• White Papers |
• Bloggers |
• Video |
• Webcasts |
• Events |
• Solution Centers |
• Newsletters |
• Magazine |
• RSS

IT Value? Added.

By Susan Cramm

September 01, 2006 — CIO — Business leaders continue to view IT spending as an expense to be managed and not an investment to be optimized. This inability to quantify the value that IT delivers to the business is, in my opinion, what separates the CIO from a seat in the boardroom.

Most organizations have formed investment councils and require business cases. But very few have defined a "concept to cash" closed-loop management process that directs investments based on strategic portfolio targets, keeps initiatives on track by measuring success around project approach and holds senior executives accountable for demonstrating value. After all, real change isn’t easy.

In The Tipping Point, Malcolm Gladwell discusses engineering change with the minimum of effort. Although conventional wisdom says the progress of IT value management will be evolutionary, Gladwell suggests it can move rapidly if the three Tipping Point laws are applied: the power of context (sensitivity to environmental signals), the stickiness factor (memorable content) and the law of the few (the influence exerted by the socially gifted).

To explore the potential of these laws, consider the practices in place at a small, fast-growing technology company. Since its inception 10 years ago, the company has invested in technology to sustain growth with little consideration given to cost structure or vision for how IT will support its competitive positioning and core business processes. The CFO, COO and CIO make decisions regarding IT investments on a case-by-case basis. Requests and associated IT resource allocations are fragmented by department and have tenuous ties to strategy.

Let’s examine the power of context. It’s amazing how often executives fail to link value management initiatives to strategies and programs that are in place and have momentum. In the tech company, there are growth concerns since its primary market is becoming saturated. Yet IT’s top objective is the integration of its existing ERP processes to knit sales together with downstream supply chain activities. In terms of the company’s emotional energy, this initiative is a yawner and doesn’t have the "coattails" to carry a value management initiative.

The CIO will be a more effective catalyst for change around IT investment if he taps into the company’s emotional concerns around growth. For example, the CIO has uncovered business strategies that call for expanding sales within existing accounts by strengthening customer service and entering new markets with current products. Using this information, the CIO can help frame the business strategy so that the ERP initiative is linked directly to these goals.

 

Email

Print

Comments

Share [+]

Digg This

SlashDot

LinkedIn