First Key to Agile IT Governance: Stakeholder Satisfaction
If a company's employees and customers are happy with its approach to tech, then its shareholders are likely to be happy, too. CIOs can take simple measures to make sure that all stakeholders appreciate their IT investments and understand how being tech savvy can improve brand perception.
Wed, June 20, 2012
CIO — This article is the first in a series called The 12 Principles of Agile IT Governance. The series is designed to help board members and senior managers leverage technology excellence as a competitive advantage for their organization. Each article discusses a key principle of agile IT governance and presents tactical measures that allow for deployment of that principle.
Businesses exist to generate shareholder value—and shareholder value can be maximized if stakeholder satisfaction permeates the entire organization. (For the purpose of this article, stakeholders are defined as shareholders, employees and customers.)
The first principle of Agile IT Governance is to focus on stakeholder satisfaction. This can be tactically achieved by taking four steps, which will be discussed in depth below:
- Manage shareholder satisfaction with ROI on technology investments.
- Improve management's technology quotient.
- Ensure that employees feel like they work for a tech-savvy company.
- Actively contribute to open source projects and organizing hackathons to improve the company's brand perception in the community.
Step 1: Manage Shareholder Satisfaction with ROI on Technology Investments.
According to Gartner, companies typically spend 3 percent to 7 percent of revenue on IT. This allocation is higher for smaller companies (with annual revenue under $250 million) and lower for companies with revenue up to $10 billion.
Most public and private companies tend to have a few large shareholders and then a pool of smaller shareholders. If you agree with the notion that you cannot satisfy what you cannot measure, then it is important to figure out a way to measure shareholder satisfaction with ROI on technology investments. The way to do this is to engage in dialog with your largest shareholders. They have the benefit of breadth in visibility across other companies in which they have invested, so their insight can be priceless. If this dialog shows that you are performing comparatively better, then you are in a better position to deliver shareholder satisfaction.
Measurement tools must be qualitative as well as quantitative. As seasoned board members and executives well know, subjective assessments of performance can often be more powerful than objective measurements. For example, a qualitative survey might yield the insight that shareholders are impressed with your bank's new iPhone app, which, including integration with back-end systems, only cost $1 million to launch. However, shareholders won't even know about the $10 million you spent to migrate a portion of your legacy application infrastructure to the cloud. The ROI on the latter may be significantly greater, but shareholder satisfaction is higher with the former.