The drive to an IT strategy of value

Oscar Wilde once famously remarked that a cynic was someone who knew the cost of everything and the value of nothing. That remark...

Oscar Wilde once famously remarked that a cynic was someone who knew the cost of everything and the value of nothing. That remark applies all too often to IT directors - and their chief executives - who simply see IT as expenditure rather than investment, writes Julia Vowler.

But how can a company achieve a value-driven IT strategy from a cost-driven one? "It takes about a week to develop a value-driven IT strategy," says Chris Potts, director at consultancy Dominic Barrow. "By talking directly, on a one-to-one basis, in business language to business managers."

Potts welcomes the current climate of belt-tightening and spending wariness. "Users have decided to invest less. This is good because it means you can restructure your strategy around value," he says.

But to change strategy means knowing who controls the current strategy. "To understand who runs IT strategy in an organisation I identify who has the money and who is turning off the tap. Whoever that is runs IT strategy," he says. "If a chief executive or finance director decides to turn off the tap it may be because they don't understand the value of the money IT is spending."

When trying to develop a value-driven IT strategy, Potts says the first question to ask is, "Whose value do we consider?"

It certainly can't be the IT department's. "IT delivers no value on its own," he says.

The most wonderful IT in the world is as useless as a car engine revving in neutral - to be of value to the corporate car journey IT must engage the business drive.

But if value belongs to business, the next challenge, says Potts, is to understand that business value is itself no easy metric to apply. "[Business] value is very difficult to measure - are we talking cost reduction, revenue growth or brand enhancement?" he asks.

If IT does not try to find out what the business values, then it has no hope of gearing IT to supporting that goal, whether it is selling more goods, strengthening a brand image or running a business process more efficiently.

"You have to work backwards from business value," says Potts.

Business value is certainly where senior management is focusing. "The board spends its time looking at the raft of projects and programmes going on in the business, which will have more or less IT content to them," he says.

"The IT architecture feeds into this: can you identify how IT can contribute to the business benefits [of projects] or map IT investment to business goals such as brand development, acquisitions, organic growth, cost reduction, and, most difficult of all, business infrastructure?"

But, says Potts, none of this should be news to IT managers, however familiar the complaint that IT and business speak different languages. Almost nothing that IT management does is different from any other area of business management.

Managing services, navigating uncertainty, leveraging the value of investments, improving strategic and operational alignment, investment planning and management are all, Potts says, core competencies of senior managers throughout an organisation.

IT should not think itself unique or set apart from the rest of the business, however much it might like to, or feels forced to. "Internal IT operating costs are business costs, IT investment is business investment, IT sourcing is business sourcing. Managing IT suppliers and spotting the business value of IT are the only specifically IT competencies," he says. "Everything else is just business competencies."

Chris Potts was speaking at last month's Impact Executive Programme seminar on Measuring and Delivering Value to the Business

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