The Challenge to CIOs, "Clearly Demonstrate Your Value!"
CIO's in today's business environment are challenged to deliver more results while reducing costs. Additionally, the business is challenging IT to clearly demonstrate its value. In essence, business executives are demanding to understand how the millions invested in IT truly contribute to the business and what it wants to accomplish.
This article is the first in a series describing the fundamental elements of a framework that links business, service delivery and information technology to achieve desired business outcomes. It describes the key issues surrounding IT executives and establishes an approach to address the challenges and seize opportunities.
Challenges- Value challenges - A common concern is that IT executives do not fully understand the critical aspects of business and how technology contributes to desired business outcomes. Questions to be answered: How can IT drive business operations and growth? How can IT create business opportunities? How can IT transform the business? How do you demonstrate IT's contributions to desired business outcomes?
- Alignment challenges - IT is often criticized for acquiring technology "for technology's sake". A criticism often well deserved. Questions to be answered: How can you determine and demonstrate how IT as an organization can do a better job of aligning with the business? How do you acquire and utilize a clear view of business objectives to better inform and liaison with your peers on the executive management team, as well as the CEO? How do you align the behavior of your staff to stay on course with these business objectives?
- Cost challenges - In many, if not most, organizations IT is considered a cost center. Much has been written about IT as a strategic investment, but in reality, it is often a difficult-to-explain expense. Questions to be answered: Why is this failing? How do you make IT more cost-efficient, while effecting ways to incorporate return on investment evaluations into your planning and decision making processes?
- Planning challenges - IT often allocates sufficient resources to planning, but the process is seldom formalized. As a result, planning is disconnected and ineffective. Questions to be answered: How do you formalize and implement an IT planning process that is integrated with business planning and budgeting? How do you develop practical action plans to better manage your investments and outcomes?
- Communication challenges - Often IT appears to be operating in isolation. IT executives must improve their relationships and communications with other business units. With better internal communications IT can lower the silos and develop synergies. Questions to be answered: What should CIO's listen for when speaking with executive management? What is the most effective way to communicate "IT" to non-IT executives?
- Culture challenges - IT has credibility problems in many organizations. There is a culture of mistrust between IT and other business units. Questions to be answered: How can you make IT more adaptable and relationship-oriented? How can your IT executives create an environment to cultivate creative solutions? How do you deal with perceptions that centralized IT is bureaucratic?
- Service challenges - IT is a service provider and needs to behave in service-oriented and customer-centric ways. In many organizations there is a general lack of understanding about service management. Questions to be answered: What are the right things and the right ways to measure and manage your organization? How can your services become more cost-effective and efficient? How can your IT organization be more proactive in delivering critical services?
- Sourcing challenges - There are different ways to source new systems and services - build, buy and ASPs, among others. IT needs to explore alternatives to manage different types sourcing relationships and service levels. Questions to be answered: What are the key differences in managing your own staff and managing a vendor in the delivery of IT services? What are the appropriate service level agreements?
- Technology challenges - Keeping up with all the technology innovations is always a challenge. IT executives need to determine the real impact e-commerce, relationship management systems, broadband and wireless technologies have on business results, as well as the true costs. Questions to be answered: How do you assess, build and operate comprehensive and integrated technology architectures that have an impact on desired business outcomes? How do you improve availability, performance and security in cost-efficient and effective ways?
- Process challenges - If asked to select an area for improvement with the greatest impact on the ability of IT to contribute to the business, the answer is IT processes. At the core of 95% of IT problems are process and organization dysfunction, not technology. May we repeat: It's not about technology! Many organizations need to give serious consideration to their IT processes and the ways they manage requirements, changes, performance, capacity, problems, configurations, assets, releases, disasters and security, among others. IT processes are the number one source of issues. Questions to be answered: How do you implement centralized controls (standards, architectures, management systems) with decentralized operations? How can IT work closely with business units to identify project requirements? How do you fuse system development and infrastructure development lifecycles? How do you formalize continuous improvements? How do you change the behaviors of your whole organization?
- Organization challenges - Good IT staff are difficult to employ and retain and the gap between the demand and supply of IT skills will increase. Questions to be answered: How do you evaluate and implement alternate staffing and training solutions? How do you manage your staff with productivity and job satisfaction in mind?
Opportunities
It's not about the technology, and it never will be. It's about people and the way they go about their business. The goal is to support and drive the business. Technology is a tool, an enabler. In essence, technology enables people to drive the business.
With rapid changes in politics, economics, business, and technology, there are vast opportunities to leverage innovative solutions to initiate fundamental transformations in the business. There are real opportunities to drive the business toward its goals, providing more and better services (e.g., faster, simpler, more reliable, more secure, etc.). Given the current environment there are real opportunities for IT to:
- Transform the business
- Provide innovative solutions
- Contribute to desired business outcomes
- Drive business growth
All organizations are looking for ways to be more efficient and effective in their market space. With greater emphasis on achieving more value from IT, you are expected to deliver more and better services using fewer resources. Moreover, the technology is only as good as the people who make it, implement it, operate it and use it. To be in control, CIO's need a systematic approach.
Framework
CIOs need a framework to manage their IT investments and operations. While the role of the CIO has evolved from technologist to business liaison, the classic "Business-IT" chasm is still common in many organizations. What's missing is a formal mechanism to link what the business wants to accomplish with the ability of IT to enable, create and support those outcomes.
CIOs need a framework that provides an end-to-end view that connects the fundamental elements of service delivery and IT with desired business outcomes. In the upcoming series of articles we will describe a three-dimensional framework that links the business, services delivery and information technology to achieve desired business outcomes.
Unification Framework
In the Business dimension, we'll focus on how to identify, quantify and understand the business and desired outcomes like business growth and cost reduction. These are the drivers for both Services Delivery and Information Technology. In the Services Delivery dimension, we'll examine the services that must be delivered to support desired business outcomes including services to customers, internal supporting enabling services, as well as services that must be delivered into the business.
Finally, the Information Technology dimension focuses on building and managing IT infrastructures that enable people to drive the business. In all three dimensions, we will describe not only what needs to be done and why, but more importantly, we'll show you how, with intelligent, practical plans of action. |
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