performance measures

Value of Technology Part 2 – Corporate IT’s True Business Is Not Your Business

Business value is not an adequate measure of the value of corporate IT work.  As described in Part 1, business value is great for gauging the value of an investment in technology, but should not be applied to gauge IT’s contribution to your business.

It would make sense if your corporate IT team was spun off into a separate business that serves you and other customers in a true competitive market environment.  Then the value of IT staff work would have a direct link to business value, since it would become the business.    But for now, in the majority of organizations, they remain a support function of the business —the one that makes the money to fund all investments, including IT.

Business Metrics Rarely Apply to IT Work

You could try —as many others did— to relate IT work excellence to the quantitative measures of efficacy applicable to your industry, the indicators that the rest of your organization uses.   Sales revenue, customer attrition, surgery waiting list length, square footage built, average waiting time at the gate.  All these gauges are used to determine how good you are in your business.  Using them for IT would be a loss of time and energy.   These measurements are too unconnected to IT work for any IT staff —or their managers— to relate to them.  On a given workday, it is not their job to improve the sample metrics above, or any dozens of others you could find. IT staff have their plate full of mundane technical chores that need to be accomplished in order to keep their heads above water. 

For IT professionals, the “business value of their work” is almost a view of the mind; at best an interesting viewpoint that bears little to no practical substance.  

If one of your IT employees is asked what business they’re in by a stranger at a social event, they will most likely answer IT-something, not banking, insurance, off-shore drilling, health services, retail or whatever business you’re in.  I’ve done it my entire career, and I don’t recall any fellow geek claiming to be in any business besides information technology.

IT Totally Relies on Business to Create Value

If business leaders tell IT staff that the organization needs to steer left to gain a new market share, they will do what they can do to steer left.  In other words, they completely rely on their non-IT, business savvy colleagues to make business decisions that lead to success.  The contribution of IT resides in the execution of the IT activities that ensue from the business endeavors that will provide the value.

Correlating IT Work to Business Value Is No Help for Betterment

If you nevertheless go down the path of linking the delivery of technical platforms, solutions, applications, etc. to the business value it provides to your organization, then beware that it will remain an accounting exercise, not an accountability one.  The lucky ones that worked on highly profitable endeavors will rejoice. The others will sadden, but all of them will feel quite remote from the concept of business value and how it relates to their achievements.  

Since this is an accounting exercise, apart from the CIO and a handful of executives, most IT staff will never be aware that someone has developed spreadsheets that enable financial analysts to correlate yearly IT spending levels to the organization’s revenue or operating costs.  And that’s a good thing to not tell them, since it would be of little help to devise any course of action for improvement. 

The Business Value Comes from Your Business, not IT

That is why you should not be asking —or hoping for—your corporate IT to provide more business value, or worse, to demonstrate the business value of IT.  Continue to gauge the business value of business endeavours.  Do not lower your guard in assessing the business value of the investments you make in your organization.

Leave the so-called “business value of IT” within your funding arbitrage practices and continue to focus on the business value of your business. 

It’s your business that generates the real value, not IT.

But How Good Is Your IT Team?

That said, it’s still a sound business question to fathom how effective your IT function is at doing what it does.  Corporate IT should be asked to demonstrate its effectiveness at supporting your quest for growth or any other business value you may seek. 

In part 3 of this series, I will reveal that within the current and typical engagement model of IT knowhow in organizations, performance measurement is flawed and doesn’t allow IT to truly improve its contribution.