If IT organizations want to remain relevant to the businesses they serve, they must do a much better job measuring the business benefits they provide, not just the technical milestones they achieve.
That’s the lesson I take from a recent CA-sponsored survey of 1,300 senior IT leaders in 21 countries. It showed that IT’s role in controlling technology spending is eroding. More than one-third (35 percent) of IT spending is already occurring outside of IT, a number expected to grow to 44 percent in three years.
As more technical work moves to the cloud or outsourcers, IT’s role is becoming much more “How do I enable the business to drive more business?” as opposed to just “How do I deliver an IT service to the business?” That means increasing demand for IT “business roles” like strategic planner, portfolio manager and business relationship manager.
Our respondents see this also, with four in ten seeing IT as a “broker” or consultant helping the organization do a better job of buying outside services. But to adapt to this new role, IT leaders must do a better job holding themselves accountable for delivering quantifiable business benefits.
To see where they’re falling short, consider the fact that 53 percent of respondents are using “what-if” analysis tools for IT planning, but only 39 percent are using metrics that measure the impact of the business. And only slightly more than one in four understand how a shift in IT investment would change the impact on the business. I see a lot of what-if analysis tools used to prepare budgets or for capacity planning. But very few are being used to figure out alternate strategic scenarios, which is where the real business impact happens.
For IT to become a real “consultant” to the business, it also needs to get much more real-time with its investment analysis. Too many organizations plan for three or four months and then execute for a year. But if a new competitor comes out of the blue with a compelling business model six months into your plan, are you going to wait until year’s end before you act?
Both the business and IT also have to move to a multi-year mindset in measuring benefits. For example, a product manager may bring a new product to market this year, but there’s no way to know if that product is successful until next year. IT falls into this trap because so many of its milestones fall within a single year. IT proudly reports it completed an application inventory or a system refresh or delivered a new help desk system in a given quarter. But that doesn’t generate much interest among business managers, who care instead about outcomes like lower costs or higher productivity that often take longer to track.
As businesses are forced to adapt more and more change, IT departments must start measuring the benefits they deliver, in business terms and over however many years it takes to track them. Achieving that requires new analytic tools, new business processes and new thinking. But if IT can’t prove its business value, technologists will lose the credibility they need to be even an internal consultant to the business, much less the preferred provider of IT services.