What value are you realizing for the company? It’s a question many IT executives struggle to answer – even those with an established Technology Business Management (TBM) Office. That’s because value realization goes far beyond IT cost reduction and higher productivity.
Value realization is evidenced by a noticeable improvement in one of two things: top-line revenue or bottom-line profitability for the whole company. By that definition, many IT organizations are not achieving true value realization.
Realizing value is difficult because business units often don’t measure the impact of technology on their own operations. Instead, IT is merely the place they go — like a drug store — to get a Band-Aid or some other quick remedy to the symptoms of their “issue.” To achieve value realization, IT needs to be viewed as a doctor that can help diagnose the needs of the enterprise, create growth opportunities, and improve the overall health of the company. But how can you shift the perception and role of IT from drug store to doctor?
This gets to the heart of value realization. The challenge is to improve the operations of the component parts of the enterprise (the business units) and each of them must leverage technology to do it. And that includes IT improving on the business of running itself – ensuring that every IT investment achieves a meaningful business outcome.
Everyone is using technology to drive their business unit’s improvement. Value realization is ONLY relevant in terms of the impact technology is having on enterprise productivity or market expansion. But technology implementation is just the first step. The real impact occurs when there is full adoption of new processes and capabilities by the business unit. That adoption, sometimes referred to as “digital transformation,” is just the normal incremental improvement in enterprise operations. Clearly, now is a prime opportunity for IT to connect those dots and shift the conversation now.
To make the shift, IT must change and play a pivotal role in achieving value realization for the enterprise. As Forbes contributor Peter Bendor-Samuel recently noted: changing IT is a fundamental realignment of how IT is organized, how it conceives itself and its role in the organization.1 IT doesn’t need to understand the business unit better than the business unit leadership. All IT needs to do is to shift its role from drug store to doctor by ensuring that every business unit request for technology has a direct and measurable business outcome that can be tied to market impacts on enterprise value. That means speaking directly to the business outcomes and clarifying for everyone how that technology will advance those outcomes. IT must help the company achieve mutual understanding and consensus.
IT executives need to lead the way in shifting conversations from IT costs and projects to business outcomes. Too often, CIOs are mired in “keeping the lights on” and the inherent distractions that come with running the business from day to day. This makes IT myopic and overly focused on cost. However, they often lack the tools and insight to have visibility into the total cost of ownership. This results in them being unable to manage the cost, and therefore, unable to drive savings for investment in achieving value.
TBM is about harnessing the data to create visibility and accountability to business outcomes. Most companies understand that keeping data siloed in spreadsheets is inefficient and ineffective in today’s business world – but without TBM it is the best they can do. Technology Business Management, on the other hand, brings standard taxonomies for cost tracking and the ability to allocate those costs across all elements of technology.
At the introductory-level, TBM techniques help describe IT budgets and quantify IT costs. At more mature levels, TBM enables companies to leverage insights to total cost of ownership (TCO) to prioritize their strategic technology investments, align to the needs of the business and proactively enhance business growth. According to the TBM Council, instead of simply answering how much should you be spending on IT, TBM enables people throughout your organization with the information to understand the impact of technology investments – making the costs actionable.2
While some organizations are leading the way with TBM, many companies are just now considering implementing TBM software tools and processes. Others already have TBM processes in place, but haven’t yet reached the level of maturity where they can take action to positively impact business outcomes. TBM initiatives today are primarily focused on legacy refresh, IT quality, IT productivity, and IT cost reduction. To achieve business outcomes, IT organizations need to focus on the way in which their technology investments impact top-line revenue and bottom-line profitability. TBM will need to generate actionable data that reduces business costs, improves profitability, increases revenue, makes new lines of business possible and enables existing market and new market expansion.
Is your company’s IT ready for the role of doctor — rather than drug store? If not, give us a call to see how we can help.
1 Forbes, August 9, 2018, “How Your Company’s IT Group Must Change to Support Digital Transformation,” Peter Bendor-Samuel.
2 TBM Council, 2016, “Technology Business Management: The Four Value Conversations CIOs Must Have With their Businesses,” Todd Tucker.