Three Questions to Unpuzzle IT Investment

IT is the core of the business today and must, therefore, be visible and present all the time. IT needs to be considered a line of business, not a cost center. CIOs need to show the value of IT with Return on Investment and tell the business management how well an IT investment repays the company. To improve IT maturity, IT value-based management needs to be driven by concepts like collaborative value or collective advantage and multi-layer ROIs. 

What is real tangible - measurable business value of IT: Forward-thinking industrial leaders empower and invest their IT organization boldly to become the strategic differentiator for pursuing business growth. The strategic value proposition of IT is how to leverage resources and assets of the IT departments to create the optimal business value. IT supports the achievement of tactical business objectives, IT delivers perceived added value products or services at a reasonable cost, IT delivers to operational and service level agreements and commitments. To measure tangible IT value, besides financial ROIs, it’s also important to evaluate the overall business value from IT investment such as performance, quality, customer satisfaction, or varying factors that stakeholders consider important to them. You can only manage what you measure. It’s important to show a clear link to the top executives between IT performance and business productivity/top-line business growth includes improving IT system effectiveness, efficiency and ROIs of those business solutions delivered by IT. IT investments positively affect business productivity and customer experiences. The focal point is to calculate which IT-led business initiatives provide the greatest return, and which would be invested in the future.

Who is driving/measuring the perceived value? IT metrics need to evolve to something that matters to the business audience. Metrics help you get some objective perspectives on what you are trying to manage, also help various stakeholders understand what is going on in IT from the outside-in business lens. It’s important to clarify who is measuring or driving the perceived value. CIOs must learn how to leverage reliable information for helping business leaders unpuzzle IT investment and assist them in deciding whether or not a tech investment is worth making. When board directors or senior leaders have sufficient knowledge and understanding of IT, they can make sound judgment about IT investment and know how to assess IT performance objectively. If you have an IT-enabled business initiative or a program without a sponsor, you need to take a fast, hard look at the business case that justifies the program you are engaged in, and spending assets on. Before the investment is made, the requestor should be required to identify specific measurable results from the investment, the delivery timeline, and the specific methodology to be used to measure the results. Without well-defined measurement, it’s hard to tell whether attempted improvements make the situation better or worse.

How can all departments truly collaborate with IT to improve the vision and realize IT as a competitive leverage? When considering the value of an IT initiative does not come from the IT change unto itself, but how the business changes what they do to leverage the IT change, This becomes even more important as IT initiatives become critical to the business including revenue generating. Everybody wins. Business should know how to express a problem in the desired end state with elements of performance sampling points that could be leveraged to determine whether the effort is moving in a positive or negative direction. Stakeholder expectations are understood and IT propose a portfolio that correspond to demand and cost drivers, business contribution, cost, consumption, and chargeback are identified. The new technological solutions that could change how current business is performed are explored, proposed and implemented. As other departments have embarked on technology strategies, the role of the CIO has also evolved into a collaborative mode with those departments. “We are moving from classic design, develop and deploy to collaborate, integrate and secure. The Non-IT executive needs to understand how to build a close relationship with the CIO and vice versa. Together as a team, they can achieve a synergy that cannot be achieved as individuals.

Digital leaders should have a certain level of IT understanding in order to break down silos, unpuzzle IT investment, and unlock business performance. Return on Investment should be expanded into the broader perspective. 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. CIOs need to understand business outside-in, help the organization generate revenue, improve IT visibility, investment transparency, as well as the overall organizational maturity.

Posted in: IT Finance,Leading by Questioning