CIO Insight: Demonstrating the value of IT
In my previous articles, I have discussed that as part of an IT professional’s evolution there would be a need for demonstrating value. I’ve since had a couple of emails from various people at different stages of their career asking how this is done? Obviously if delivering a project, we can demonstrate return on investment however the next generation of IT pros must be able to do this at all times even when in a state of business as usual. This post will hopefully give you an insight into my thoughts on the subject of value and also some tips on how you may go about it.
Firstly, lets remind ourselves why. As discussed previously, we IT professionals are continuously needing to reinvent ourselves as we shift into the digital age. Our users are becoming in tune to technology and IT can no longer be the isolated department we are used to being. We need to be business people. An IT department needs to find innovative ways of gaining trust from the business, they need to be transparent, and clearly demonstrate value to the business in a way that has not been seen before.
Traditionally IT folk have had to demonstrate ROI to the business to justify projects they wish to undertake. Examples of this may include things like upgrading a fleet of laptops, delivering a new software application, migrating to the cloud or refreshing on premise server hardware. At a point in the development of that project there would be a need to justify the spend, whether that be for financial gain or because something had gone end of life/unsupported.
The rest of the time we were left freely to get on with business as usual, develop apps, supporting users, administering infrastructure or whatever was required. As organisations move to the cloud, it is changing a whole lot more than just where your data is stored. The emergence of cloud services and the ease of deploying and using these services is making our life easier and the IT department may not be perceived as integral to the business as they once were.
In my opinion though value isn’t demonstrated purely on financials. It is easy to show value when we talk in terms of ROI, slashing budgets or developing a product which drives revenue, but what about those IT departments who are internally focused or those that do currently show this value but are being pushed further? What I am going to discuss is going beyond the budget….
Firstly, let’s look at metrics. Are you communicating any metrics? Does the business know how you are performing? Metrics can be the easiest way of demonstrating value however capturing the right data and communicating it in the right way is vital. I often see IT departments simply reporting how quickly they close off support tickets or how many cyber-attacks they have prevented and so on. This is all very well and potentially could show some of the best metrics in industry but the audience must understand these metrics. We must begin to show these metrics in a way the entire business can understand. For example, a retail company having a network with 99.99% uptime looks great on paper to a technical person but what would it mean to a CEO or even the customer? What would be of more useful in this scenario would be showing that the retail business continued to take sales because the point of sale machines had an uptime of 99.99%. Try to think about how you can link IT metrics to things the business understands. If you can get a view of what metrics the business report on and link the IT metrics directly to those. If you can show the impact of those metrics on how the business performs then the business will stand up and notice.
I’ve used optimisation as a way of looking at a few areas, each of which contribute to demonstrating value. It could have quite easily of been labelled business change or process engineering, however the scope of the topic stays the same. It basically means helping the business leaders to find ways to change the business and play a role in helping implementing those changes.
So what does this mean in a practical sense? It starts with analysing or understanding the way in which the business operates. This isn’t just understanding how each department use technology but understanding how all processes in the business operate and how they are linked or entwined. Some organisations have an advantage as these are documented or stored in a QMS of some description. For those that aren’t you need to find ways to extract this information. One of the ways I have done this in the past is to embed a member of the IT department in other departments, a sort of secondment where they can tease this information out. This information can be fed back into the IT department and recommendations can be made on how to improve these via consolidation, streamlining or by using technology to automate certain processes.
This isn’t the only benefit of this approach, it also improves the perception of IT and helps build relationships across the business.
It is worth also looking at the ways in which people work and how they operate. A few times recently I have referred to the shift to the new digital era. This brings in new ways of working and for me this includes a shift in an organisations culture to one which is output driven. As IT we need to make sure we enable the business to achieve this. The use of Cloud has made this easier as we can be a lot less reliant on our own infrastructure and leverage critical applications from other sources. The strategic approach we have taken to new business applications and IT services is wherever possible a Cloud first approach. This means is don’t need to worry about maintenance windows, having resource available out of working hours and BCP in the same way we once did. As far as IT is concerned our users can work when they want using various devices. Linking this back to metrics we can demonstrate how the business can continue to function following the sun.
Chargeback Opportunities – IT as a service
I am just starting to look at chargeback and I’ll admit it’s not for every organisation. We all know which departments or which users pull on our resource more than others but would this be the case if they had to pay for those services? In similar fashion to service based approach can we charge departments for what the consume? IT as a service if you like. I’m not just necessarily talking about a member of IT helping a particular department but what about those functions that want to leverage some IT capability? The way in which we are beginning to explore this is through development of a multi-platform development environment. We basically have a pool of storage and compute which departments can have access to be able to spin up VM’s and manipulate in any way they deem necessary. We currently have a basic charging model so any new requirements are priced up and charged. That money can be used to reinvest in the environment as we build its capability. IT wouldn’t work in out particular organisations but essentially once the environment reaches a certain stage of its lifecycle the need to reinvest would have disappeared and the charge could appear on the bottom line of the IT cost centre. A similar pay for what you consume could be used for licenses, departments have a need for use of a certain application for a period of time and this could be charged based upon usage. This exercise isn’t all about the revenue the IT department can bring in but about the service it provides. We are giving the business opportunities and potentially saving them money along the way also. Again IT are going the extra mile and showing value to the business.
How we communicate the IT budget to the business
A budget isn’t just a set of figures; a budget should be part of a strategic plan for the forthcoming period. In similar fashion to communicating metrics I’ve been exploring ways of justifying spend. Putting down the technical explanation for purchasing some additional infrastructure or procuring a certain piece of software isn’t always clear and is difficult again for the business to understand. I decided to take a slightly different approach following an example I read in a book called The real business of IT. Each line of my budget was grouped into one of 3 categories that I believed would clearly demonstrate what had to be done as part of our 12-month plan. These categories were, Run the business, Grow the business and Transform the business. They speak for themselves in terms of what they mean, which is the major benefit, anyone can understand what we are trying to achieve. This allowed me to move from a list of items which didn’t mean anything to anyone with a value against it that I needed to justify on a line by line basis to a number of activities that showed a high level outcome for why the money needed spending. In my opinion this shows that the money we are spending is giving the business value
IT is simple, we just over complicate it. Our biggest asset, but also our Achilles heel, is communication. The way in which we communicate to the business is vital, be sure to use business language rather than technical jargon and show how the work we do benefits the business or the individual. If you aren’t already, start measuring yourself and don’t be afraid to show these metrics, you’ll be surprised by the results.