Demonstrating the business value of IT

The running joke in most companies is if you want something done or approved, get the Sales Department to ask for it. With its tangible revenue streams, and the ability to tie cause-and-effect, Sales effortlessly communicates its contributions to the rest of the organization.

On the contrary, the IT team must navigate a labyrinth of complexities to demonstrate its value proposition across different audiences within the org.

The deluge of articles, dashboards, and arguments later, the technologist’s job in demonstrating the business value of IT continues to be a challenging and uphill task.

In some ways, the wound is self-inflicted. The value of IT’s contribution to a business is almost often trivialized and lost in tactical details – often relegated to showing the number of tickets generated or solved, number of cases closed, so on and so forth. This quantification is what makes the CFO/CEO walk away with a distasteful validation and a poor understanding of the millions, or billions, they spend on IT, without a concrete demonstration of the value they derive from it.

The onus, hence, squarely rests on the shoulders of the CIO to show in concrete and unambiguous terms how the investments made in IT are fundamental to the existence of the business, let alone the success or the thriving of it.

The gap between the poor perception of the CFO and the inadequate demonstration by the CIO, translates into avoidable debates and conversations, poor perception of the common services, reduced funding for essential functions, not to mention the more adverse reactions like executive replacements and such.

The Fundamental Premise for Value Demonstration

For most CIOs, demonstrating the value of a new idea, application, platform, or tool either comes naturally or seems easier than showing the value proposition behind BAU (Business-as-Usual) activities. A case in point is the number of batch jobs the IT department runs every night. Say, IT oversees the successful running of six million batch jobs a month. How can we expect the CIO to demonstrate the business value of those six million jobs. Especially, when those jobs have been running as a BAU activity for the last ten years. Or the 50,000 tickets logged by clients, month-over-month. In both these examples, the common temptation is to prove the department’s value or work in terms of the monthly increase in the number of jobs or tickets, or the reduced abend rates for the jobs, or the increasing number of tickets month-over-month, or the turnaround times for ticket resolution, or the first-call resolution rates of the tickets etc. While each of these metrics has a place in one or more dashboards, the CFO/CEO cannot be expected to appreciate any of this grunt work. To their defense, they don’t mean any offense or disrespect to the numbers or the teams of people that make it happen diligently. Traditional metrics fail to resonate with executive leadership, who struggle to correlate operational minutiae with substantial investments in IT.

The Starting Point for Value Demonstration

CIOs have the absolute responsibility to demonstrate the value proposition of both the areas – BAU and New Projects. Keeping the lights. And driving the business forward. The former being hard to demonstrate. And the latter, a walk in the park; almost.

There are a finite number of questions CIOs can ask to demonstrate the value of IT. A short list of them include –

-??????????? Does the effort, in question, result in cost optimization?

-??????????? Does it increase revenue for the org?

-??????????? Will it allow the org to do more with less or the same set of resources?

-??????????? Will it be a differentiator in the marketplace?

-??????????? What is the contribution to customer satisfaction/engagement?

-??????????? How does it contribute to NPS scores?

-??????????? Does it help with streamline operations?

Understandably, none of them have a semblance of technology. Rather the effect of technology on everyday success factors for the org.

The answer in most of the BAU cases is not going to be straightforward. Nor simple. But, once you understand the basic need and demand from the org, the translation becomes possible. Not easy. But certainly, within the realm of possibility.

Gartner provides a simple frame of reference to quantify the business objectives that are most common in such instances.

This framework provides a great starting point to translate the IT effort and spend into data that is likely to be appreciated by the business.

It will be up to IT executives to go through an iterative cycle to build dashboards that will demonstrate this value proposition and continue to add to it in order to produce a robust point of view that will unambiguously show IT’s value to business. The secret sauce here is to view the need from the perspective of the consumer of this information – be it the CFO or the CEO or anyone in the Line-of-Business.