Follow these 3 steps to communicate business value to your colleagues
Compare two different investment requests delivered by two IT leaders. The first IT leader presents a business request for $3.5 million to pay for a needed network upgrade and includes all the details of the equipment and parts needed to add capacity. The second IT leader starts her pitch saying that based on projected double digit business growth in the coming year and expected market expansion, the network is projected to reach capacity the following year and IT needs $3.5 million to upgrade the network ahead of the looming capacity bottleneck.
The first IT leader is met with a question of “Why does it cost so much” and the second IT leader is met with “Where do we sign?”
IT leaders, particularly in midsize enterprises, need to shift their thinking to an outcome-first mentality. “You need to think like a buyer and ask yourself ‘What does the business need?’” said Robert Naegle, Gartner research vice president, during the Gartner Symposium/ ITxpo 2017 in Orlando, Florida.
Read More: How CIOs Achieve Digital Value at Scale
Business partners aren’t really interested in the pieces and parts that go into delivering the value they need to grow the business. Too often IT leaders lead business partner discussions with details of data centers, servers and routers. IT needs to learn to “talk business”.
To talk in business language, start by understanding who the customer is and clarify how IT delivers value. Then move on to codifying the metrics that matter in terms of communicating that value.
Flip the pyramid
To build better business value metrics, use a three level hierarchy that communicates and tracks progress, from operations all the way through to business value delivery. Operational metrics are internal to IT and used to measure and improve performance around key areas such as connectivity, security and compliance and hardware and software. IT management metrics are a hybrid of sorts, serving as the connective tissue between monitoring operational indicators and translating metrics into value delivery for both IT and business leadership. Sitting at the top of the metrics hierarchy are the business value metrics used to show IT’s contribution to business outcomes.
Communicating value to business leadership is not simply a matter of filtering operational metrics for a business audience. It’s a matter of flipping the entire pyramid to first start with outcomes and value.
Three steps to align measurement
The three steps to measuring and communicating value delivery start with the end in mind.
Step 1. Focus on what matters to the business first
Select a few measurements, no more than 3-4, that reflect what business partners care most about. These will typically fall into categories around revenue, cost, and risk. Tailor these measures to the business. Healthcare companies may rank patient care just as important than patient risk. Look for areas where the business is willing to invest money.
Step 2. Validate your value map
Spend the time and work with business leaders to ensure your value metrics accurately reflect their priorities. Are they representative of business goals? Did you explore customer experience, patient risk, client references and innovation?
Step 3. Include areas that IT controls
Within each area of value, list the three to five items that IT controls and can impact. Ask what IT is doing to reduce cost or manage risk. For revenue, explore areas such as shopping cart, CRM systems and order entry. For cost reduction look at efficiency and asset optimization and for risk reduction explore data security and data loss.
“While it’s a manual task, take a minimalist approach to focus on what’s important,” said Naegle.
Gartner clients can learn more in the full research Five Steps to Empower the I&O Organization to Prove Its Value by Robert Naegle, et al.
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