CASE STUDY: Business Value of IT
IT is often misunderstood as related to how it creates and communicates business value. There are two distinct ways IT organizations can accomplish this. First, IT delivers value for money by providing the right services, at the right level of performance, to meet enterprise objectives, at a competitive price. This demonstrates that IT is an efficient and effective provider of service. This value is measured in terms of price for performance, where performance is enterprise performance. Second, IT helps the enterprise make wise decisions about investments in business change supported by IT. The value of wise decision making and execution is measured in terms of enterprise operational and financial outcomes, not in terms of IT's performance. In other words, business unit profit-and-loss statements, and not IT's budget.
In spite of this, many leaders outside of IT fail to understand or consider the impact a change in direction can have on IT. As designed, IT is responsible for ensuring that all manner of regular operations are maintained. Yet, they are simultaneously tasked with carving out the roadmap (and dollars) to fulfill a priority change- often with little to no advance notice. Expectations of IT management have changed fundamentally during the last decade. Changing demands and a rapidly transforming business environment require an increasingly agile IT department that is aligned with business needs in three key areas: 1) ensuring security and compliance; 2) increasing efficiency and productivity; and 3) gaining a competitive advantage.
Some business unit heads in large organizations still want to hear metrics that they are familiar with such like the return on investment (ROI) of the project. While ROI is a more clear-cut metric to use in assessing transformative technology projects, it’s much harder to quantify the outcomes of projects that keep the business going since these are never about top line growth. Measuring the business value of IT is absolutely critical when discussing plans for new technology investments or determining budgets for on-going support projects. Running the business is essential, growing the business is commendable but transforming the business is critical.
Business Value of IT
While the IT department collects a lot of performance-driven data, it can often struggle to make those metrics meaningful to those not residing within IT. For CIOs, the difficulty lies in translating the tactical efforts of his team into a compelling business story.
At Align, we understand how the Business Value of IT can help CIOs establish the framework for creating, communicating, and measuring value, while leaders outside of IT can begin to understand the business value that technology brings, including the sacrifices required to fulfill strategic objectives. Ultimately, this enables an organization to view decisions in terms of practical costs, outcomes, and decisions, instead of notional desires and unforeseen expenses. It allows an enterprise to strategize and plan, at a tactical level, to drive organizational change and deliver results that involve optimal decision-making based on changing business requirements.
THE SOLUTION: The IT Department is able to demonstrate KPIs that they are on-track, within budget, and improving with every budget cycle
Effective IT teams identify and resolve problems before they occur while keeping systems running smoothly and securely—feats that are hidden by their very nature. Conversely, if one little thing goes wrong, everyone notices. Business value presents itself in two ways: strategic value and economic value. Economic value includes items that reduce cost or increase revenue. On the other hand, as the name suggests, strategic value deals in productivity enhancements, key differentiators that are included in your value proposition and customer satisfaction. Both are important considerations in measuring business value and with ServiceNow, can unlock a world of possibilities that enable faster, more precise decision-making within an organization.
Our intimate knowledge of the ServiceNow environment has allowed Align to enhance our Business Value of IT offering. Built on the back of the first four ‘spirals’, we can extract essential metrics, performance data, and visibility that will empower your organization to interpret and execute toward a competitive advantage previously invisible. By working alongside our customers through the first four phases, we possess the domain knowledge and expertise required to decompose your performance and translate data into drivers that reflect where you can save, and what you can do to improve.
THE RESULT: IT is able to proactively demonstrate value and justify future investments
In today’s digital era, CIOs must shift their priorities from cost cutting to driving revenue, and from process engineering to exploiting data if they want to achieve a set of broader business outcomes. Furthermore, understanding how to measure and communicate the business value of IT helps to foster a level of transparency that breaks down the barriers that traditionally exist between IT and the rest of the business. The ability to measure business value gives IT leverage to be a well-funded, fully operational department. In a climate where the bottom line is often the driving factor in business decisions, showing the big picture of what IT can accomplish in an organization is essential for establishing value with all key stakeholders.
Our experience will help you strategize and plan with certainty, allowing you to scope and establish a go-forward strategy that considers the impact to the enterprise at the most granular level. With the data derived, organizations can develop optimal processes for making decisions and assigning responsibility, determining when to interact with stakeholders across departments, including assigning authority for final determinations. The data derived allows customers to optimize and execute response strategies with a clear understanding of the impact to all departments across the company. With Align’s experience and the work you’ve done through the first four phases, data becomes rich content that comes to life, empowering an organization with the knowledge to interpret and react in real-time to drivers that affect strategic vision achievement.