You may think your IT group is delivering significant value to your company’s bottom line, but do higher-ups agree? Possibly not: In the wake of costly Y2K, ERP and e-commerce initiatives, there’s been a widening gap within many organizations between the IT group’s opinion of its value and top management’s perception of that value.
What’s a CIO to do? A recent report by Meta Group (www.metagroup.com), of Stamford, Conn., offers some suggestions. First, figure out how the IT organization is currently expected to add value to the business. According to Meta, most companies envision one of three roles:
1. IT supports the business primarily by providing tactical support for current business processes.
2. IT operates like a business within a business, using its products and services to provide business solutions.
3. IT becomes the business by fusing operations and eliminating major differences between the business and IT planning, performance measurement and the like.
Once you’ve figured out which one best matches your company’s current expectations for IT, make sure you’re measuring the value of IT appropriately – using the wrong metrics can hurt IT’s credibility, Meta asserts. If your group is expected to fall within the first expectation, for example, value should be measured in terms of cost and efficiencies. For the second, the focus should be on effective resource investment. And for the third, what’s most important is real value delivered to markets, such as IT’s contribution to market penetration.
Finally, think about how you’d like the company to perceive your IT group. Meta recommends creating a “value agenda” that defines and addresses the gap between current and desired value positions. That agenda should include strategies for bridging that gap: techniques for aligning value expectations, identifying value opportunities and creating a value “playbook” or action plan.
Not surprisingly, Meta recommends using its Value Assurance Program to get your organization headed in the right direction. But whatever route you take, the end result – better alignment with the business – should be well worth the trip.
