Wednesday, October 20, 2021


Broadly speaking, IT is about distributing and sharing intelligence on the scale and assisting purpose and personalization needs, uniformly, fairly and effectively.

Organizations rely more and more on technology; the information technology department has more and more to overcome. Many information technology organizations have been perceived as the cost center of the company. To reinvent IT as the trustful business partner, it should shift from an invisible support function to the business enabler and a value generator. 

In a time when information technology departments are being asked to do more and more when budgets are not increasing, where does the money come from for value adding and innovation? What are the barriers to managing a balanced IT portfolio, how to run IT effectively, and do more with innovation?

Visibility of IT asset consumption: Nowadays, companies are highly dependent on IT executives who can make the proposal to update technology based on the needs of the business to catalyze change and build IT assets cost-effectively. IT investment is costly; it’s important to raise the visibility of IT asset consumption and traceability of how to align resources and allocate the cost to improve IT effectiveness and efficiency. In reality, many companies are driving down a dark road with no headlights or instruments; many IT organizations spend a significant amount of assets and budgets to keep the lights on; they don't know if there is a problem brewing or if there is an opportunity to increase return on investment. When IT becomes only the mechanism for realizing a vision described by other C-level executives, it becomes a commodity. When IT management thinks about how to run IT as a business, and improve the visibility of IT asset consumption, they get a better handle on their direct, indirect, fixed and variable costs and they start to allocate those costs across a revenue model, based on consumption.

Many companies endeavor to embed IT more directly into the business, other organizations take the hybrid model of centralization and decentralization, how to extract out the measure of tangible value that IT might deliver? Is IT able to allocate the cost of those assets based on that consumption results in an accurate measurement of IT contribution to cost of sale that is both traceable and visible? What is the company's position on chargeback? If IT assets or services are not accurately charged to the business units that use them, does it create disincentives to change? Whether it is an allocation or direct charge, once the end users understand how much it costs to keep their favorite application on hand and running, it brings about a rapid change in thinking and adjustment. Fixed operational costs, processes, and risk management need to be totally optimized. So that redundancy will be simplified, in the end, IT will contribute business and competitiveness to generate revenue.

Visibility of costs measured against the visibility of quantifiable benefits
: In the hyperconnected digital organizations, the business leverages information technology and tools in harnessing cross-functional collaboration, and dynamic processes and case management. IT management are encouraging their teams to spend more time with leaders on the business side as well as directly with customers. These engagements are leading IT to be much more proactive in proposing, instead of responding to ideas for new ways to improve and create value.

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 information technology contributes to the top and bottom line. Contemporary IT is a strategic partner of the business. Information technology management not only not only needs to work within the organization but also work to integrate and lead the integration, not merely alignment of information technology, but to create strategic value proposition.

Visibility of overall IT value proposition:
IT should continue to review the return on investment of existing IT investment, whether the depreciated life cycle is completed or not; or whether new technologies/products mature enough in the business market to adopt. IT value is measured by optimization and consumption of IT assets in support of the business services that are identified within the organization's revenue producing streams. In order to demonstrate IT value, organizations need to first know wherein lies the IT value. How does IT become strategic? How does IT deliver maximum value? If you understand that upfront by doing the right strategic questioning, you can later go back and ask if you achieved the value that had been set out to attain. Achieving visibility of costs provides a pathway into information technology optimization and justification of IT value contribution to the organization's bottom line performance within each revenue stream.

IT either becomes the value generator or will be seen as the soft target for blame. It's a constant struggle with the business to justify any IT value. The best way to demonstrate the value of IT is to know who you are showing the value to. Ask whether the metrics can reveal anything meaningful for the identified business purpose and the stakeholders who will use the metrics. If business and IT understand each other and IT ought to be able to articulate their value in terms the other C-levels understand, which for the most part is a tangible financial measurement, in addition to whatever intangible benefits it provides. Prioritize opportunities based on risk-adjusted returns; partition the benefits of achieving savings to reward the people that bear the brunt of the work.

It is simply not sufficient to run IT as a support center. Measurement is the first step that leads to control and eventually to improvement. More broadly speaking, IT is about distributing and sharing intelligence on the scale and assisting purpose and personalization needs, uniformly, fairly and effectively. The best way IT can demonstrate value to the business is to invest in understanding the business processes it supports and deliver improvements that help the business achieve its ultimate goals and objectives by making continuous deliveries.


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