Our premise for some time has been that maximizing Value – as opposed to only considering cost and total cost of ownership (TCO) – is critical to achieving a corporation’s desired business results. Recently we decided to apply that lens to IT departments. We found that optimum business results for projects and programs are not being achieved. Part of the problem is that CIOs have been losing their seat at the table. Over the last fifteen years they have been increasingly moved within the corporate hierarchy. Many are now reporting to the CFO rather than the CEO (Computerworld). There are several reasons for this, including overspending during the dot.com boom, overspending on Y2K remediation, lackluster results from ERP implementations relative to the promises made, and complaints from the business that IT is too narrowly focused on their own success as opposed to corporation success. In the CEO’s mind, this has made IT an area that requires more oversight. The watchdog for this kind of oversight is typically the CFO.
Our experience has shown that the core reason for this ratcheting down of IT’s position is due to their focusing on the wrong “What” (Cost, Time, Scope, Quality, Risk – the typical drivers of an IT project) and the wrong “When” (success declared when the project is deployed and the users trained). It is apparent that companies are achieving better business results by focusing on a different set of “Whats”, including tracking and retaining new customers, market position, risk management, and operational advantage. They are also focusing on a new “When” by analyzing when business value is actually delivered. This requires them to focus on areas like Adoption, Execution, Implementation, Optimization and Utilization.
As evidenced by recent articles in CIO Magazine, the conversations about IT have moved past merely worrying about alignment and have morphed into programs and discussions of how best to provide business value. This makes the discussion more concrete and useful but one could argue that it hasn’t moved us much closer to solving the underlying problems of properly identifying and driving towards true value to the business.
How does it look to the rest of you? Is IT providing stronger business value?
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