continued to grow apace; right up until the global recession, when corporations froze or reduced technology spending.
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Having spent nearly half my life in IT, I occasionally fall into the "been there, done that" trap. After all, when you're old enough to remember time-share and service bureaus, the case for cloud seems old hat.  Still, I often wonder about "Big Picture IT" questions, such as: After years of spending billions of dollars on technology, why are companies struggling to measure and maximize the business value of their IT-enabled investments?  After all, it's been an area of concern and an occasional source of controversy for years.

The last big kerfuffle about IT and ROI was in 2003 with the publication in the Harvard Business Review of IT Doesn't Matter by Nicholas Carr (actually, there are HBR articles on IT value going back to the 1990s).  However, in spite of the attention and controversy generated by the Carr piece, IT spending continued to grow apace; right up until the global recession, when corporations froze or reduced technology spending.

Even with some sectors recovering and global economic activity increasing, IT budgets remain under the microscope. However, unlike past downturn - recovery cycles, the microscope is not just focused on  cost savings that accompanies periods of business uncertainty. There is an added emphasis on realizing business value from technology investments.

Picking up on the trend, analysts and the industry described how leading corporations were leveraging IT to increase the efficiency of supply chains, increase customer loyalty, penetrate new markets, and grow revenues. At the same time, the same channels released research findings indicating that most companies struggling to translate IT spending into measurable business outcomes.

This dichotomy was highlighted in a May, 2011 article in CIO.com entitled, Value Is Dead, Long Live Business Value, which stated on one hand that, "Business outcomes are the real and only measure of IT worth," while simultaneously acknowledging that "Calculating technology value using business terms is an evolving art."

So, why do companies continue to struggle?  One reason is that in spite of years of research, commentary, discussion about, and attempts at value realization, many CIOs and business stakeholders were merely paying lip service to the idea. Getting IT investment right wasn't top of mind. Then, too, IT success was measured - and continues to be measured -- by whether or not projects were "on-time" and "on-budget," not "on-value."

The difference between then and now, however, is making the right spending choices is essential to business success. Or, as one interviewee quoted in the CIO.com article noted, "People really mean it now."

How about you?  Is it time for your company to focus even more on realizing business value from IT?  Do you have the resources, the methods, the metrics, the executive support and stakeholder buy-in, and the follow-through necessary to achieve the goal?  As we share our experiences and perspectives, my fellow bloggers and I want to know what you think.

 

Comments

Cloud computing provides an excellent opportunity for IT to lead the discussion and set the direction with respect to the value they provide, if they handle it correctly. It's a perfect excuse to get back in front of their business colleagues to get an understanding of their strategy and how IT can make it happen. This business perspective can be factored in to an ensuing infrastructure assessment for cloud readiness. Should the assessment ultimately lead to a cloud deployment, IT can get out of the glass house business and focus their energy on building solutions in partnership with business units that drive value

IT budget has been always under stress at difficult times for almost all industries. What is important now more than ever for any proactive oragnization is to register few important points
1. IT is present across all LOBs, BUs and Fucntions. It is the most important Business Enabler
2. IT cannot be treated as a passive cost center for any industry now
3. Cruel, but true is that IT is a lagging Indicator. It is the business which grows first then the spending grows, but practically it should have been the other way has indutry been eable to exploit the benefit of IT as business enabler completely.
The constraits that makes IT benefits invisible or grey are
1. Inability to tranlate the TCO(Total Cost of Ownership) of IT projects to Business Benefits
2. The 'Qucik-Fix' attitude of oragnisations to get immediate problem solved leading to greater stategic and operational issue in future.
The solution to these issues are not uniform across industry or irganizations. But I feel organizations should.
1. Decide on Business & IT Consulting before IT Iplementation starts, get it done form one or more end to end Business & IT Advisory companies.As often the Business Advisory folks are able to idetify and relate business problems but are impractical in sugesting Client with the required IT solutions due to the lack of expertise or visbility in IT Domain
2. IT is the Bitter Pill, that companies need to take, they need to give importance to even in tough times in order to come out of the trouble. More often than not companies are not able to gauge the magnitude of the the trouble as business would be sitting inside the trouble state already.
3. Try and focus on ' Optimal Capex to Opex Shift', here I mean it might not always be use SAAS or PAAS or IAAS in that case. It is always recommendable to guess the duration and extent of use of a service before we move to 'AS A SERVICE' parlance. Though looking at presentl development it might be suggested to move to Cloud, depending on business needs and legal constraints.
4. Get the grading right , it is very important to be able to show business value add through IT implementations, for that we need to identify the appropiate KPIs and indicators. It is not binary, or (yes/no), more often the inabability to articulate the ROI of IT implementations lead to Business loosing their interest in IT investments.

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