- May 25, 2019
- Posted by: admin
- Category: Business Management, Business Process
Articulating the Value of IT to Business for Sustenance
We know that today, the dependency on IT has increased substantially. As we are targeting more digitization, presence of IT is changing from nice-to-have to must-have. Amid this accelerating technological shift, enterprises still not only need to expand their market share by winning new businesses, but also must retain their existing customers and maintain a competitive edge over the others. These lofty goals will only remain a distant dream if IT does not play a pivotal role in delivering what the business demands.
An all-inclusive approach to measure, track and deliver business outcomes is essential to articulate IT value to the business. We call it Business Value Articulation (BVA) framework.
The business value has two facets – tangible and intangible. The financial performance parameters like Revenue, Profit, Cost, Market Capitalization, etc. are few of the key tangible aspects that constitute the business value. The equally important intangible aspect includes Brand Equity, Competitive Positioning, Utility of the products or Services to the consumers, Social Standing of the enterprise, etc. All such elements put together leads to the improved business performance as well as adds to the potential of the enterprise. Any activity or arrangement that helps to boost such tangible or intangible elements qualifies as BVA.
Hence, the question arises – How can IT enable the business to achieve strategic objectives?
Traditionally, IT metrics has fallen short of influencing important strategic decisions because the KPIs do not directly gets linked with the business requirements. Therefore, it is imperative to know what to measure to deliver the desired outcome(s). This starts with the definition of outcomes followed by the charting of sub-process level goals that enable the delivery of the business goals by calibrating the applications, infrastructure and business process services touchpoints. It is easy to fix the portfolio once the ‘white spaces’ in the business process flow are identified.
As a measure of business value, the ROI and Cost-Benefit analysis are included in the ‘business case’ for any such new project proposed.
The key to articulate business value lies with the ability to link each application functionality to a business KPI and measure the change this IT functionality can facilitate. There have been enough instances where every stake holder is convinced that a specific functionality delivers value to business but the lack of clarity and ability to measure the delta on the specific KPI is the main hurdle. Not able to quantify the quality aspect in business parameter or in $ term, puts IT in a juncture where it does not get the due credit. It also impacts the business decisions where an articulated business case fetches more investment than the not-so-well-articulated business case though the actual ability to deliver the value may be higher in the latter. It becomes important to provide an estimated Leverage Ratio for a given lifecycle for any IT projects. As such, to make the business impact effectively, it is very much required that all IT professionals must be business process savvy in addition to their technical expertise.
Let us now look at what it really takes to do the business with added value and articulate it. The biggest source of ideas on business value as well as a radical prerequisite is the knowledge of the business. The more the IT team knows the business processes, the higher are the chances of promising ideas for improvement coming from them.
Being in the operational efficiency paradigm, the common arrangement of having SLAs for each task and aligning the IT team with it helps to just administrate the support environment. However, beyond the operational efficiency, there remains a considerable scope and leading to innate expectation of business value add from the team as business enabler.
At ATG, our BVA framework helps in connecting IT to business goals through a three-step approach for any identified and defined Challenge necessitating to actualize an idea:
- Designing the Change Enabler
This is the solution put on papers to address the problem/challenge, be it related to Performance improvement, Automation, etc.
- Computing the Engineering Impact
It provides the details on what will the solution lead to when implemented, be it in terms of reduction in manual effort, increased availability of resources for other activities, etc.
- Providing the desired/more than desired Outcome with calculated benefits in $ terms
This is the core that provides the result and compares with the stated challenge. It also provides data point on how much effort is saved (in % or $ terms), and/or how much cost saving/additional revenue the IT solution has brought to the client’s organization
This framework helps in defining, delivering and sustaining business performance by enabling the convergence of IT and business goals.
Thereby, by shifting IT focus from application development to business outcomes-aligned metrics, IT organizations can establish a better connection with the business and contribute insights for key decision making.