Trust, credibility, and respect are earned through IT Value Creation and result in IT-business alignment.
Creating Value From IT
We’ve been discussing how IT doesn’t just suddenly align with the rest of the business. Rather, IT must demonstrate the value it creates and earn the trust, credibility, and respect from the business. That leads to IT being invited to do more strategic work, resulting in full alignment.
So how does IT create measurable value?
We’ve been applying, and continuously refining, an eight-step IT Value Creation Process™ for more than 20 years. This process has led to major IT turnarounds, several digital transformations, and has created hundreds of millions of dollars of value for our clients. I’m happy to share that process here.
The Eight-Step IT Value Creation Process
Following is a brief summary of the Eight-Step IT Value Creation Process. It is abbreviated to express the concept in a short article and is not meant to be a comprehensive explanation. As always, if you want more detail, just contact Emily Ford at firstname.lastname@example.org and she’ll be happy to send additional information or set up a 30- to 60- minute call with me.
Step 1: Assess IT
IT assessment generally looks at the organization, services, operations, and infrastructure.
We evaluate twenty areas within these four categories. We present a simple graphic with the twenty assessed areas and a green, yellow, or red light above each to signify the level of risk. That graphic can serve as an introduction in the executive summary.
The assessment report should have a one-page executive summary that may use the above referenced graphic in the introduction and then simply lists the highest risk items in one sentence each. For each item, we quantify the potential business risk in a single sentence, and then share a one-sentence recommendation. Remember, this is the executive summary and details will follow.
The following pages will detail the assessment, organized in each of the four categories and the five items reviewed in each. This section should be actionable, meaning the IT team should be able to understand each assessment point and any recommendations.
The goal of the assessment is to share observations, specify business risks, and recommend corrective action.
Step 2: Triage
Triage is the art of prioritizing. We evaluate what is IT working on and compare that with our assessment report. Chances are, IT is not addressing the high-risk items in the assessment.
We identify any items that may risk business failure and immediately address those. Then we set priorities by business impact as quantified in the assessment report.
That means IT will likely stop working on many things that are on our plate. We simply let some fires continue to burn because, in the overall picture, they just are not as important as they seemed before the assessment.
Obviously, we have to continue to support the business but, if we don’t fix the high priority items, there may not be a business to support. And, having shared the assessment with senior leadership, the rest of the business will appreciate the reprioritization.
Step 3: Planning
Strategic planning in the IT Value Creation Process is the roadmap for navigating the IT Value Journey™, initially emphasizing Maintenance and then shifting to Enhancement and, ultimately, Transformation.
In the Maintain phase, we fix root causes of recurring issues that lock IT into maintenance and add little, if any, value to the business. During this time, we can start baselining our metrics. More on that in the next section.
Our triage probably demonstrated that we’re not serving the most critical business needs. Rather, IT typically addresses whoever is most persistent or shouts the loudest. This is the time to ask our business colleagues to justify requests for IT services. How much money will we save, or how much new revenue will we gain, by fulfilling a given request? How much will it cost IT to deliver? If the ROI is there, proceed with the project. If not, be sure the business understands why.
By tracking the shift in IT focus, baselining our metrics, and gaining business partnership on the ROI of projects, we establish the foundation for measuring IT value.
Step 4: Measurement
This is the step that starts earning IT the trust, credibility, and respect from the rest of the business. Regardless of our baselines from the previous step, whether the numbers are good, bad, or indifferent, measurement is what enables us to show continuous improvement. And that catches the attention of business leadership.
I like to measure three specific areas. We measure Customer Service based on customer satisfaction among internal and/or external customers and compare that with the cost of delivering service. Satisfaction increases while costs decrease, so we earn trust, credibility, and respect.
We can measure the Infrastructure and Operations by looking at cyber resilience and availability of services. We want to show that time to detect a cyber threat is decreasing and time to remediate a threat is also decreasing. We also want to show improving availability of services. Not “uptime” of servers, as an example, but availability of the services that may run on that server. It’s much more important to business peers that a client facing system is available than the state of the server it’s running on.
Software Development is an interesting challenge to measure for most IT teams. I like to look at the cost per story point in an Agile environment because we should be able to show over time that we are delivering more functionality at a continuously decreasing cost. I also like to track where bugs are found. We want to catch bugs during the sprint or, perhaps, in user acceptance testing as opposed to discovering bugs in production. Measuring this should demonstrate improved IT governance and reduced costs.
During the Maintenance stage of the IT Value Journey, we start collecting these metrics. Now we know where to focus our improvements. As we measure and improve, we free up resources to keep up with necessary enhancements to support the business rather than maintenance. And we earn trust, credibility, and respect.
Step 5: Culture
As we introduce planning and measurement, we can shift the culture to one of pride and teamwork. When we measure IT, as in the previous step, we start seeing healthy dependencies. For example, when Customer Service sees frequently occurring issues, they can work with other parts of IT to discover and remedy the root causes. This should create a strong sense of team and a customer obsessed culture.
We know the culture is shifting when the perceived attitude of IT changes from “we can’t do that” to “how can we do that?”
A customer obsessed culture and strong sense of teamwork will always enhance the value created by IT.
Step 6: Governance
During the early years of Sarbanes-Oxley, I kept hearing IT people complaining about audits and auditors, and SOX and governance became bad words. Then, I was serving as Interim CIO orchestrating a substantial IT turnaround. I discouraged the use of those words and, instead, we spoke about our IT Quality Program.
It turns out the great governance, including solid IT controls, results in improved quality and increased value creation.
Step 7: Communication
IT value creation requires great communication. If the goal is to build trust, credibility, and respect, then we need to communicate the value we’re creating.
Share the IT strategy and the achievements from the strategy. Share the strategic IT metrics, like described above. And be open about our challenges.
Share these in an executive summary at least quarterly. If you’re a CIO and reporting at Board meetings, condense all of this into a 10-minute presentation, using no technical terminology. Always discuss IT from the business perspective.
Step 8: Continuous Improvement
IT Value Creation depends on continuous improvement. Establish your baseline metrics as soon as possible. Some can be built immediately. Others may take a year to measure. Just get started.
Wherever the metrics start, challenge your team with those big hairy audacious goals (BHAGs). If customer satisfaction is at 60%, ask the team how to get to 75%. Let the team determine the action plans. Let them own it. You’ll be amazed at what they come up with.
Seek improvements every quarter and every year. At first, you may be able to make huge leaps. Later, it will be just incremental improvements. It’s critically important that the business sees continuous improvement, including increased value creation.
Trust, Credibility, and Respect are earned through IT Value Creation and result in alignment. We highlighted the IT Value Creation Process™ showing eight steps to prove the value created by IT. Step eight emphasizes continuous improvement, which means we can repeat this IT Value Creation Process every year, finding that we spend less time on assessment and triage, and more time on planning, measuring, culture, governance (aka quality), communication, and continuous improvement.
As IT demonstrates more and more value, we earn the privilege of participating in a more strategic and, eventually, transformational role.
Next, we’ll move on to embedding technology in the corporate strategy.
We purposefully keep these articles brief and aim to provide high level guidance and trigger ideas. As always, if you want more information or don’t want to wait for the upcoming articles, email Emily Ford at Emily@WolffStrategy.com and she’ll set up a complimentary 30-minute consultation with me.
Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management, Digital Transformation, IT Leadership, and Executive Coaching. Larry has served as CEO, COO, CIO, Chief Digital Officer, and management consultant for public, private, international, and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues. His methodologies span industries and scale to companies of all sizes.
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