Transcript
Page 1: Information Technology adds value

CXO Advisor

Advise – Innovate – Change

Extracting value from IT

Terry [email protected]

Page 2: Information Technology adds value

Who says IT doesn’t add value

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Who says IT doesn’t add valueMostly CFOs (Have a look at the many discussions by CFOs on IT value)

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Who says IT doesn’t add valueMostly CFOs

That’s because IT doesn’t prove hard number value

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Who says IT doesn’t add valueMostly CFOs

That’s because IT doesn’t prove hard number value

And ROI is a really narrow way of describing IT value anyway So how do we describe IT value in a way that makes sense to CFOs?

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Who says IT doesn’t add valueBut let’s not take it out on CFOs (they don’t know better)

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Who says IT doesn’t add valueBut let’s not take it out on CFOs (they don’t know better)

CIOs also say IT doesn’t add value

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Who says IT doesn’t add valueBut let’s not take it out on CFOs (they don’t know better)

CIOs also say IT doesn’t add value

I’m talking at a conference for CIOs in London in May, and one of the agenda items is:

“Does IT add value and what can we do about it?”

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Who says IT doesn’t add valueBut let’s not take it out on CFOs (they don’t know better)

CIOs also say IT doesn’t add value

I’m talking at a conference for CIOs in London in May, and one of the agenda items is:

“Does IT add value and what can we do about it?”

Can you see that the topic assumes that IT doesn’t add value?

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Who says IT doesn’t add valueBut let’s not take it out on CFOs (they don’t know better)

CIOs also say IT doesn’t add value

I’m talking at a conference for CIOs in London in May, and one of the agenda items is:

“Does IT add value and what can we do about it?”

Last year I was at the same conference and one of the agenda items was:

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Who says IT doesn’t add valueBut let’s not take it out on CFOs (they don’t know better)

CIOs also say IT doesn’t add value

I’m talking at a conference for CIOs in London in May, and one of the agenda items is:

“Where does IT add value and what can we do about it?”

Last year I was at the same conference and one of the agenda items was:

You guessed it.

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Who says IT doesn’t add valueCIOs also “say” IT doesn’t add value, by their resolute failure to actually prove benefits

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Who says IT doesn’t add valueCIOs also “say” IT doesn’t add value, by their resolute failure to actually prove benefits

So the equation looks like this:

Spend $1 million on an IT project based on a business case that says the return will be $2 million…

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Who says IT doesn’t add valueCIOs also “say” IT doesn’t add value, by their resolute failure to actually prove benefits

So the equation looks like this:

Spend $1 million on an IT project based on a business case that says the return will be $2 million

Then ignore the business case

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Who says IT doesn’t add valueCIOs also “say” IT doesn’t add value, by their resolute failure to actually prove benefits

So the equation looks like this:

Spend $1 million on an IT project based on a business case that says the return will be $2 million

Then ignore the business case Don’t develop a benefits realisation plan Don’t try to track benefits Just get on with the next project (It’s a business problem anyway)

Page 16: Information Technology adds value

Who says IT doesn’t add valueCIOs also “say” IT doesn’t add value, by their resolute failure to actually prove benefits

So the equation looks like this:

Spend $1 million on an IT project based on a business case that says the return will be $2 million

Then ignore the business caseDon’t develop a benefits realisation planDon’t try to track benefitsJust get on with the next project (It’s a business problem anyway)

And forevermore talk about the cost of running IT.Never talk about benefits

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Who says IT doesn’t add valueCIOs also “say” IT doesn’t add value, by their resolute failure to actually prove benefits

So the equation looks like this:

Spend $1 million on an IT project based on a business case that says the return will be $2 million

Then ignore the business caseDon’t develop a benefits realisation planDon’t try to track benefitsJust get on with the next project (It’s a business problem anyway)Oh yes. Ask for more money from the CFO

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Of course IT does provide valueBut the secret sauce is…

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Of course IT does provide valueBut the secret sauce is…The way you describe value

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Definition of valueValue (n): The relative worth, merit, or importance of something

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Definition of valueValue (n): The relative worth, merit, or importance of something

Value must be described relative to something

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Definition of valueValue (n): The relative worth, merit, or importance of something

Value must be described relative to something

Value must have merit(something justifiable)

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Definition of valueValue (n): The relative worth, merit, or importance of something

Value must be described relative to something

Value must have merit(something justifiable)

Value must be important to the business

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Definition of valueValue (n): The relative worth, merit, or importance of something

So IT value should be described in terms of:• What it compares to (not having it; doing it manually, customer retention)• What justifies it (keep the business running; improve the business, new

business)• Why it is important (99.99% SLA compliance isn’t important to the business

(relatively). Business results are important)

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There are five types of IT value that fit these criteriaAnd only one “adds” value

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There are five types of IT value that fit these criteriaThink about what IT does for the business:

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There are five types of IT value that fit these criteriaThink about what IT does for the business:

Supports existing business operations

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There are five types of IT value that fit these criteriaThink about what IT does for the business:

Supports existing business operations

Fixes things when they break

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There are five types of IT value that fit these criteriaThink about what IT does for the business:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

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There are five types of IT value that fit these criteriaThink about what IT does for the business:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Helps the business improve their operations

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There are five types of IT value that fit these criteriaThink about what IT does for the business:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Helps the business improve their operations

Provides new IT supported products, markets, channels

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

The added value that IT can help the business get from current operations

Provides new IT supported products, markets, channels

The value inherent in the systems that we provide

The value of continuity

The value of sustainability (we’ll still be viable next year)

Helps the business improve their operations

The value that IT can create for the business

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Provides new IT supported products, markets, channels

The value inherent in the systems that we provide

Helps the business improve their operations

Here’s the problem. We don’t get the full and proper use from our systems.

So we need to initiate a “value unlock” initiative

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Provides new IT supported products, markets, channels

The value of continuity

Helps the business improve their operations

This is the value preservation layer: DR, BCM, Rapid problem resolution,

compliance with the law, all preserve value

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Provides new IT supported products, markets, channels

The value of sustainability (we’ll still be viable next year)

Helps the business improve their operations

You can choose not to service your car every 10 000 km. Or you can sustain the value of your existing engine. IT

Maintenance is a sustainability value

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

The added value that IT can help the business get from current operations

Provides new IT supported products, markets, channels

Helps the business improve their operations

This is the value of doing things better. The value of efficiency and effectiveness. Many of our existing business cases target this “value

add” dimension only

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Provides new IT supported products, markets, channels

Helps the business improve their operations

The value that IT can create for the business

This value depends on IT maturity and business strategy (and maturity).

But this “value creation” layer could be the most productive

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There are five types of IT value that fit these criteriaAnd IT value works the same way:

Supports existing business operations

Fixes things when they break

Services the IT “engine” that supports the business

Value add

Provides new IT supported products, markets, channels

Value unlock

Value preservation

Sustainability value

Helps the business improve their operations

Value creation

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Intangible value has been proven to come before tangible value – at different times through the life-cycle

Idea Test the idea

Design and

build

Implement

Operate

Retire

Early adoption

MaturityMajority adoption

Initiate

AttentionMeaning

Create Operate

1 2 3 5 6 7 84

Intangibles

TangiblesPotential Value

Until you’ve installed something, it’s only potential value

There’s real “value” for IT to chase the intangible values first

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Intangible value has been proven to come before tangible value – at different times through the life-cycle

Idea Test the idea

Design and

build

Implement

Operate

Retire

Early adoption

MaturityMajority adoption

Initiate

AttentionMeaning

Create Operate

1 2 3 5 6 7 84

Intangibles

TangiblesPotential Value

Notice also that potential value grows after you’ve had the business case passed, as your understanding of the

problem/solution dimension increases

Business case

Page 41: Information Technology adds value

Intangible value has been proven to come before tangible value – at different times through the life-cycle

Idea Test the idea

Design and

build

Implement

Operate

Retire

Early adoption

MaturityMajority adoption

Initiate

AttentionMeaning

Create Operate

1 2 3 5 6 7 84

Intangibles

TangiblesPotential Value

Notice also that potential value grows after you’ve had the business case passed, as your understanding of the

problem/solution dimension increases

Business case

So keep a benefits register, that is subject to changeas understanding improves

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Look for different value at different life-cycle stages

Idea Test the idea

Design and build

Implement

Operate

Retire

Early adoption

MaturityMajority adoption

Plan

AttentionMeaning

Build Run

CostMonthly

cost

Monthly cost

Monthly cost Monthly

cost Monthly cost

Monthly cost

Cost

Value potential

Value potential

Value potential

Value potential

IntangibleValue

Value add /

creation

IntangibleValue

Creation; Add

Sustain value

Cost-cutValue

UnlockValue

1 2 3 5 6 7 8

Value preservation

4

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Look for different value at different life-cycle stages

Idea Test the idea

Design and build

Implement

Operate

Retire

Early adoption

MaturityMajority adoption

Plan

AttentionMeaning

Build Run

CostMonthly

cost

Monthly cost

Monthly cost Monthly

cost Monthly cost

Monthly cost

Cost

Value potential

Value potential

Value potential

Value potential

IntangibleValue

Value add /

creation

IntangibleValue

Creation; Add

Sustain value

Cost-cutValue

UnlockValue

1 2 3 5 6 7 8

Value preservation

4

Your benefits realisation plan operates here

Your value

unlock plan

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IT ADDS VALUE – IT’S UP TO YOU TO PROVE IT

Terry [email protected]


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