Friday, March 18, 2016

Setting IT Priorities via Three Lenses of IT Value Index

A value driven IT needs to understand stakeholders’ expectations and propose a service/solution portfolio that corresponds to both demand and cost drivers with a focus on business priority. 

IT is at the crossroad to either transform from a cost center to a value center or become irrelevant in the digital age. There is triangulate value from the different lens in building a more comprehensive and effective IT organization. IT value index has three lenses: Strategic imperative, operational excellence, and business agility. There are also tangible (cost savings efficiency, etc.) and intangible (brand equity, business growth enablement, etc.) components of value. Most IT organizations are overloading and under delivered. So how to set IT priority right to enhance its value proposition and maximize its value delivery?

Focus on the most critical projects with the strategic imperative: At many organizations today, IT spends most of their resources and budget on operational projects which do not provide differentiate business capabilities to compete for the future. Therefore, to avoid such pitfalls, IT strategy needs to become a significant component of the business strategy, co-developing strategy from both business and technology will make all projects essentially business investment, to focus on business growth or cost optimization, the study also found that in general, IT investments were more effective in improving profitability by increasing revenue than by decreasing operating expenses. In fact, IT investments had a marked positive effect on revenue growth. It’s important to have a long-term roadmap that shows where you want to be and why is needed. You need to ensure you’re investing in the right projects. This focus will free up money in every facet of IT and create headroom for IT innovation and business growth. Work to simplify your existing technical debt using the capability model and roadmap as a guide.

Prioritize IT to delight customers via operational excellence: At the age of people including both customers and employees, IT needs to set priority to digitalize every touch point of customer experience. IT has two sets of customers as well, the internal users who count on IT to equip them with the effective technology tools to improve productivity and work satisfaction; and the end customers who shop the business’s products or service and continue to compare their customer experience with competitors,' the user would need a delightful experience because if the user is bored or confused with the applications, the revenue or productivity will decrease, it will directly impact the business’s top line growth or bottom line efficiency. Hence, in order to delight customers, the forward-thinking and fast-growing businesses set top priority to build new capabilities in which IT is a key enabler. They will challenge the cost control efforts, with the drive to bring new capabilities to the business at a fast pace, this, in turn, can force some cost control measures to lower on the priority list.

Prioritize IT to improve business agility: Agility is a common business term that is used frequently these days to measure how fast business will respond to opportunities or threats, and enterprises are even having key agility indicators. IT Agility is about how IT will enable business agility, how fast IT will deliver the required effectiveness and efficiency. The more integration between business and IT the more level of agility for both will be achieved. Every CIO may ask self: Is IT responsive and proactive enough to find answers and solutions in case of emerging chances? Does IT have a platform which is scalable, secure, resilient and well interconnected? For achieving agility, there should be a rolling plan in addition to the mid-term or long-term strategic planning document. Need for agility arises due to changes in underlying assumptions. If these changes are captured in the rolling plan, flexibility can be achieved. The business aspiration to agility can often be leveraged to help align business and technology stakeholders around the case for application modernization and rationalization. Many businesses aspire to agility when they are burdened by brittle, tightly coupled systems constrained by rigid roadmaps and deployment schedules due to the underlying technique redundancy, integration dependencies, and testing complexity. Agility requires a set of complementary & strategic IT competencies: It includes but not limited to portfolio management, project management, change management, enterprise architecture, rapid adoption and deployment of new platforms, etc. Using agile IT methods and DevOps will help to control runaway projects and keep those costs lower while bringing quick incremental value to the business through your business innovation efforts. In the meantime, the well-run IT organizations can demonstrate agility by being responsive to tactical business opportunities to the degree possible while remaining focused on developing, communicating, and executing a longer-term strategy to enable and maintain true enterprise agility.

A value driven IT needs to understand stakeholders’ expectations and propose a service/solution portfolio that corresponds to both demand and cost drivers with a focus on business priority. IT develops the professional competencies needed for successful business solution delivery. IT planning has to be steady and adaptive while coordinating different and sometimes competing for resources. In the context of business technology, these resources are demands, capabilities, applications, technologies, risks, projects, and costs, and they are organized in portfolios. Still, many organizations keep these portfolios in silos. But they need to be managed as a cohesive one that is constantly linked to the business vision and adaptable milestones. This relies on having an optimized prioritization/planning process and ongoing IT efforts to continuously improve IT value proposition and maturity.


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