This is a breakout from Deliver Business Value with IT (the Book) that you can find as well as (Actionable Story Boards) @ https://flevy.com/seller/mpalmgre/ref=mpalmgre that is flick out the slide set on your ipad and start to share with your CIO, Executives and Board.
The IT department needs to perform 3 things well: 1) understand the needs of the business, 2) how to build and run applications that meets the needs of the business and 3) to run an effective infrastructure.
That is IT supports new emerging business initiatives that will eventually form the business strategy as they succeed or fail and the RUN.
Yet most IT Departments 1) has a poor understanding of the needs of the business, 2) are not very successful @ to build and run applications that meets the needs of the business and 3) do not run an effective infrastructure. We all know that infrastructure is unsexy. It is due to his effort to build a solid infrastructure that David Giambruno @ Revlon has successfully turned a “we spend 80 percent of our resources to fire fight and hopefully keep the lights on to one where 20 percent of the resources are spent on the run and 80 percent on how to deliver effective solutions to the business”.
Instead most IT departments are IT centric and focus on project management or to roll out frameworks (that have a specific function) to build business strategy (see https://deliverbusinessvaluewithit.wordpress.com/2013/03/19/why-agile-is-not-a-methodology-to-build-it-strategy/ ). Once the “happy few” certified have managed to talk the IT Executive management in to how important it is to impose an excellent project management tool brought forward to develop software, or manage the IT architecture or how to ensure that IT and Business Processes are managed and controlled to build the IT Strategy we then feel obliged to adapt how the business side is run to fit to this world view and deliver to the needs of the business…
The CIO and the IT Department need to position as premium provider of IT services and focus on value to cost.
In order to avoid the “do we really need a CIO and IT department to bother us with technology when we can use the cloud?” the CIO has to ensure that the business strategy and business objectives are supported by IT (from a Business and IT architecture perspective). Where the IT Strategy support Strategy execution, “Time to Market”, Cost Effectiveness and stakeholder expectations from an Executive, Business Unit, IT Management and IT Risk Management perspective.
To deliver business value with IT we need to Focus on the Business Bottom Line: How fast can we get our products and services to market “Time to Market” & how can the IT department support the business from a Cycle Time and Cost Effectiveness perspective.
The IT Bottom line is that up to 40 % of current IT spend occurs outside the IT budget (CRM, Cloud). The IT department needs to position itself as a facilitator to IT services and effectively address emerging needs, market opportunities and demonstrate that the current Business Model is supported effectively. The IT department should facilitate the access to IT services to support new and current business initiatives. The business strategy emerge out of a number of initiatives that are successful or not. The IT department need to support the “Run” of day-to-day operations as well as new projects. The Cloud might particularly be of interest within this frame.
The execution of the defined business strategy is often a mystery (missing link) both on the Business and the IT side. The truth is that regardless of how well the executive team draws out the strategy in the boardroom the bottom line is that the business initiatives that were supported by clients succeeds, those not supported by clients (that do not get it) fail and disappear.
The CIO and IT department hence needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed.
We believe that in order for the CIO and the IT Department to position as premium provider of IT services and focus on value to cost we need to understand the Business (IT) Strategy and how the IT department can deliver effectively to business objectives, that is to deliver business value with IT: - What is the Business’s strategy and plans? , – What is the current business model that IT has to support? ,- Where could IT make a significant impact on the business? ,- Are there any further opportunities to use IT? , – How do we provide IT Services as we meet demand and cost drivers where the decision is to make (internal) or to buy (external service provider)?
We have identified 2 key trends for the CIO to focus on: – Differentiation (That is, how does IT provide a competitive advantage for the business), and – Cost (How does the IT Department deliver IT Services cost effectively). To do so we need to Build an effective IT Delivery Model to meet business needs and expectations as we leverage business strategy execution and business processes supported by an IT Service strategy (ITIL, IT – CMF, CobIT 5 (ValIT, CobIT 4.1, RiskIT), ISO 38 500, TOGAF and ISO 9001, ISO 27 001, COSO) delivered in a Business IT roadmap; that is how do we support business objectives and processes leveraged by IT and an effective IT Services strategy. Within this scope we would by definition address how we execute the IT service strategy (ITIL) Design – Spell out IT Activities from a demand and supplier side, Build – Set IT processes and key performance indicators, Run – Aligned to described ITIL activities and processes and full IT Financial Management (supported by delivery capability IT CMF, COBIT 5). Once services defined we can then decide where to run the application that support the IT and or Business Services (server / internal / external cloud / outsourced provider).
Within the frame of an acquisition up to 80% of the value realisation is (can be) on the IT side. The failure to address IT and the IT strategy can be an additional (1 out of 3) reason to M & A failure.
If we assume that to deliver business value with IT we need to support business objectives, the integration of a new entity is an optimisation of the current IT strategy (how we support business objectives and processes). We would obviously need to understand (and hopefully have the opportunity) how the current IT run before the purchase (IT due diligence) with full IT Financial Management to figure out the actual cost of delivered IT services (cost, consumption, chargeback). Once services defined we can then decide where to run the applications that support the IT and or Business Service (server / internal / external cloud / outsourced provider). We also need to define the purpose of the purchase (invest / divest) in the overall corporate strategy where it is of little use and a significant cost to integrate all systems in to a common backbone if the company is to be divested only a few years later. We could use a an IT Scorecard to ensure that stakeholder expectations are met from an executive, business line, IT and IT risk perspective.
The CIO and IT department needs to support the run of the current business activities as well as new emerging initiatives that will eventually form the business strategy. The cloud (internal or external) would be particularly well placed to develop new services that can then be institutionalised as the success of the initiative is confirmed.
The CIO and IT Department that sit around and wait for the Business Strategy to be formalised to build an IT strategy and vision might not make the 18 months magic mark. The IT Bottom line is that the IT Strategy should support business objectives, with new technology as needed as the IT department delivers effective IT Services and innovative technology solutions to improve competitiveness, demonstrated and articulated.
If your IT strategy looks like this https://deliverbusinessvaluewithit.wordpress.com/2013/03/01/if-your-it-strategy-execution-looks-like-this-i-would-invite-you-to-discover-my-new-book-deliver-business-value-with-it-design-build-and-run-effective-it-strategy-execution-to-business-needs-ht/?goback=%2Egmp_3376230%2Egde_3376230_member_218787029 then I would invite you to discover my new book Deliver Business Value with IT! – Design, Build and Run Effective IT Strategy execution to business needs. @ https://www.smashwords.com/books/view/290604 and soon also on apple store, Amazon, Barnes and Noble.