Using Innovation to Drive Value in Enterprise IT

Stephanie Overby captured popular sentiment in a recent CIO.com article when she said, “IT Value is Dead.  Long Live Business Value.”  She picked up on a theme we see from more and more CEOs and business organizations, IT doesn’t make relevant measurements, and CEOs don’t care about IT’s attempts to align to the business; all that matters is meeting business goals.  This criticism is catchy but we believe that IT can learn to be innovative, aligned to the business and demonstrate the accomplishment of business value. Let’s start by looking at what value means to the business.

In our discussions with many senior business executives it is clear that they can frame their attempts at creating value in a few categories.

1. Increased agility in responding to a changing market place, means new products, services, and cross selling must be introduced rapidly while the excitement is high.
2. Take educated risks to be the mindshare leader in the marketplace, while protecting the brand. New services and products should not destroy their brand through poor execution.
3. Change investment and cost models in the face of a changing marketplace; don’t be weighed down by the past.

In our discussions with the IT executives who must fulfill the above goals, these IT Key Performance Indicators (IT KPI’s) are how they say they are measured:

1. Support business process agility, including the introduction of new products and services
2. Cost containment and transparency
3. Minimize operational risk
4. Maximize reliability
5. Reduce complexity and increase efficiency

IT executives want to enable business strategy, item #1 above, to become relevant, while avoiding the tag of “cost center”. The problem is how to address this first KPI above, while executing against how they are measured today (mostly 2-5).  All of this needs to happen while balancing the manifestation of past decisions, in terms of aging infrastructure and redundant applications.

We can only drive our first KPI if we first learn how to unshackle ourselves from the past; a past where the goals we were measured on (KPIs 2-5) were difficult to achieve.  To accomplish this we need to ask, “what can we do now that we couldn’t do while the tangled mess grew?”  That’s where innovation comes in, we need to do something today with the mess from yesterday so that we can build for tomorrow.  The first thing we can do is use advances in discovery, and alignment to consider application portfolio management.

In order to relieve the burdens of the past, you need to assess what applications matter, how they relate to business segments, and their respective business demand characteristics. But that is only the beginning, as you need to plan how to change applications and assure that the changes matter. You need your business decisions regarding applications to influence and direct design decisions. Only then can you determine what applications need investment, retirement and deployment alternatives such as the cloud or leveraging a SaaS model.

Application portfolio management is not an end in itself; it is a vehicle to make intelligent investments. The business decisions made in Portfolio Management about criticality, strategic importance, etc. need to be leveraged in infrastructure and application rationalization, stating clear directions for change that can be acted upon. You need to capture tribal knowledge and integrate it with relevant discoverable, production information, which can then be used to make intelligent informed decisions that can be tracked and improved upon over time. You need to do what could not be done before, get a holistic, consistent, relevant and timely set of information to make decisions with.

Stand alone spreadsheets, and inventory collection systems are not enough. Why? Because reporting about what you already know is not value. Value comes from making intelligent proactive choices in a manageable way that was not possible a few years ago.  An Intelligent design system is required to guide you through the myriad of conflicting choices such as those IT KPI’s for each business segment that an application supports.

Juggling the many conflicting needs of an application portfolio to meet the business needs is where the value is. How to get there is the brutal part.

Category: Business Alignment, IT Management