Recently we had the pleasure of hosting a webinar featuring MIT Sloan School of Management’s Dr. George Westerman, a leading authority on strategic potential of IT and organizational aspects of technology innovation. During this informative session, he shared his expertise in the area of IT financial management with a particular focus on how IT organizations can enhance the value of their services and play a more strategic role in their enterprise.
Westerman explained how IT needs to move from being an order taker, working to fulfill company needs, to acting as a true strategic partner that contributes to the business conversation and delivers more value. The key to achieving this state is transparency, which is the top driver of business value in the eyes of non-IT executives. Drawing upon his expert insight and real-world examples of how IT organizations of leading companies improved their value position, Westerman offered several best practices for increasing transparency.
Westerman introduced us to his Path to Value, comprising four steps IT can take to become a strategic partner:
- New Thinking – By changing the way IT talks about the services it offers, executives will hear and change the way they view the IT organization.
- Value for Money – Delivering the right services at the right price and right level of value will lead to more credibility in managing IT.
- New Business Value – Highlighting the IT investment process – how projects are prioritized and delivered – will show the value the rest of the organization gains from working with IT.
- Extended Value – When executives see the power of IT and the capabilities it delivers, they are likely to give them more opportunities to continue extending their value.
Aside from the Path to Value, Westerman shared additional thoughts and ideas about how IT can increase transparency and its value to the entire organization.
Other highlights of the webinar include:
Value Traps – Westerman explained how many of the things IT professionals were trained to do actually end up getting them in trouble. These ‘value traps’ include neglecting to talk about the good things IT does, which enables non-IT execs to focus on complaints; emphasizing that IT is a cost of doing business, which gives reason to drive IT budgets down; and treating the organization as a customer, which positions IT as a vendor who can be blamed when things go poorly.
Value for Money – Also integral in raising the stature of IT is to promote the concept of value for money. This can be accomplished by focusing on performing IT activities well and with full transparency, which will build trust and show the value of IT. By highlighting measurements and trends, performance, business processes and service levels balanced with consumption and service delivery costs, IT can demonstrate its value for money.
Transparency around IT Risk – Westerman described the four risks that IT most affects: Availability, Access, Accuracy and Agility. Although IT tends to focus on the first two, it’s the latter two that are most important to business executives. By getting input from all stakeholders about the importance of each risk and how working to improve one area affects the others, you can build more transparency inside IT and across the organization.
Westerman also asked the audience a few survey questions to gauge the state of transparency at their organizations.
When asked which performance metrics their IT organizations discuss regularly with non-IT colleagues, most respondents selected 1) IT Costs (55%) or 2) Project On Time/On Budget Performance (50%). However, Westerman explained that by talking about IT as a cost, you’re asking to have the budget cut, and focusing on project time or budget has nothing to do with whether the project was successful. Instead, he asserted that the area to focus on is business process performance gains, which provides real insight into business value.
Westerman closed out the webinar by asking what percent of projects go through formal post-implementation harvest reviews. Remarkably, 59% said they perform minimal if any reviews on projects. But without reviews, you’re essentially asking people to cheat on the business case projects and they will miss out on gaining real value.
Although moving to a state of full transparency will take time, Westerman explained that starting with just the biggest projects first will bring immediate value, and even the smallest change in how processes are delivered can greatly improve transparency. Each time IT helps to deliver a project with measurable business process, it will gain more trust from non-IT executives. While such changes won’t happen overnight, it is up to IT to initiate the process in order to bring about the desired state of transparency.
Feel free to contact us to find out how ComSci can help you start on the path toward IT financial management transparency. If you’re attending the Gartner Symposium/ITxpo in Orlando October 21 – 25, drop by Booth 314 to learn more.