The value of IT investment is its ability to support and improve business performance – period.
Any discussion of IT value is ultimately meaningless unless it’s framed in terms of changes in business performance. Cost always matters for IT, but does not equate to value. IT performance must be connected to business performance to be meaningful to business executives.
The first step in connecting IT and business performance is to focus on the right thing. Let’s consider the analogy of an exercise machine. For the purchaser, it’s pointless to measure the value of the machine in terms of its mechanical operations.
The only meaningful metrics for the purchaser are the machine’s effects on weight loss and muscle tone, and how much better the user will look and feel after completing an exercise program with the device.
The lesson of the analogy is this: do not report to business executives on the technical minutiae of operations; report on how IT operations are affecting business performance gains.
To effectively realign conversations, identify business performance metrics and tie them to IT metrics at the start of the program or when substantial change occurs in the business.
Credibly communicate benefits
When communicating the benefits of IT investments, take care to avoid the baseless, outright sales pitch syndrome that glosses over obvious defects. CIOs must continually show that IT delivers value for money right where it counts: in improvements to business performance.
Be aware, though, that nothing destroys credibility and influence faster than unreliable delivery of services and initiatives and poor management of the business initiative pipeline.
Another key to credibly communicating the benefits of IT investments is regular benchmarking and setting guidelines for performance. In many enterprises, IT investment is seen as a trailing indicator of improved business performance.
A more accurate viewpoint is that careful investment in IT drives business growth by providing the capacity in infrastructure, operations and management visibility that makes improvements in business performance possible.
To make this point, the IT organization needs to benchmark and measure not only its own performance, but also the performance of the business units.
CIOs will know when the corner is turned because the nature of the conversation will change. The CIO will no longer sell technology, but will advise on investments.
The role of the CIO
IT is one lever an executive team can pull to improve business performance. To this end, CIOs must keep the following in mind: the CIO’s job as an executive is to boost business performance, not IT’s.
The CIO can set an example for the entire IT team by focusing discussions on the business – inside and outside the IT organization. In short, conversations should always be about what the business can do, when, where and how – not about what the technology can do.
Finally, CIOs must ensure that business performance improvements are harvested and measured using a systematic approach. They should also be aware of the lag between IT investment and the delivery of value. The organization needs time – typically one to two years for a major change – to assimilate new processes.
In effect, when CIOs talk and act like business executives focused on business performance, sooner or later they will be perceived as business executives. The first sign of this change is being invited to the CEO’s staff meetings. The next sign is being asked to manage business initiatives outside the realm of IT.