This article, written by Vincent Bieri, Nexthink Co-founder, first appeared on Forbes on December 6, 2017.
Historically, technology has been seen as necessary line items without much strategic value. Even recent developments such as cloud computing and big data analysis have focused less on the value IT brings to the organization and more on the role of technology professionals in making sure these services are available on-demand. So, it’s no surprise that CIOs still struggle to align IT and business objectives, despite the increasing value of technology services to corporate strategy.
But chief information officers (CIOs) can effectively showcase the business side of IT and cast off the mantle of a mere cost center.
Measurement Of Business Value: How Much It Supports Core Business
Companies measure business value according to how well it expands the capabilities of the products or services they sell. Everything else, including technology, must support that goal. Unless you’re an IT firm, IT isn’t viewed as a core business; it plays a supporting role. For example, electronics firms focus on the manufacture of advanced components, insurance firms take care of the delivery of insurance policies and new offerings and fashion retailers work on selling the latest in fashion. In each case, IT serves in the background. While the core businesses can’t effectively compete without technology, the technology itself isn’t seen as driving the business value. Instead, it’s a necessary, added expense that’s offset by revenue.
According to how a CEO or corporate board sees it, the key measurements of true business value include:
- How well it increases revenue
- If it can lower costs
- How it improves productivity
- How it can help the company stand apart
- If it improves client satisfaction
Unless IT can prove it is providing cost-effective and relevant business support to address these measurements, it will lose the sponsorship of the corner office and line-of-business leaders.
Metrics That Matter
So, how does IT prove its value and win the trust of the C-suite? The changing nature of IT services and the rapid rise of accessible technology is changing the narrative. According to Gartner, almost 20% of companies have already invested in tools capable of monitoring business-relevant metrics, and it predicts this number will reach 60% by 2021. The problem is many infrastructure and operations (I&O) leaders don’t know where to begin when initiating an IT monitoring strategy.
For companies just starting their IT monitoring journey, Gartner suggests several metrics that can help businesses align the role of IT in running the business. One key metric is to deploy technology that provides real-time insights into the end-user perspective. Data collected from end users about how they interact with technology, its impact on their day-to-day processes and how it empowers (or frustrates) them is invaluable when it comes to aligning IT with overall business impact. Since end users — from staff to customers to stakeholders — form the backbone of all business value, access to real-time data about their experiences, expectations and the root causes of IT issues can help establish a firm foundation for business/IT alignment and drive mutually beneficial agreements.
According to Gartner, “Historically, the focus was on starting from the ground up — at the infrastructure ‘hardware level’ of servers, storage and networks — then building up from there. What this starting point failed to deliver was business relevance. Due to the changing nature of infrastructure and application architecture, it no longer makes sense to begin data collection efforts from a perspective that is unlikely to provide insight into the end user’s experience.”
In addition to bringing valuable end-user metrics into the boardroom, CIOs can make themselves more boardroom-worthy by avoiding the tech lingo and explaining in basic language how technology can bring bottom-line business value. They can also show long-term thinking (not just an immediate resolution of challenges) and get to know the other board members on a one-on-one basis. It always pays to know your audience and your peers.
CIOs Entering The Boardroom
Despite the challenges, in the past two years, the number of CIOs joining boards have grown significantly, and I expect that number to rise in the coming year. In fact, the number of CIOs serving on the boards of Fortune 100 companies has jumped by 78% over the past two years.
Another way CIOs can come to the table equipped is by having the right tools to prove the business value of technology when it is not the core business of the company. Tapping into the value of technology means finding the right metrics that show its impact on revenue, reduced costs, greater productivity, differentiation and client satisfaction. These metrics must be immediate, accurate and inextricably linked to end users.