Run your IT organization like a business

The current economic climate has put a particular emphasis on the efficiency and effectiveness of organizational projects and IT portfolios. Programs and projects that are unable to demonstrate a reasonable return on investment are being punished, and in many cases rightfully so. Unfortunately or fortunately, depending on your particular vantage point, management’s axe is falling on those whose outcome is not well defined, whose numbers don’t add up, or worse who simply have no numbers. As a firm believer in having well defined outcomes, business cases and aligning change initiatives, programs, projects and other organizational resources to strategy. I think that this is probably a good thing. In the short term however, both evaluators and those being evaluated will need to work together to ensure that the unfortunate consequences of this new focus on the outcomes, alignment and return on investment are protected and advocated for by people with similar requirements and “desirements”. This will only work if those same people have comparable abilities to “market” their interests. This can be a serious problem for the organization as a whole if management doesn’t recognize that there may be a gap between perceived value and real value. One of the things that is fairly widely accepted in the business world is that you should be careful what you measure because what you measure will get done. The renewed focus on accountability and return on investment across many organizations is essentially a renewed emphasis on measuring based on these yardsticks. I believe that in the long run this will have enormous benefit for organizations that stick with it and evolve their project and portfolio management efforts in coordination with an overarching performance management program. In the short run it may cause enterprise problems by punishing organizations, programs and projects that are delivering results but aren’t able to enunciate their value. IT executives take note; this may be a major problem for you sooner rather than later. Most business executives are fluent in the business case and live and breathe return on investment, they may also have more access to experienced sales and marketing professionals. IT executives generally don’t have that same expertise on staff, or in their personal background. This is compounded by a real gap in understanding – how what they do actually does impact the business.
How well can you present the benefit the business gets from your resources? How much did it help them? What were the outcomes that resulted? Executives that aren’t able to answer these questions are going to lose the budget battles in tight economic times, they are also going to lose control of their portfolios over time to outside vendors that can better enunciate their value proposition. I’m not advocating that IT executives develop their own marketing department, but I do think that there are some real lessons that need to be learned by IT in order to ensure that their efforts are appreciated and that the organization as a whole gets the value it is supposed to from their technology organization. The following 3 steps will help the IT executive better communicate the value to the business.
Step One: Establish ongoing relationships and remember to take credit. This can be as simple as developing a systematic approach to gathering the fruits of your success in order to reflect some of that glory back to your unit as a key enabler. Did your team help bring on a critical new application that increased sales? Go to the business unit and get the numbers. Did you make some course corrections during the delivery to tailor the application for the business? Get a quote from someone. Think of it as an internal press release to help generate more business (funding) for your IT department. More importantly make gathering this type of feedback a part of every project’s execution. One of the biggest things most IT shops need to come to grips with in this new era is that they are no longer operating as monopolies within their organizations. The proliferation of options and changing expectations of stakeholders means that you are now in competition with a wide range of vendors for wallet share within your own organization. Those vendors will have marketing and sales teams, you need to counter this by building your internal communications practice, developing business side advocates and taking advantage of your domain expertise. I want to be very clear – I’m not advocating for a territorial IT department that pushes back on initiatives just because they use outside vendors. I’m suggesting that we are entering an era when internal IT departments can lose budget to outside vendors based on a lack of marketing rather than a lack of competitive offerings. I think this competitive environment is good in the long term and probably means that we will see successful internal IT departments that are much more tightly integrated with the business than ever before, because those that don’t will see their influence and footprint erode substantially as outside vendors that are willing to work closely with the business win more and more wallet share. Remember that you need to reach out to the business units regularly. Not just to let them know when the network is down but to let them know what you are doing to help support their initiatives and to provide opportunities for feedback.
Step Two: Establish a set of criteria for success that you can tie to the value proposition and the organizations values. Many of the measurements we are accustomed to in IT – from uptime to help ticket resolution – don’t clearly tie back to the bottom line. They are probably good to do, for example it is probably good for the corporate website to be up and running at all times, but what does that mean for the business? How many visitors does your site get? What do you know about those visitors? What percentage of your corporate revenue is dependent on the supply chain system running in your datacenters? If you process 65,000 transactions a month that account for 1/2 the corporate revenues related to a specific line of business and every outage of more than 2 minutes costs you thousands or tens of thousands of dollars, it provides context for “overhead” expenditures. Does the line of business you are supporting really understand what they are getting for their dollars if you are working on a fee basis? I spend a lot of time with business side executives that don’t understand what they are getting for the 7 million they spend every year on IT. The story IT tells has to be tied to the story of the business and its success, clearly aligned to the success of the business. If you can’t tell that story then something is probably wrong not just in how you are marketing yourself to the organization but in how you are executing your programs. You should be able to clearly work backwards from the strategic approaches of the business to best understand how each is enhanced by your technology offerings. If you aren’t sure how your programs are critical to executing the business you can be sure that the business is wondering the same and eventually that wonder will culminate in budget cutting or re-allocation. If your organization has a clear strategy coming from executive leadership, it is worth taking the time to align your internal strategies to that top-level strategy. Similarly for performance indicators, taking the time to align these ensures that you can clearly talk to how your efforts support the business.
Step Three: Start thinking like you are in business to support the business. This means developing the in house skill to develop business cases, strategic communications and relationships. Again, I’m not suggesting that you need to go out and get a sales and marketing staff, but the IT staff has to start thinking about things that used to be “business” stuff. Developing business side relationships are critical and will improve your performance over time. Spending time cultivating those relationships will not only ensure you have an advocate at budget time, but will ensure that you are responsive and are deserving of that advocacy. Don’t think of it as a sales job, think of it as requirements gathering. Great sales people are great at client side requirements. This is a skill worth building in your organization. No outside vendor should be able to beat your team in understanding your own organizations requirements, yet I have often heard from business executives that they decided to do something because vendor “X” really got their problem. How is this possible for an outside sales team? How could an outside team come in and beat you at understanding your own organizations requirements? If an outside vendor has the right technology to meet your business requirements you should be the first to realize it and should be the ones bringing the vendor to the business rather than evaluating it after the fact. Don’t depend on the business to drag you to their next set of requirements. One of the greatest competitive advantages your organization should have is an absolute lock down on domain expertise. To be successful and stay relevant you must exploit this to your fullest advantage. Identify and begin talking to your business customers about the technologies and solutions that are going to be changing the industry before the vendors of the same start talking to your business. This isn’t about shutting them out, because to be a successful IT organization you will need to bring in and adopt some of these same technologies in order to ensure the business is successful. It is about ensuring that you have the confidence of the business. Every time the business hears a pitch about something that a competitor is doing to save money, enhance productivity, etc. that you haven’t talked to first you lose credibility and eventually this will affect the performance of the organization as a whole.
Finally, I hope that the above isn’t taken as an approach to maintain control and budget over increasing performance. Quite the contrary, I believe that running the IT organization more like a business will significantly increase performance both within the IT organization itself and for the organization as a whole. At the core of this statement is a belief in competition and clarity, which I think are closely tied in this case. I think that as organizations demand more clarity and insight into what they are getting for their money that competition for those dollars will intensify between internal and external organizations. I believe that this is a good thing and that it will play a key role in driving the sort of business and technology partnership that is so often talked about but so rarely realized. I also believe that organizations are opening themselves up to making terrible mistakes if their internal executives do not prepare themselves to participate in a more competitive environment. The world is changing and as more technology savvy business people enter the working world, the unquestioned expertise in all things technology related will no longer be ceded to the IT department. Business executives who are comfortable with technology and who depend on highly sophisticated technology in their lives outside of work are going to bring with them a different set of expectations. These executives are going to be more likely to expect agility, more likely to be aware of other options, and increasingly likely to question the wisdom of the IT organization. In order to meet that challenge the IT organization is going to have to evolve if it expects to thrive. Part of that success is in thinking more like and acting more like a business that is competing for their own organizational dollars because, like it or not you are.

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