Demystify IT Investment Puzzle

The success of IT investment is usually based on how they enable business growth and support the business objectives by delivering services and solutions in time to the market perspective. 

The ambitious companies across the vertical sectors empower their IT because digital IT can drive all sorts of innovations, proactively push ideas forward and leverage technology to accelerate revenue growth, increase business productivity, flexibility and maturity. To keep relevant, IT is also working hard to transform from a cost center to a value center by demystifying the IT investment puzzle and presenting the measurable IT-driven business value.

IT leaders need to be able to support the essential IT investment with sound Return On Investment reasoning: From the variety of IT industry surveys, the investments companies make in IT increase profitability more than investments in advertising or R&D do. Forward-thinking industrial leaders empower and invest their IT boldly to be the strategic differentiator for pursuing business growth. Return on Investment tells the business management how well an IT investment repays the company. IT leaders should convey a data-based presentation to the board and top executive teams in looking and appreciating IT strategic value to the business; they should convey a persuasive message with a calculated estimation of the loss if IT was not used to achieve the strategy. Often, the business management wrongly equates IT solutions with concerns of expensive technical difficulties while IT sometimes builds things not meeting the needs of the business clients; thereby, not serving its wise to earn that seat at the big table. Thus, CIOs must learn how to leverage reliable information for helping business leaders demystify IT investment puzzle and assist them in deciding whether or not a tech investment is worth making.

Focus on the most critical business initiatives to weave the “golden thread” of IT investment: From IT investment perspective, there is a concept of the “golden thread” that can link the business strategy to investment goals or business benefit, enabling business change and strategy implementation. With the fast pace of changes, there is a danger of not having a proper management process to "develop and nurture" business potential and performance. In reality, many IT organizations spend most of their resources and budget on “keeping the lights on” without providing differentiated business capabilities to compete for the future. The logical investment scenario helps an organization assess whether the business improvement associated technology is the right investment to be done in the first place, and ensure the expected return on investment. From the IT management perspective, the structure of budget estimating for big IT projects will tend to under-estimate the time and cost. You should estimate the time and cost for all the project activities that you can think of and include a consideration of the interconnections. IT is now the threshold of running a digital organization. Demystifying IT investment puzzle is critical because IT investment in the business can often become the decisive factor to run a high-performance organization with a long-term perspective.

Analyze total cost, total value, and total impact in order to improve IT organizational maturity as a business value generator: To reinvent IT as a value creator, IT management should learn and explore different methodologies to measure and present IT performance and potential. Total IT impact and total value should get more attention rather than just cost. When people speak about an IT initiative generating new revenue, visibility of costs measured against the visibility of quantifiable benefits is a way to show how IT contributes to the top business growth and bottom line efficiency improvement, to justify IT performance premium. In IT management meeting, instead of spending all the time on total IT expense discussion, the focus point should shift to which IT-led business initiatives provide the greatest return; and which should be invested in the future. Return on Investment should be expanded into the broader perspective which usually cannot be measured fully in time and dollars such as employee satisfaction, creativity, teamwork or culture evolution, etc. CIOs need to play the number game wisely and help business leaders demystify the puzzle of tech investment in order to make the right decisions. IT measurement and performance have to evolve from being a cost center to becoming a revenue generator and strategic business partner.

The success of IT investment is usually based on how they enable business growth and support the business objectives by delivering services and solutions in time to the market perspective. As organizations are at a different stage of the business lifecycle, and they should have their own set of specific and measurable goals and objectives they have to hit through in IT. When I leaders can help the business demystify IT investment puzzle and demonstrate the measurable business value to the board and the top executive teams, they are on the right way to reinvent IT as a strategic business partner and improve IT organizational maturity from functioning to delight.

Posted in: IT Finance,IT Performance Management,KPIs