Business Value and IT Value: a Disconnect

Over the decades I’ve bounced between working within IT and working within other business functions.  The one conclusion I’ve found, despite all the rhetoric and initiatives to the contrary, IT just doesn’t get it.  The latest examples are the two campaigns on the top of the Hype Cycle:  Agile Development and User Experience / Design Thinking.  Yes these are valuable initiatives, but at the end of the day these are contributory to improving IT’s ability to deliver applications and technology services.  Not necessarily business value.

Many of my pervious IT peers and Technology providers would like to argue the point that these deliver Business Value.  My counter to this is simple:  Does a wrench, shovel, chef’s knife, etc. deliver business value?  Only to the mechanic, landscaper, or cook that knows how to use these productively.  The key words here are “use these productively”  This suggest that IT needs to understand how these tools are to be used -beyond the manipulation of data– and measure their contribution to business value based upon the business value the business itself delivers (i.e., a percentage of the business value, not the entire value).

This then suggests a line of research which should be undertaken to establish how to measure that contribution.  Several times I was engaged in such research:  IBM’s initiative on Strategic Capability Network,  DMR’s Results Chain, and more recently using Benefits Dependency Network.  The problem with all of these initiatives was that they were applied backwards (i.e., here is a technical solution how do I map it to a business result)

Over the past decade I have become enamored by Business Models.  I now see Business Models or fully attributed business models as the connection between Business and IT.  That is to be able to explain IT’s relevance to the business.  My current role within my company is heavily focused on managing the portfolio of technology investments (IT projects).  Initially the organization had as its measures a focus on making delivery of the IT service more efficient.  Whether it helped the business be more efficient or effective was not really on their radar.  Which I could completely understand.  IT in most organizations is constantly a whipping boy, with complaints of late delivery, underachievement, and a lack of responsiveness. Even if business functions themselves have contributed to much of this issue.  Its no wonder why IT is focused on improving delivery above all else.

Leadership, to their credit, recognized the problem and moved the activity to a business function.  The results have been amazing, in a short time the focus of the activity has really switched from IT projects for IT benefit to examining business value for the corporation.  While the business value measurement is more educated guess (t-shirt size ranking) than actual metrics, its a great start.  What is missing still –though I’m back to offline R&D on this issue– is the strong tie-in to the business.  As I continue to investigate, I’m now seeing the linkage between business models, strategy and portfolio clearer than when I was working on various planning horizons at IBM Corporate.