“You can see computers everywhere but in the productivity statistics.” — Robert Solow, Economist
The CEO wants to know how to transform IT from a cost center to a game changer. The CIO wants to run IT like a business. The business unit leader wants a consumption-based IT bill so he/she can better manage the department’s IT spend. The CFO needs an IT cost charge-back mechanism that will impact IT consumption behavior. The head of IT strategy hopes to continually track the business value of the company’s IT services and in-flight projects.
As that wish list suggests, executives at all levels of the organization are unclear about the returns of their IT investments. “Part of the problem is they believe there is no transparency on IT costs or visibility into the real return on IT spend. Their perception is IT delivers suboptimal value given the cost,” explains Deepak Jain, senior vice president and head of TIS for Wipro.
He says instead of trying to control costs, enterprises should be asking these questions to gain value from their IT investments:
- How can we leverage IT for business growth?
- How can IT help lower business operations cost?
- How can IT help meet regulatory pressure and lower business risk?
Jain observes the discipline of IT business value management “is at its nascent stage of maturity,” comparing it to IT service management during the pre-ITIL days. The Wipro executive predicts IT financial and value management platforms will emerge as a global framework, just as ITIL became the de facto standard for focusing on IT service delivery and operations management. “These platforms will deliver transparency into IT costs and produce a rigor to define, measure and continually improve IT’s business value,” he says.
Wipro has developed a holistic, framework-based approach to define, measure and maximize IT’s business value. Wipro coined the term IT360 because it encompasses the entire IT value lifecycle from value definition through value realization. “IT360’s goal is to deliver an accurate and granular handle on the cost and value of IT to an enterprise,” Jain says.
The Wipro executive says enterprises can implement IT360 in four “easy steps.” Companies can implement the solution in modules depending on their high-priority needs and pain points.
- Goal setting (2 days): The objective of this first phase is to align business and IT objectives. It is the place where business units and the IT department jointly define the business value of IT (BVIT) and then agree on common goals that actually create it. “All parties gain an understanding of IT’s potential role as a game-changer,” says Jain.
- Cost lens (12 weeks): The objective of this phase is to gain a granular and accurate baseline of IT’s actual cost. Jain says enterprises must know the actual cost of IT services that each individual business unit consumes. “This phase helps enterprises learn the real costs of supporting business growth and new employees,” says Jain. Sussing out these numbers allow IT to deliver a realistic and reliable consumption-based IT bill for all business units. The true numbers also help produce analytics to identify ways to optimize costs.
- Value lens (8 weeks): The objective of this phase is to assess the current health of all IT capabilities that contribute toward value creation and then identify specific strengths and weaknesses. It also benchmarks the Wipro customer against the best-performing IT organizations in its peer group. The value lens phase determines the current maturity levels in all IT functions as well as prioritizes key focus areas based on the application’s importance and maturity gap. “This phase provides a clear picture of the IT organization’s as-is maturity to deliver business value and prioritizes the IT budget,” points out Jain.
- Roadmap (12 months): The enterprise and Wipro design a roadmap that becomes the “strategic guiding tool to prioritize IT spend,” Jain explains. He says the goal of this phase is to move more IT investments “into the ‘grow the business’ category instead of having the ‘keeping the lights on’ operational spend consuming a majority of the funds.” This roadmap maximizes BVIT and produces specific recommendations to continuously increase it.
Why this new point of view produces a competitive advantage
Jain says the IT360 framework “effectively neutralizes” the traditional view of IT as a support function and cost center. He believes this shift in perception “can result in a significant competitive advantage because wise investments in IT deliver measurable business value.” In addition, enterprises using IT360 know how to rebalance the equation between IT as a cost and IT as a strategic business investment. The framework also will play “a pivotal role in justifying and prioritizing IT budgets,” Jain continues.
And that’s how you define, maximize and measure IT’s business value.