I try to keep up with what’s going on in the industry by reading magazines, articles, blogs, and so on. Perhaps it’s the economy, or just coincidence, but in the past few months, there seem to have been more than enough articles about the impotence of IT.
One editorial in Information Week quoted a survey that asked IT professionals to rank 10 items that would contribute to improving their job productivity. Top items were:
- Better guidance from business leaders on the most important processes, measures, and metrics.
- A clearer sense of corporate strategy from top executives.
- More support from top executives to implement policies and procedures companywide.
- More money and more staff ranked at the bottom of the list.
In a different editorial titled “Global CIO: Prove IT’s Business Value to Your CEO — Or Else,” a fictitious letter from the CEO to the CIO goes something like, “You’ve been unwilling or unable to connect your team’s performance and compensation to the business value the IT organization delivers.” I wonder if the CEO had the same discussion about justification with HR? (Not that I really want to be compared to HR, but you get the point.) The fictitious letter continues with an example: “The BI project. We spent $9 million over 15 months … what’s the quantifiable impact on revenue, customer retention, cross sell?” Come on, get a grip. Is it really IT’s responsibility to quantify the value of BI? Could it perhaps be the responsibility of the business users who sponsored the project?
When you get a question like that, it’s an indication of something seriously wrong with the organization (leadership?), and it’s time to dig deeper. On the one hand, IT leaders are saying they don’t get the support they need from management. On the other hand, management is saying IT needs to justify itself. To quote the Road Captain in Cool Hand Luke, “What we have here is failure to communicate.”
CIO Magazine reports that from 2009 through 2011, IT budgets will grow at only 1.3% per year, while IT demand will grow at 8.6% annually. Enterprises today simply can’t operate without IT, so why do some leaders find it necessary to justify the value in terms that aren’t necessarily applicable? Maybe this is your opportunity to educate them on the importance of IT. Try turning the computers off for a day to give them an idea. OK, just kidding! Don’t do that! Of course, it’s important for IT to provide business value, but the question is: What are realistic measures of IT value?
I’m often asked about the ROI of architecture. I sometime counter with questions along these lines: Do you own a home? Do you have insurance? What is the ROI of your homeowners insurance?
You would never not have homeowners’ insurance, but neither can it be measured by ROI. It is measured in terms of risk, asset value, and liability. The value of your home and possessions are too important not to protect. You might do a cost/benefit tradeoff to determine the right level of insurance, but you are going to have insurance. Similarly, the enterprise is too valuable and important to operate without IT, if it’s even possible. We know that, like insurance, architecture (done well) helps to reduce IT risk. We might even be able to measure the value of architectural governance in terms of preventing unnecessary or unwise investments, or less directly in terms of reducing total cost of ownership and integration. The value is there. Quantifying it is hard. Even more elusively, we want to be providing new opportunities, not just cost savings. In any case, you need to challenge vague “business value” measures, look into why they are being suggested, and propose alternatives.
My experience is that in organizations where IT and architecture are delivering value, there is not a need to constantly justify and validate. It’s part of the culture and success of the enterprise. So, if you’re being asked to justify the business value of IT, is it because management doesn’t get it or because IT is not delivering as it should? Either way, you probably want to figure it out as soon as possible.