Sometimes working in IT must feel like being a kid all over again, having to justify to your parents how you spent your allowance money. IT often finds itself between a rock and a hard place as cutbacks require it to justify the return on investment for each expenditure. Unlike departments such as sales and marketing, which can often turn to revenue projections and profits, IT often finds itself trying to demonstrate how a new e-mail system can actually save a company money or how the new database application can increase product reliability. A difficult task, to say the least.
For the hundreds of thousands of IT workers worldwide most of these questions are no-brainers. But for many senior executives seeing the economic benefits of spending millions on a software solution is far from crystal clear.
At a recent Gartner Inc. symposium in Toronto, ITxpo 2001, Hung LeHong, a Toronto-based Gartner research director, spoke about how IT professionals can monitor, maintain and show the value IT can add to all levels of a company, specifically individual business units.
The key to success, as is often the case in the world of high tech, is decidedly low tech: communication.
“Go out there and start talking with your business [unit leaders]…engage in conversation with them,” LeHong said.
Much the way four blindfolded individuals would describe an elephant differently based on the part they touch, business units often measure their own success using specific metrics which don’t carry over very well into other parts of a company. In other words, IT has to start speaking the language of marketing, sales and billing, not the ancient language of geekdom.
LeHong said it is important for IT to take a proactive role in getting out there conversing with all business units to find out how IT can have a positive impact on the various unit’s success.
Twenty years ago this may have been a bit of a dream but today’s IT has its fair share of MBAs while business units have techno-geeks in their midst.
The Esperanto spoken in the halls of the corporate world is a modern techno-capitalism with ROIs, TEIs and KPIs. The larger the company and more dependent it is on technology, the better its IT members better speak the language of business.
Al Tinney, senior vice-president personal and commercial banking technology at the Royal Bank in Toronto, sits in on biweekly project management office meetings where they discuss and review projects, and share information and resources.
“On the technology side we have to be fairly conversant with the business (units) and what they are trying to do to make sure, when we are building things and we are buying things, it is actually going to do what they want it to do,” he said.
The Hudson Bay Company also follows this thinking. With 70,000 employees nationwide, of which 500 are in IT, HBC has at its core the desire to have a common corporate focus.
“On the strategic level I still believe it starts with overall agreement of what are the goals and objective of the overall company and getting everyone in alignment on those,” said Gary Davenport, vice-president information services at HBC in Toronto.
The metrics could be sales per square foot or inventory asset utilization, he said. And if everyone understands that, you can always link back your initiatives to them, he added.
On a more tactical note, since marketing and accounts payable will inherently look at key metrics from a different angle, the IT professional can help bridge that gap, Davenport said.
“IT can actually play a very big communication and integration role in servicing both of those users and trying to draw the linkages together.”
Future Shop Ltd, the Vancouver-based electronics company, has seen its common language slowly evolve.
Language has evolved over time and likely will continue to evolve, but the terminology and metrics are jointly established between the business units and their respective business solution managers, with monthly presentations and discussions from these department heads, said Larry Needham, CIO of Future Shop in an e-mail interview with ComputerWorld Canada.
measuring it impact
Once you are all speaking the same language then it becomes easier to start measuring the real value of IT.
LeHong made it clear that IT should focus its efforts on those areas it will have the most impact (please see chart). It is much easier to show value in these areas, he said.
Measure IT success in terms that are relevant and meaningful to each individual business unit, he added.
Admittedly some IT installations are far more difficult to measure than others. The success of a piece of warehouse management software, which can reduce stock levels while keeping shipping on time, is easier to measure than a new corporate portal or e-mail system. Though it is difficult to come up with dollar figures for some implementations, keeping track and noting positive influence on overall corporate strategy is helpful when the budget wars start in earnest, if the economy starts to tail off as many predict.
“For those (difficult to measure implementations) we would loop it back to…the overall intent of our strategy and how…this initiative fits in,” Davenport explained. “Are there intangibles associated with [it] that we can at least lay on the table and quantify to some degree, recognizing that we won’t get cost out, or it won’t add revenue, but that we can still see the contribution of it to (the overall corporate) effort?”
HBC also realizes that IT will have regular maintenance costs and upgrades, like any other part of the company, if it is to keep moving forward to reach its goals.
Future Shop is no different, it also has regular reports which deal with the ongoing value of IT, Needham said.