Red Hat President and CEO Jim Whitehurst recently discussed the challenges of the large-scale culture change associated with digital transformation. Consider these four takeaways for leaders.
Extreme Networks CIO shares his decision-making tips for IT
Every business objective has a parallel IT objective, says Dan Adam, CIO of Extreme Networks. In an interview with The Enterprisers Project, Adam explains the importance of aligning those objectives and communicating business value to your business counterparts.
The Enterprisers Project (TEP): Should IT be all about business value?
Adam: IT provides a set of business and technical services that support strategic initiatives and business processes optimization. One of the key roles of the CIO is to communicate the business value – in business terms – that IT services provide by assessing how efficiently each IT service is being executed. Improving the business value of IT services is critical for strategic CIOs to gain credibility with the business.
I think that historically, companies didn't think about IT as a cost, but as a department ready to service the needs of the business. However, every business objective has a parallel IT objective. The business objectives of customer satisfaction, ease of use, and flexibility of ordering services translate to incidents, down time, wait time, and repair time for IT. People don't see that IT organizations are enablers of business value because our services have to provide measureable value at a designated cost and return on investment, tangible or intangible.
TEP: Business value can be notoriously difficult to quantify, and your area of networking sometimes provides great examples of this conundrum. What is the value of making a network that has not yet failed less prone to failure? Or of a seemingly slight improvement in bandwidth or speed? How do you go about quantifying the business value of IT in situations like these?
Adam: For many products and services, IT is the delivery channel and operational requirements are closely tied to the value proposition. The value of our services is expressed in the efficiency of our operations, customer satisfaction, revenue increase, cost avoidance and our ability to grow and serve new customer segments. An optimized network can be directly related to the value of services.
In order to best show the value of IT as a greater investment in business performance, we should be measuring the outcomes of our initiatives. IT investments should support company objectives and we should focus all of our efforts on the end user's productivity needs.
TEP: IT decisions are sometimes made in terms of ROI. If a project will pay for itself within a year or two, it's usually considered worthwhile; if not, it may be questioned. Is ROI always the best way to make IT decisions? And if not, what other measures should CIOs use when evaluating and/or presenting the value of IT initiatives?
Adam: When it comes to making IT decisions, in most cases there should be a financial payback. When determining business value, it is important to note and measure the benefits provided to the business, such as faster access to information, increased revenue and better customer service. For example, IT services can enhance the customer experience by providing a positive interaction through a well-designed website and customer portal. Comparing the cost of maintaining the website to the revenue it provides can directly show how the IT service contributes to the company's business value. We look at speed-to-market, support of product development, risk mitigation and customer satisfaction, which all indirectly lead to financial benefits.
TEP: Are there times when a project or initiative doesn't make sense from a financial or business perspective but is still worthwhile?
Adam: With so many new and exciting technologies entering the IT landscape – social media, cloud computing, big data, etc. – we are being given a greater opportunity to produce innovative business models even if there isn't an obvious or immediate benefit from a business perspective. Ultimately, we may see results down the line, whether it's through increased operational efficiency or improved customer service platforms. Sometimes it's about keeping up with the constantly evolving tech landscape in order to maintain a competitive advantage through the most efficient technologies available.
Keeping track of our services and understanding how they contribute to the business as a whole provides us with the best basis for planning future services. If we cannot accomplish this, the IT sector will be viewed as a cost center where technical activity happens, versus a strategic partnership where IT personnel partner in business terms to create significant and measurable business outcomes.
TEP: What advice would you offer other CIOs when considering the value of possible IT initiatives? What should they consider when discussing these initiatives with the C-suite?
Adam: CIOs should be able to recognize what is important to the business, and know how an initiative is connected to the overall corporate strategy. Know what is important to the business sponsor. It's important to remain transparent with the C-suite, and consistently discuss IT initiatives in business terms and value. Be ready to offer proof that our services are cost-effective and relevant to business support. The ultimate goal is to communicate the IT value in terms that are meaningful to the rest of the business by talking about how IT helps the company function better.