What Does It Mean to Run IT Like a Business
Run IT like a business. We’ve all heard this phrase numerous times. I can imagine all of your heads nodding as you once again hear this phrase. I know most of you are already are familiar with it, but do you really know what it means?
Run IT like a business sure sounds important. It easily rolls of the tongue and sounds logical. As with many catchphrases in the past though, IT professionals may fear this is simply just another short-term trend. Like it or not though, run IT like a business is here to stay as it’s a mandate directly from today’s CEOs. Running IT like a business transforms IT from simply a cost center to a strategic business partner. But do all IT leaders understand exactly what this means?
Just like every business is unique, every IT leader needs to develop their own answer. A good place to start is with the fundamentals. Think of it as building a business plan. 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?
CIOs today operate in a tough market. CIO.com recently shared, “it’s not just the magnitude of the budget, but the influence that IT has throughout today’s enterprise that demands a new way of operating. CEOs and boards of directors have taken note of their dependence on IT, and they will no longer tolerate IT operating by its own set of rules, as a mysterious black box with no apparent business discipline or 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 consume. It takes hard work and a thorough understanding to do this, but anything less is considered a failure.
Running IT like a business doesn’t happen overnight. This transformational journey will be difficult as it requires a cultural and mindset change – starting with the CIO. Running a successful business is nothing new though and you can easily start with the fundamentals we included above. The heart of a sound business strategy will remain the same for IT as well – strategic planning meetings, thorough project management practices, customer satisfaction surveys, financial audits, etc. The key is to not just implement a few sporadic pieces of a well-run business. Even if you build on different parts 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. IT teams must hold themselves accountable to reaching this goal.
So what’s in it for IT if they run it like a business? One of the biggest perks of running IT like a business is enabling IT teams to drive decisions based on financial metrics. In the words of Peter F. Drucker, “what’s measured improves.” You will now be empowered to not only see but also 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 now be driven by full visibility into each and every IT cost. You can stand confidently behind your data-driven decisions.
The quickest way to run IT like a business is through the right IT financial management software. The right software gives you line of sight to unit-costs, IT spend, cost reductions and future technology goals. Business and IT will be brought into a fully collaborative planning and budgeting process that drives efficiency and promotes innovation. If you don’t have insight into the cost of IT services and the effects of business consumption on your budget, then you’ll be relegated to reacting to requests in a tactical and spontaneous manner – and quite frankly, you’ll be a thing of the past in the minds of today’s C-level executives. Taking a more strategic approach is crucial to driving value and 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.