Making IT Happen

The FT on Monday had a front page article, the gist of which was that companies didn't know what value they got from their IT spend.

This is the front page article... "Big spenders reveal..."

...and this is a more detailed piece on p26: "Big spenders are brought to book..."

I was reminded about these articles by a letter in today's FT which responded with three points: first, how do you define IT spending, second even if you knew how much you spent how would you know whether this is 'right', and third, how do you measure benefits.

My own view?

First, what a coup for Micro Focus, who commissioned the survey. With an annual turnover of $172m this is a fantastic piece of 'free' advertising.

Second, whilst 70% of respondents said they knew how they were spending on core software assets, we will never know how many of them were right. I don't believe for a moment that 70% of companies really know.

Third, to the 48% that tried to quantify the financial value of all their IT assets my response would be good luck, but I'm with the 52%. I'm left with an image of complicated spreadsheets underpinned with swathes of assumptions, that produce the 'answer' that 'yes, IT does add value'.

I do think you can quantify the value of IT in some cases, but in others you can't. The trick for a CIO is to recognise the best approach to articulating potential value to support cases, or real value to present results. For that you need a whole range of approaches. I'll add a list of mine in a few days.

In an average year I think I probably get contact from around 500 companies trying to sell IT products and services to my company. Some do a great job, and some don't. This is the first in an occasional series highlighting some of the best and worst approaches.

Yesterday I got an e-mail from a recruitment consultant I have never met, selling his services. It included the phrases "waiting patiently in the wings for my opportunity to shine" and "I'm looking to build solid relationships, not to engage in hit-and-run-business".

Stirring stuff, but it started "I trust you are well and had a pleasant easter weekend". Ah, the joys of cut and paste.

This is a follow up to a recent entry about measuring IT value. As that entry said, most IT teams don't put much effort into measuring actual value, but that's not necessarily a bad thing as some of the attempts I have seen over the years are pretty bogus in any case. Your boss, and other people in the organisation, will always have their own instinctive valu-o-meter, and no post-implementation report is ever going to swing it much.

What IT teams are great at is predicting value, and getting other people to agree with these predictions. Of course we have a technical term for these predictions - business cases. Every year we pursuade our colleagues to sign off billions of pounds worth of cases - a great and unheralded strength of the IT profession.

I've read lot's of theory over the years. My experience is that, in practice, the cases that get approved tend to be one of the following types:

Well sponsored cases. Remember the mantra "it's not an IT project it's a business project." This is of course completely true, and getting an influential person elsewhere in the organisation to drive the case because they think they will benefit from it is a good approach. The problem with this approach is that it doesn't necessarily identify the best cases, just the most popular ones. There is a difference.

Cases that prey on fear. The value proposition is usually compliance based - i.e. approve this and you won't go to prison, get fined, ruin our reputation etc

Real value adding cases. The classic 'case' - based on real observable cash flows - spend this now, and increase that income / save that cost in the future. FD's are always very suspicious of these - they manipulate numbers for a living, and know all the tricks. Grind them down and they will eventually start to feel guilty about not signing them. Don't go too far or you will seem like a stalker.

Transformational cases. Best approach here is to hook into something your colleagues read about in the paper - Web 2.0 is a current favourite - and then subtly imply in the case that anyone who doesn't approve it is a progress halting luddite dragging the organisation backwards into the stone-age.

'Trust me' cases. I put one of these through every now and again. If you have an instinctive judgement that something is right, you shouldn't let the fact you can't articulate it put you off. Creativity and experimentation have a place.