Posts Tagged ‘Information Technology value’

8th

It can be very challenging to manage a cost center where the CEO feels that the value provided is insufficient for the costs.  Yet that is the very situation many CIOs face every day.  How did such a difficult circumstance arise, and what can be done to overcome it?

If the CEO thinks IT doesn’t deliver enough value for the buck, that can’t be a good thing

Years ago I recall reading that the purpose of technology within a company is three-fold:  increase revenue, reduce costs, and enhance the differences that cause a Finding Valuecustomer to select our company over our competition.  But while we understood this in a theoretical sense, IT at most companies became primarily dedicated to cutting costs.  Many of the factors contributing to this were addressed in my post on Moving IT from Cost-Cutter to Difference-Maker.  As this post indicated, cost centers are typically managed by continually reducing their budget.  This results in an even larger percentage of the IT budget dedicated to keeping the lights on and fewer dollars available for technology projects to move the company forward.  It is important for IT to move away from being seen as a cost center toward being a business driver.

But even being seen as a cost center does not necessarily cause the CEO to believe that IT costs are too high for the value received.  After all, you don’t often hear that cost centers like Accounting or Procurement are too expensive.  And while the size of the technology expenditure quickly shines a spotlight on IT, that in itself doesn’t mean that the company is not receiving enough bang for its technology buck.

How is the CEO supposed to know the value IT brings?

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22nd

“What business are you in?”  Ask any IT practitioner this question and you will likely hear something like, “I’m in IT.”

Let’s face it.  Most IT people do not seem to see themselves as bankers, manufacturers, retailers, or distributors.  They see themselves as IT professionals.  After all, couldn’t they easily take their skills to another industry that uses similar technology?lemonade stand

It is true that an IT professional may perhaps be able to switch industries easier than those in some other professions.  But a single-minded focus on technology (rather than on the larger business environment that actually writes the paychecks) prevents your company from truly benefitting from all the talents at their disposal.

In his book Get Out of I.T. While You Can, Craig Schiefelbein proposes an interesting exercise.  Pick out any IT professional in your company.  Now imagine your CEO recruiting that individual on the spur of the moment to show some important potential customers around the company.  You could expect the customers to ask typical questions like:

  • What is your target market for each of your products?
  • Who are the major competitors for each of your products and what are your advantages as compared to your competition?  What are the selling points your competitors use against you?
  • What else differentiates you from your competition?
  • What is your company doing to ensure me that it will still be around in five or ten years?
  • What are you doing to improve the customer experience?

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6th

Why is there such an emphasis on the need for IT transformation? 

Think about it.  If everything was poking along at a glacial pace and everyone was satisfied with the results they are achieving through IT, then there likely would not be such a hue and cry for IT to undergo radical changes.

But that is obviously not the case.  Social, mobile, cloud, and big data analytics are combining to create what some have called the perfect storm for disruptive innovation (The Wharton School, University of Pennsylvania, Mack Institute for Innovation Management).  

In his book, Here Comes Everybody (p. 160), author and NYU professor Clay Shirky wrote, “Revolution doesn’t happen when society adopts new technologies – it happens when society adopts new behaviors.”  Is there any doubt that social and mobile technologies are driving new societal behaviors?  And these new behaviors are having a huge effect on many elements of our businesses – marketing, sales, product development, customer service, and yes, even IT.

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30th

“How many of you know of a company where people aren’t real happy with their IT department?”  This question was asked in a room of executives from various businesses.  The response was immediate laughter.  There seemed to be almost unanimous agreement with the one executive who exclaimed, “No one is happy with their IT shop!”Dumb PC

In a commissioned study conducted by Forrester Research on behalf of BMC, 86% of the global business users surveyed reporting losing an average of 18 hours/month due to IT issues (Exploring Business and IT Friction:  Myths and Realities – free registration required).  That’s over 5 weeks a year!  #WOW!  Think about the effect that would have on the company’s bottom line!

 

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