What CEOs and CFOs Really Want to Know About Enterprise IT Value
by Bruce Skaistis
Enterprise IT value has become a very hot topic in the enterprise IT world. Much of the focus is on what can be done to demonstrate enterprise ITís role in creating business value. These efforts are producing positive results by focusing more attention on the importance of enterprise IT and the strategic role of the CIO.
We need to build on the momentum that has been created for the enterprise IT value concept and find a way to actually measure how enterprise IT creates business value. Being able to objectively measure enterprise IT value will change the way organizations think about and address enterprise IT resources and expenditures.
Measuring and tracking enterprise IT value will ensure enterprise IT expenditures are targeted to produce maximum benefit for organizations; but objectively measuring enterprise IT value is not an easy exercise. The first step in developing meaningful enterprise IT value metrics is having a clear understanding of why enterprise IT value should be measured. If you ask a CEO, CFO or CIO if itís important to measure the value of enterprise IT, you will probably get a very positive "yes" or "absolutely" response. If you follow up and ask why is it important to measure the value of enterprise IT, the CEO and CFO will probably give you different answers than the CIO.
Why Do CEOs and CFOs Wand to Measure Enterprise IT Value?
Okay, so why are CEOs and CFOs interested in measuring enterprise IT value? Simple answer, "itís a money thing!"
Many CEOs and most CFOs are concerned about current enterprise IT expenditures and continuing pressure to increase expenditures. They are asked to make huge commitments to enterprise IT based on subjective factors and hypothetical projections that are very difficult to understand. CEOs and CFOs want easy to understand answers to three questions about enterprise IT value.
Question 1: Can We Get More From What We Are Already Spending On Enterprise IT?
Itís almost impossible for CEOs and CFOs to get their arms around what their organizations get from the huge amounts spent on enterprise IT. CFOs in particular are concerned that their organizations should be getting more from what is already being spent on enterprise IT rather than increasing spending on enterprise IT.
CEOs and CFOs want some form of tangible, non-technical proof they are getting their moneyís worth from enterprise IT expenditures. They want to know enterprise IT is being used effectively to produce maximum benefit for their organizations.
Question 2: What Do We Give Up If We Cut Enterprise IT Spending?
The follow up to the "can we get more from what we are already spending on enterprise IT?" question is the "can we spend less on enterprise IT?" question.
I know that question makes most CIOs a little uncomfortable, especially since most organizations have been tightly controlling enterprise IT spending for the last few years, but it is a legitimate question and it needs to be answered. An objective measure of enterprise value should address the ďwhat do we have to give up if we spend less?Ē question. CEOs and CFOs want a better way to see how reducing enterprise IT spending will actually affect their organizations.
Question 3: What Would We Get If We Spend More on Enterprise IT?
If we are able to objectively measure the value of enterprise IT, the next logical question CEOs and CFOs should ask is, "what would we get if we increased our enterprise IT spending?" If youíre a CIO, wouldnít you enjoy having to answer that question?
If we are able to show that enterprise IT is producing real business value for organizations, it makes sense that CEOs and CFOs would want to create even more value for their organizations by increasing enterprise IT spending.
This is why I believe being able to objectively measure enterprise IT value is so important. If we can actually prove enterprise IT is a strategic asset that can produce real business value for organizations, it will change the way organizations think about enterprise IT resources and expenditures.
Why Should CIOs Want to Measure Enterprise IT Value?
Now letís talk about CIOs. CIOs have two very positive reasons for wanting to find a way to objectively measure enterprise IT value.
Improve Enterprise IT Resource Justification Process
The enterprise IT resource justification processes in many organizations rely heavily on subjective factors and financial projections built on hypothetical scenarios. Enterprise IT resource recommendations can trigger heated discussions with CEOs and CFOs feeling like they are being fed a lot of technical mumbo jumbo and CIOs thinking CEOs and CFOs are the most unreasonable people on the face of the earth.
As a result, critical enterprise IT resource decisions frequently end up being made on a "gut feel" basis. Iíve never confirmed this, but Iím convinced these resource justification "discussions" can reduce the life expectancy of CIOs and other senior enterprise IT leaders by several years.
When I was a CIO, I would lay awake at night trying to find ways to take some of the subjectivity and emotion out of the enterprise IT resource justification process. Having a way to measure the value of enterprise IT resources would make it much easier to justify enterprise IT expenditures because the CIO would have a way to show what their organization is getting for its money.
Show How Enterprise IT Is Contributing to the Success of Organizations
CIOs also want a better way to show how enterprise IT contributes directly to the success of their organizations. Enterprise IT is the backbone of most organizations, but it is very difficult to show specifically how enterprise IT contributes to the success of organizations.
Having a way to show how enterprise IT creates business value would help organizations better understand how to use enterprise IT to achieve strategic and competitive objectives. It would also give CIOs more credibility in dealing with other senior executives in their organizations.
Moral of the Story
Objectively measuring how enterprise IT creates business value is an inexact and evolving science, but the potential payoff is big. Measuring and tracking enterprise IT value will ensure organizations get the most out of their enterprise IT resources and expenditure.
The first step in developing objective measures of enterprise IT value is to determine what questions the measures need to answer. CEOs and CFOs want an objective basis for determining how much should be spent on enterprise IT while CIOs want to improve the enterprise IT resource justification process and show how enterprise IT contributes directly to the success of their organizations.
About the Author
Bruce Skaistis is the founder of eGlobal CIO. He began his career as a consultant with Arthur Andersen and was CIO of a large bank group before forming his own management services firm. He has extensive enterprise IT management, process optimization, and action facilitation experience.
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