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At a recent roundtable gathering of CIOs in Monterrey, Mexico, a presentation and discussion focused on how to create and communicate IT value. The group agreed that IT leaders have an opportunity to create and communicate value and become more valuable players in the enterprise. The participants defined steps to increase the IT organization’s value contribution.
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The first part of the roundtable session was a Gartner presentation on how CIOs create and communicate value. The presentation showed both best practices in how to avoid the traditional traps damaging IT image and recommendations for finding and showing value. The presentation concluded with a proposed description of the successful CIO of the future.
Following the presentation, the participants brainstormed ideas for creating and communicating IT value. All ideas were grouped into categories. Each participant cast three votes to select the most valuable idea category. The group identified the following ideas as the most valuable:
1. Use regular reports to communicate how IT is contributing to the business – for example:
• Issue a monthly IT report with the contributions, linking all metrics to strategic business objectives.
• Develop an annual IT report describing the value IT contributed to the organization, and publish it on the enterprise intranet.
• Ensure that all financial reports and presentations link results to IT projects.
• Develop a financial dashboard to report IT contributions to the business.
• Proactively offer to make presentations to the management committee to show the contributions of IT.
2. Proactively seek to communicate by participating in management committee meetings.
• Participate in management committee meetings whenever possible to detect IT opportunities.
• Make a presentation to the CEO and the management committee showing the contribution of IT to each business area.
3. Redesign key customer processes to add value.
• Initiate a business process redesign project involving multiple areas.
• Map each project to a business process and establish contribution metrics for each process.
4. Establish a formal evaluation process for each project at regular intervals – six, 12, 18 and 24 months after completion to capture benefits over time.
5. Develop effective working relationships with other directors and stakeholders. Have lunch one day a week with a business unit director to improve the perception of IT and communicate the ways IT is contributing to that business unit.
6. Compare IT with other organizations regarding projects, personnel, investments and expenses.
CIO CALL TO ACTION
CIO’s must make a paradigm shift from focusing on technology to focusing on business performance. Successful CIOs make costs transparent but emphasize the outcome of the services IT provides. If the CIO does not communicate value, other directors will not notice and may conclude IT is only an expense.
CIOs may become successful business contributors by doing the following:
• Talk in business terms to demonstrate sound business understanding. Instead of speaking about IT performance, successful CIOs communicate how IT is helping to achieve business results. A good rule to follow is: If the head of Sales would not say it that way, neither should you.
• Measure and communicate IT value. Players always keep score, and CIOs must do the same.
• Show the value of IT in business terms. Effective CIOs must help the business focus on strategy, processes and operational performance measures.
BOTTOM LINE
A paradigm shift is occurring among some CIOs. Instead of limiting their work to reacting to business requirements, effective CIOs are now identifying ways to create value for key business processes and providing transparent services. These CIOs are communicating the value IT contributes, changing the way the stakeholders perceive IT.
Business Impact:
Effective CIOs who use IT to work with business leaders to improve processes and reshape interactions with customers and suppliers will deliver real value to the organization. By measuring the benefits of completed projects, CIOs can quantify results and determine IT’s contribution to the business. Our research shows that when the IT organization delivers the right services with high quality at the right price, organizational performance improves.
Additional Insights
1. The Real Business of IT: How CIOs Create and Communicate Value, Richard Hunter, George Westerman, 2009, Harvard Business Press
2. “Business Performance is the Value of IT; CIO Desk Reference Chapter 14″, Richard Hunter, Tina Nunno, 1 October 2009 (Research)
