Business value is key to IT success

IT managers who manage technology versus managing the business of IT support have an uphill battle. The bottom line is that it is all about the business, not about the technology.

Technology is certainly important for most companies in today’s world, but the key issue to keep in mind is that technology is not normally the core competency of a company:

• In banking it’s about delivering banking services.
• In manufacturing it’s about creating new widgets.
• In healthcare it’s about providing healthcare services.

In all of these industries, technology plays a vital role in a company’s ability to deliver the services or manufacture the widgets, but technology is not their core competency.

Technology is simply a means to the end result the company wants to achieve. What’s important for the business is to achieve company goals and objectives, and they do that by providing products and services in a productive, quality and profitable manner.

What this means is that a company’s IT organization needs to become a partner to the executive management team in helping the company achieve its objectives. The pathway to becoming a true partner is delivering business value.

Business value includes five very specific things:

1. Increase revenue
2. Decrease cost
3. Improve productivity
4. Differentiate the company
5. Improve client satisfaction

A key point to be aware of is that every one of these items has a financial implication to the company. This is key because what your CEO and CFO focus on as much as anything they do is to manage the business in such a way to achieve their financial projections to the owners of the company. 

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Let’s discuss each business value:

1.  Increase revenue – The IT organization can be instrumental in helping a company achieve more revenue through innovation, doing what is necessary to enter new geographic markets or to support the addition of new products to a company’s portfolio.

In addition, taking advantage of evolving marketing tools such as search engine optimization and pay-per-click advertising that are predominately technology-driven can assist a company create more awareness and sell more products or services.

2.  Decrease cost – IT organizations offer tremendous financial leverage. In fact the IT organization can provide more leverage than any department in a company. IT is the only department that can help every other department of a company reduce cost or improve productivity. No other department offers this type of leverage.

3.  Improve productivity – There are countless ways to improve productivity in a company and IT is often the facilitator to make it happen. Here are just a few:

• Eliminate paper
• Implement business applications to improve processes and productivity
• Implement video conferencing technologies to reduce travel and improve meeting and training time

4.  Differentiate the company – Technology can often differentiate a company from its competition. When this happens a company can become more competitive or even have an advantage in selling its products and services.

5.  Improve client satisfaction – It is much more profitable to keep a client than it is to replace a client you lose. In most companies the major source of revenue is from existing clients, not new clients. Improving client satisfaction can definitely help a company retain its clients and this is a key value every CEO wants.

Summary

Every recommendation IT makes should provide business value in some form. If it doesn’t, it becomes difficult for senior management to justify why the company needs to spend money and manpower to do it.

It’s important for IT managers to get into a habit of thinking like a business owner and always ask himself or herself a basic question when recommending projects, “If this were my company, would I spend money and use resources of the company to do it?”

Business owners usually do things that will put money (profits) into their bank account. The five business value components discussed above do just that.

When IT managers make recommendations that deliver quantifiable and tangible business value their senior management team sees them in a whole different light. They start seeing us as business partners and not technical managers, and this is a tremendous difference and positive thing.