Robert Urwiler’s Hierarchy of IT Value

Robert Urwiler, CIO of Vail Resorts, developed a unique model that he uses to help the management team at his Boulder, Colo.-based company understand the importance of different kinds of IT investments. He shared his IT value pyramid with an audience of CIOs attending a session on business strategy at CIO’s Leadership Conference in Huntington Beach, Calif.

Urwiler based his model on psychologist Abraham Maslow’s Hierarchy of Needs. Just as humans require such basics and food and shelter to function, oraganizations need such IT fundamentals as a stable infrastructure and access to data in order to operate in the business world today.

Urwiler’s hierarchy of IT value looks like this:

Top: Paradigm shift

Competitive differentiation

Integrated Information needs

Stability and security needs in applications environment

Bottom: Infrastructure needs

At the bottom of Urwiler’s IT value pyramid is infrastructure needs. This is the requirement for the network and basic dial-tone for IT that all companies need to operate at a fundamental level.

The next level in the hierarchy represents the applications the company requires to do business, so in Urwiler’s case, the software the company uses to sell lift tickets, pay vendors, and check guests into lodges.

Integrated information needs refers to a company’s ability to extract actionable information and insights from its systems to make better business decisions. Urwiler notes that a lot of companies don’t get beyond this third level of the pyramid.

Competitive differentiation refers to a company’s ability to use technology to distinguish themselves in its market.  Urwiler gives the example of how USAA uses its web site to interact with its customers.

At the top of the pyramid is a company’s ability to use technology to create a paradigm shift in its market, in much the same way that Netflix used the Internet to turn the video rental model on its head and iTunes turned the music industry upside down. 

Urwiler categorizes his various IT projects and investments according to this value hierarchy.

The model helps business leaders understand why certain IT investments are being made and makes it easier for Urwiler to talk about technology initiatives in business terms. For instance, Urwiler discusses a data center consolidation that’s currently going on at his company in terms of that most basic level of infrastructure needs.  His company is

also rebuilding its central reservation system, which falls into the second level of application security on his hierarchy.

By putting IT projects in the context of this pyramid, executive management gets a better understanding of why the projects are being taken on, and it also helps Urwiler justify those basic, keeping-the-lights on investments are that are necessary in so many companies but so difficult to cost-justify.

Urwiler says the model has worked well for him at Vail and he hopes other IT executives can put it to use in their organizations.

What do you think of Urwiler’s model? How do you explain the value of IT in your organization? What models have worked well for you?

Addendum: Robert Urwiler has kindly given CIO.com permission to post a paper he wrote about his IT value and maturity model. Check it out.