The Business Value of IT
When Bill Clinton ran for
president, his slogan was, “It’s the economy, stupid!” Well, when it comes to
IT, my slogan is, “It’s the business, stupid!”
I am a firm believer that the true value of IT is to drive tangible business value. I’m not a fan of technology for technology’s sake. Nor am I a big fan of people who become enamored with technology because it’s “cool.” IT is meant to help drive business outcomes, plain and simple.
For the past few years, you couldn’t attend a conference or pick up a technology publication without reading about the need for IT to “align” with the business. To me, this may be the single stupidest thing I’ve ever heard. Do you hear CFOs or CMOs discussing the need to align with the business? Of course not. Why? Because they know they are a critical part of the business.
Well, so are we! The concept of IT aligning with the business suggests that IT is somehow separate from the business. Instead, we are a critical component that should be engaged in every aspect of operations and strategy.
I often tell people that my organization doesn’t have any IT projects, which makes them look at me as if I had three heads. But it’s true: We don’t have any IT projects.
What we do have are many important business projects in which technology is a key driver for achieving the desired outcomes and generating the necessary value. These projects are sponsored by business executives, have clearly articulated business outcomes and provide a real business ROI. Otherwise, there’s no project.
I imagine you’re thinking, “Yeah, smart guy, but what about infrastructure projects?” Well, in those cases, the CIO (a.k.a. me) is the business sponsor, and the onus is on me to articulate a value proposition and an ROI as to why we should upgrade a portion of the infrastructure and the business implications of not doing that.
It’s very simple: Our mission is to grow the sport of tennis in the United States. Every penny we spend on something unrelated to that goal is a distraction from what really matters to our organization. Therefore, we ensure that the money we invest in technology helps to drive that mission.
In every organization there are critical objectives that determine whether it succeeds in accomplishing its mission or misses the mark. If I asked you, I'm sure you could rattle off the top three things your company is focused on accomplishing this year. It might be launching a new product line, increasing top-line revenue by a certain percent, lowering operational costs, rationalizing a global business process, or integrating a key merger or acquisition. Whatever these goals are, they constitute what matters to your organization.
All CIOs have a limited amount of human and financial resources. In determining how to invest (not spend!) these resources, I suggest you ask yourself the following three questions:
1. What are the top priorities that really matter for my company?
2. How will the things we are planning to do affect these major objectives?
3. If they won’t affect these goals, why are we doing them?
This is a tough litmus test, but it’s one that should be applied to all potential initiatives. Some of you probably have projects in your portfolio that either don’t have a customer (there is no business sponsor) or don’t have a quantitative or qualitative ROI. Instead, they are projects you think you should do—or want to do.
Let me ask you this: Is that how you handle your personal finances? Do you make sure that the mortgage and utility bills are paid first, or do you put your money on the No. 3 horse in the fifth race? When it comes to your own money, you undoubtedly are prudent in how you invest it.
Well, if you are truly a business leader (and if you have a C in your title, you’d better be), then it is your money! Too many CIOs think like technologists, but their job is to function as an executive of their company.
I always laugh when I hear CIOs whining about having to justify their budgets. None of us has unlimited resources. All of us have to determine what the appropriate level of investment is to fuel our efforts.
Have you ever met a business executive who isn’t focused on the financial bottom line and who isn’t held accountable for financial outcomes? If we as CIOs are truly business executives, then we should be held to the same set of expectations as the other business leaders in the C-suite.
Larry Bonfante is CIO of the USTA and founder of CIO Bench Coach, an executive coaching practice for IT executives. He is author of Lessons in IT Transformation: Technology Expert to Business Leader. Larry can be reached at Larry@CIOBenchCoach.com.