This is Part 2 of a 2-part series on the Business Value of IT. To read Part 1, please visit: https://ssgnet.com/how-cios-should-think-about-business-value-leveraging-technology-to-create-wealth
How CIOs Prove Business Value: A Comprehensive Guide
CIOs have always been under pressure to demonstrate the value of their team’s work. However, the digital era has brought with it an increased expectation for CIOs to show the business value of their projects and services. According to a #CIOChat, demonstrating business value is essential for IT to transform from a cost center to a valuable contributor to business strategy. This article outlines how CIOs can prove business value and increase the perception of IT in their organizations.
Start with CIO
The culture of business value should start with the CIO. CIOs must ensure that their teams understand that delivering business value is essential. IT leaders must demonstrate commitment and accountability to create an organization that can prove business value. Business value can come in the form of cost savings or revenue generation.
Define KPIs for every project
CIOs should define key performance indicators (KPIs) at the inception of a project and track them through cycles of measuring, managing, and publishing. CIOs need to describe their value from the customer’s perspective to understand how their company captures value, including from its technology investments. This requires that CIOs translate business value and then communicate it to everyone in IT and to business stakeholders. CIOs must be liaisons between the tech and business side of the organization.
Make demonstrating value a philosophy
Demonstrating value should be an enterprise-wide practice, but IT is especially under scrutiny. CIOs should ingrain it in IT culture. CIOs stress that capturing value-in-use is strategic. CIOs must require sprint-by-sprint demonstrations of business value. This is challenging for leadership because implementing technology is always easier than guiding culture.
Project naming (projects with business names)
CIOs have differing opinions on project naming. Some CIOs said that technical names are fine as long as the business understands the reasoning, use-cases, and business value being derived from a project. Others suggest that almost all initiatives in their enterprises are business-related and should be business named. Regardless, delivering and demonstrating business value should be a core objective of every person and function within IT.
Techniques for proving business value
CIOs suggest that value KPIs should be defined as early as possible in the process. These KPIs should depend upon the business goal and value that should be targeted or demonstrated. CIOs collectively suggested several different potential value metrics. These include revenue/market growth, customer satisfaction/NPS, operational efficiency, security, on-time project delivery, degree of innovation, efficiency/effectiveness delivery, on-budget delivery, risk mitigation, usage metrics and surveys, interviews on customer satisfaction, quality factors, and financial metrics (revenue, profitability).
Proving business value is essential for CIOs to better align with the organization. CIOs should define KPIs for every project and track them through cycles of measuring, managing, and publishing. Demonstrating value should be a philosophy across the enterprise and ingrained in IT culture. CIOs must require sprint-by-sprint demonstrations of business value. CIOs should translate business value and communicate it to everyone in IT and to business stakeholders. By doing this, CIOs can transform IT from a cost center to a valuable contributor to business strategy.
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To read the complete CIO article, please visit: https://www.cio.com/article/221711/how-cios-prove-business-value.html.