That businesses want IT investments to be firmly rooted in business strategy is a given. And there is plentiful advice available on how to align investments with strategies. But what new IT investments to consider? How are the potential investments identified and validated?
One popular approach is to brainstorm for IT solutions with business strategy in hand as the guide. Another approach is to collate business requests and evaluate and prioritize them in the context of business strategy. Often, the two are combined.
These approaches are typically annual affairs that take place after business strategy is handed down to the rest of the organization and often as part of the budgeting process itself. These methods are useful but insufficient. They do little to ensure that an organization is choosing from an optimal set of available IT investment options. To select the best projects from a list, particularly with a portfolio management mindset, is certainly important. But what if the list itself does not include what could be even better IT investment choices for the business?
I am a strong advocate of developing an explicit IT business innovation function that would uncover and formulate, long before the budgeting meetings, the best IT investment options for an organization to consider.
The IT business innovation function shapes and defines the organization’s business demand for IT. It makes recommendations to decision makers, such as IT investment steering committees, that are a result of monitoring, analyzing, and synthesizing — on an ongoing and proactive basis — information from a variety of sources, including the following:
- Overall strategic business objectives and current business requirements
- External developments and innovations in the IT marketplace
- IT developments and investments among competitors and other industry players
- Internal business and IT insights, recommendations, and requests pertaining to IT
Performance of existing IT assets A manager of IT business innovation has a mandate to:
- Seek cross-functional and cross-business unit IT investment opportunities that enable or strengthen the company’s competitive advantage
- Identify and recommend responses to external IT-based threats
- Recommend action on acquiring competitive-parity IT capabilities
The focus of IT business innovation is to strengthen the organization’s competitive standing through the selective application of IT. The IT business innovation manager actively participates in the setting of business strategies and has peer-level access to line managers.
The IT business innovation function also allows time to experiment with IT business applications and technologies long before they are considered by IT investment decision makers. Too often, businesses engage in binary “invest” or “do not invest” decisions prematurely, with all the attendant business cases, presentations, politics, vendor pressures, and negotiations. The timing only seems right because the external or internal pressures force the decision on the table. These decisions involve large investments, and once the train with the IT project leaves, it is hard to stop it, even if it enters the wrong tracks.
The IT business innovation function ensures that enough small-scale and small-budget experimenting takes place to identify valuable options and to validate them in the business context before it is time to decide on the investment on a larger scale. IT vendors won’t like this approach, but you should give them no other choice. Your organization’s list of choices for IT investment will be so much better and, with it, your organization’s track record of success with IT.
— Helen Pukszta, Senior Consultant, Cutter Consortium