Managing IT to Create Business Value
Every year companies waste billions of dollars in IT products and services with high expectations that do not materialize. While IT can assist a company do new or different things- it has no inherent value unless it enhancing the company’s competitiveness. Well intended products and services will create value only if management focuses on expected benefits, links them to the business strategy and governs their delivery.
This is a shared responsibility that must be actively planned and managed between business units and IT in a holistic manner engaging people, processes and IT and at the end of the day, while the responsibility to achieve beneficial returns on IT investments imply shared functions between ITand the business, it is ultimately the business- who are the users of IT and who lead the company- who must spearhead this effort.
From the IT side, the CIO must focus more on management, strategy and vision and less on technical skills. A CIO’s role as a top valuable leader will depend on himself (his leadership, vision, management skills, broad technical expertise), the attitudes of top management (which might distrust or dislike IT) and the role IT plays within the business strategy of the company.
The IT function must collaborate to understand the business needs and provide appropriate technology-oriented solutions. Enterprise applications are good examples of the shared responsibility. Many of these applications promise improved customer relationship, supply chain planning, better management of sales, stricter controls, etc. but at the end, they often result in poor value realization because of ineffectual solution design, poor on inexistent decision making, resistance by people, misuse of the solution lack of coordination and governance of IT assets and many other factors.
Coordination and oversight of IT assets and programs/projects across the enterprise can be managed from a holistic framework following an IT Portfolio Management structure (ITPM). ITPM is a single-minded focused activity that delivers information and tools to effectively manage the sequence of programs that enter the IT development pipeline. Activities include assessing value of the projects, balancing capacity and impact evaluation.
The rationale behind ITPM is to group together (and prioritize) projects or programs and other work to facilitate effective management and to meet strategic business objectives. By aligning groups of related projects and managing them in a coordinated way, businesses achieve a level of control and purpose not available from managing them individually
Further attempts by management to align IT with business strategy have used Enterprise Architecture (EA) frameworks to link the business model and the business strategy with change requirements to drive the business’ evolution and competitiveness. It is a tool used to find IT’s role within the business by- among other things- defining how and when they should innovate, integrate and standardized business processes for its best competitive use.
In the end ITPM or EA initiatives will not work if there is not a true partnership between business and IT. Neither will IT become an enabler of business transformation if it does not transform itself first. IT must go way beyond its critical IT functions and responsibilities (centralized and robustly governed to protect assets, including- maintain the integrity of the operating model and assure system reliability; assess risk; confidentiality privacy; process integrity and availability of service outsource management) and operate as a business (managing its budget, IT Assets and value chain) for it to truly contribute and add meaningful value.
