The concept of running IT like a business is being mandated directly from today’s CEOs. It entails transforming IT from a cost center to a strategic business partner. But why is it important? And how do you put it into practice?
Start with a plan
CIOs today operate in a tough market. With the large budgets of IT departments and the important role IT plays in today’s enterprises, CEOs are demanding governance and accountability. Running IT like a business enables IT organizations to demonstrate that they can drive down costs while simultaneously driving high performance – and ultimately own the process of mapping all transactions and activities to the IT resources they provide.
To begin, think of it as building a business plan, and start with the fundamentals. Here are a few simple questions to lay the foundation:
- Who are my customers?
- What services do they buy from me today?
- What services will they want tomorrow?
- Who is my competition?
- Am I getting good value from my suppliers?
Running IT like a business doesn’t happen overnight. It takes discipline and a thorough understanding of the business. This transformational journey may be challenging, as it requires a cultural and mindset change – starting with the CIO. The heart of a sound business strategy will require:
- Strategic planning – How to best exploit existing technologies from a business point of view. Think about where technology can improve efficiency or effectiveness, and be a business game-changer.
- Service catalog – Create a framework of services and products to position IT as the provider of choice, and encourage the business units to work with you. The service catalog is the foundation of any showback/chargeback process. Perform benchmarking so you price each service competitively.
- Formal processes – Good governance will result in transparency on how decisions are made, and will empower teams to make decisions. Good processes will lead to efficient incident management and request fulfillment, and a satisfying customer experience.
- Financial and business acumen – You need to know how much it costs to provide each service, the value of services provided, whether the services be obtained at lower cost, what IT is spending money on, and the value of each service to the business. You’ll also need to keep abreast of the latest technologies and market trends to identify opportunities that may have business benefits.
- Socializing and promoting internally – Keep communicating back to the business regarding innovations, wins, and service catalog updates. Promote IT at meetings and demonstrate how IT proactively contributes to the business and is aligned with business goals.
Even if you add different parts of your plan over time, it’s critical to not lose sight of the big picture and the end goal of running the entire IT organization as a business. IT needs to manage this business process in a rigorous and methodical way and must hold itself accountable to reaching this goal.
Benefits to IT
What’s in it for IT if it runs like a business? One of the biggest benefits is enabling IT teams to drive decisions based on financial metrics. You will be empowered to measure and ultimately improve the dollar value of IT. Running IT like a business forces you to take a step back and recognize the overall goals of the business, thereby making IT a true business partner that knows how to positively impact the bottom line. Decisions will be driven by full visibility into each and every IT cost, and you can stand confidently behind your data-driven decisions.
IT financial management/technology business management (ITFM/TBM) software will help you take a more strategic approach to effectively running IT like a business. Money, time and resources will be saved – which is at the end of the day is exactly what running IT like a business is all about.
Request a demo of ComSci ITFM/TBM software to see how we can help you roll out a methodical plan to run IT like a business.