Establishing IT’s business contribution and communicating the business value of IT are the two most important initiatives CIOs have for the coming year. CIOs recognize that this task is complex because the connections between IT and business performance are complex.
Note: Explaining a tool to address this complexity will make this post will be longer than normal. This post is also the first of two addressing this issue.
Balanced scorecards, portfolio management and transformation programs try to solve the problem by matching complexity with complexity. In this case the complex set of activities required to raise business performance with complex sets of measures, projects and complex change initiatives. These techniques are all administrative in nature and therefore are ill suited for CIOs looking to demonstrate IT’s business contribution.
CIOs need a simple, clear approach that achieves the following goals:
- Connects IT activities with business results as that is the basis executives use to judge IT’s contribution and reaffirm their choice of the IT organization as a resource for change and improvement.
- Communicates the value potential of IT investments as performance improvement comes through addressing specific issues rather than pasting over broad generalities with technology.
- Captures the set of activities and investments required to realize value and results as raising business performance requires changing more than just IT and making changes in concert with other business adjustments.
Take these three goals into consideration and its easy to envision creating a IT transformation binder with dozens if not hundreds of pages filled with business cases, detailed specifications, Gant Charts, and staffing models. While all of that is necessary to execute such a program, but all of that paper and all the work behind it does nothing to demonstrate that IT is contributing to business value. All that such a binder does demonstrate is that IT is complex, requires too much effort, is probably overstaffed, slow to respond and costs too much.
CIOs need a way to make these connections on a single piece of paper and then use that paper to effectively communicate the contribution of IT. Here is a simple paper based tool for your consideration based on all the information required to delivery IT’s contribution but expressed in a flexible way to speak in a way that different people will understand.
The tool starts with a one-page summary of your annual plan, shown in the figure below.
You can think of this document as the CIOs annual plan-o-gram that shows the positioning of the strategy in the same way retailers plan the positioning of their merchandise.
The plan has four columns: Objectives, Issues and Gaps, Actions and Results and Metrics. The columns give the CIO the ability to capture the high level themes of the coming year on a single page. The plan does not have to be complete, just capture the major direction of IT and its contribution in the business.
Objectives describe the business, technical or operational objectives the enterprise needs to achieve in the coming year. Raising customer service, expanding into new markets, reducing inventory costs are all examples of objective statements.
Issues and Gaps are single statements describing what is keeping the enterprise from realizing its objectives. These can be expressed in terms of problems that need to be corrected, opportunities that require investment to realize, or gaps in actual versus desired levels of performance. Describe issues and gaps in terms your audience would recognize as barrier to achieving the objectives.
Actions capture what the enterprise is going to do to address the issues and achieve the objectives. This column should describe what is going to happen in a way that you can see it addressing the issues and achieving the objectives.
Results and metrics layout specific things that will be tangibly different once the action is taken, the issue resolved and the objective achieved. These statements should be clear and measurable rather than platitudes. Good result statements and metrics should provide test conditions that guide the design of solutions.
The figure below provides a high level view of a plan covering two common objectives: improving customer satisfaction and providing greater local flexibility. Providing a general example while illustrative, tends to create details expressed in consultantese that require more specific statements for your company’s situation.
Creating the high level action plan organizes the context required to connect IT’s contribution to business value. Summarizing this work on a single page gives the CIO the ability to have a focused conversation with their business peers, within the IT organization and with the board.
While many CIOs will see similarities between their high level planning documents and the examples above and say I already have something like this, so what gives?
The action plan above and its equivalents you use can be easily read to focus more on activities rather than results. Establishing the right connection between the two rests not in gathering the information, but in how that information is revealed to the audience.
Plunking down this piece of paper or presenting it as a slide in a Powerpoint deck all at once just communicates that IT is complex, engages in many activities and therefore must be costly.
The action plan provides the base data to connect IT and business value. However CIOs need to bend, fold, spindle and mutilate this chart in order to communicate that base data in a way the business and IT can readily understand. That exercise is the subject of the next blog post.