By Tony Scott

Proving to the business the value of your IT organization is not about the technology, it is about their business.  As an IT leader, you need to align yourself to what the business does, and then apply the technology to solutions that drive revenue or efficiency.  While easily said, it is much more difficult to implement.  During my career, I’ve come across several different ways that IT provides the services needed to drive business value (or not).  In that journey, I was hit with a plethora of management practices and standards that all claimed to be the panacea for the woes of IT service delivery.  I can tell you right now, none of them, as a standalone process framework, ever delivered on those promises.  It was a process medley that ultimately got me and my teams to where they needed to be.

So, I set out to write a book (which actually started out as a white paper on quality assurance) on how to frame up a IT manager’s job – specifically from the viewpoint of an application manager, as they are the closest to driving business value and have the most at stake in the success or failure of the IT services provided to the business.  Needless to say, technology has become an indispensible element in business strategies.  IT managers have to marry the capabilities of technologies to the growing and changing demands of the business and the economy. 

I also wanted to begin blogging about these ideas and get input from the technology community.  I thought I would start off with a topic that at least crosses the minds of IT senior managers – how do I prove out the value of my technology organization to the business. 

Well I can tell you it is not about how much IT costs the business.  Yes, you have to manage to a budget, but that budget is driven from business strategy.  IT is a part of the business strategy. 

Let’s tackle the subject of cost cutting first.  If you are given a mandate to cut costs in your organization, then you have not done enough to provide the value that the business determines it needs to stay competitive in delivering products or services to its customers.  Cost cutting should never be a mandate, but rather a joint strategic decision based on changing business conditions. 

If you were to take that mandate and start cutting costs, you will get into a spiral that is very difficult to recover from.  Instead of a value added function to the business, you now look like a cost center, a line item, yet another cost that put into the line of fire every time a bad quarter is occurring.  It happens – a lot.  And those managers that are caught up in those spirals often find themselves on the back end of a pink slip when, at some point, the business realizes that they are no longer competitive because they have not been able to deliver in a way that their competition has already employed to steal your customers!  

You are going to have to get ahead of this.  Instead of being the passenger on the cost cutting train, you need to help drive the business, to new channels for product and service delivery, to look at budget changes (up or down) against the strategy you and the business have agreed upon mutually. 

Think like a sales person

Strategically aligning the services you provide for the business requires you to have a deep understanding of the business.  If you ever spent time with any decent sales person, they would tell you that in order to effectively sell to a customer, they have to understand their customer’s customer. 

You have to do the same thing.  Ask the question what is the business selling to the customer and what value can you provide that is going to make a real difference in generating revenue streams for the company (or conversely streamline internal operations and reduce costs)? 

If you don’t know the answer to that question, you need to build an understanding of the customer and customer segments your company is targeting.  Spend time on the front lines to see firsthand how revenue is generated.  If you work in retail, spend a day at one of the stores or call centers.  If the company has a field sales force, see if a sales person will allow you to follow them for a day.  Before you go, make sure you understand the products.  Take courses that are available from your company that will help you learn the products and services the business is offering. 

In all of the verticals that I worked in, I have always strived to see the business through the eyes of the business leaders I was supporting.  As an application delivery manager, the best thing I ever did with any company is learn about the products and services we sold and their nuances.   It helped me have a meaningful dialog with the business.  Instead of the business trying to interpret what they are doing to drive requirements, I had discussions with the business on their level.  The venue now focused on approaches to reach and deliver to their customers, some that they had not thought about.  The key here is that I was driving the conversation, but it took me understanding the business to get to that point. 

Communicating the value  

Once you have that relationship with the business, you can go back to the standard IT management tools to help shape, deliver, and service the solution that you are proposing.  At that point, the metrics that flow from the work your team performs can be put in light of the business context.  Here are some examples of how a portfolio review is transformed from IT centric to business centric:

What we’ve done here is delink costs and caste these metrics in a business light.  It’s not about how much IT is costing the business, but the value (and challenges) that IT is bringing to deliver products or services to the market.  The cost viewed as a part of the overall P&L. 

You still need your standard book of metrics, but for the business, it’s about how you present those metrics in a way that makes sense to them.  You cannot make them translate your metrics into their operating environment.  You have to provide them the data in a format and presentation that aligns to their business. 

Remember that value you bring is the impact that your operations has on the viability of the business, not how the operation is managed (while that is important, the business expects you do to that as a part of your job).  What you want to focus on is the value you are bringing to the business so you don’t end up looking like a cost center.  To that end, when you are expressing the benefits of technology, it needs to be either tied directly to a business metric (not an IT metric) or to the business P&L. 

The value you provide will be based on the effectiveness of the business to deliver results.  You are tied to the business – with their metrics, their success, and their failures.