The last few years have witnessed that technology and IT interventions are rapidly moving from the peripheries to the core for almost all businesses. Invariably, the importance of digital transformation for organizational success is being acknowledged by business leaders across verticals. However, while technology and IT initiatives are being seen as growth drivers, their perception as driving business value or impacting the bottom line requires more attention and celebration.
To put things in perspective, it is imperative for organizations to take technology decision making to the boardroom to become digital natives in the years to come. However, digitalization can only become a boardroom agenda if it is perceived as creating business value. Thus, in this article, we will share insights from industry leaders on how enterprises need to rethink the way they are demonstrating business value of IT initiatives to start a collective digital dialogue for 2023.
The importance of demonstrating business value of IT initiatives
Let’s start with the most pressing question of why technology leaders need to demonstrate business value of IT initiatives. Many CIOs/CTOs agree that highlighting business value can help enterprises:
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Suggested practices to demonstrate IT business value for technology CXOs for 2023
Based on insights from industry leaders, we have curated the following list of 6 practices enterprises can leverage to demonstrate IT business value:
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Understand what constitutes business value
When you are trying to demonstrate business value for IT initiatives, it is important to have a clear understanding of what constitutes business value. You need to be clear on which outcome is considered to be driving business value. Here are a few steps to achieve the same:
- Start by identifying the key stakeholders who determine the business value for each vertical
- Constantly assess and reassess their needs or expectations from the nature of business value they seek from IT initiatives
Understand what is considered value by them, revenue growth or cost reduction
With this, you will have a clear understanding of the narrative you should be focusing on when it comes to demonstrating IT business value. There may be 100 ways in which you are delivering impact, however, if you are not able to communicate how it’s making business sense for the stakeholders, it may not fly.
Focus on outcomes not resources invested
When demonstrating IT business value, your focus needs to be on tangible and quantifiable outcomes, and not simply on resources or inputs. For instance, instead of saying that you invested 50 Lacs in upgrading systems to improve productivity, demonstrate the value of your initiatives by showcasing the tangible impact on productivity. You may want to portray the same achievement as a 1.5X increase in productivity, leading to a greater revenue realization of 70 Lacs.
You should steer away from metrics that measure efforts or work or even technical output. While these are important parts of your story line, your main demonstration should be the outcomes you have achieved vis-a-vis the set expectations.
Separate transformation vs optimization value
As a CIO/CTO or a technology leader, most IT initiatives are focused on either transformation or optimization. Transformation generally involves identifying new processes, infrastructure, practices, etc. to achieve new results. However, optimization focuses on improving the current environment to deliver better results. When you are advocating IT business value, focus on two sides of the coin:
- Illustrate the value driven by digital transformation leading to new sources of revenue, new business models, etc.
- Showcase value generated from optimization of existing efforts to drive more impact from ongoing activities
This will help you demonstrate how IT interventions are critical to driving business value in different ways, along the entire business lifecycle, and the need to make it a part of the boardroom agenda.
Demonstrate business value which each stakeholder understands
The understanding of business value or value from any initiatives can be best demonstrated when the stakeholder on the other end understands what you are saying. For instance, if you are dealing with a business leader and you illustrate that a specific initiative led to a 3X increase in the internet speed or increase in bandwidth, they may have a blank expression.
However, as a business leader, the stakeholder can be expected to respond to the subsequent impact of such initiatives on the PnL or the bottom line. Thus, you need to focus on communicating your impact and value in what your stakeholders understand the best, without getting too technical. Provide clear data points and insights which can help illustrate impact and serve as a starting point for future decision making.
Explain both financial and non-financial value
While IT initiatives have optimization and transformative potential, their value can be translated in financial and non-financial terms. Both forms of values will have a tangible backing, just how they impact the business will be different.
- Financial value essentially refers to how the initiatives impact the bottom line by increasing revenue, decreasing costs, facilitating efficiency, resilience and agility.
- Non financial value refers to the value created for extended stakeholders. For instance, better IT systems will lead to improved employee experience, resulting in low voluntary turnover, saving associated costs. Similarly, better partner servicing will lead to deeper relationships and improved customer experience in the longer run.
Thus, it is extremely important to highlight the non-financial value of IT initiatives to illustrate its overall impact and how such interventions are integral to business success.
Highlight the value of competitive advantage
Finally, business value can be demonstrated by illustrating how a particular intervention leads to gaining competitive advantage. If you look closely, IT initiatives that improve efficiency and productivity, ultimately help businesses outperform their competitors who are not yet fuelled with digital adoption. Invariably, this leads to greater market penetration and customer acquisition, becoming a brand of choice.
Therefore, you need to strategically demonstrate how specific initiatives enabled the business to gain a competitive advantage and become a preferred choice for customers.
Highlight IT business value for 2023
Start with these six practices for 2023 to not only demonstrate business value of IT initiatives for your organization, but to also make digital discussions a part of the boardroom agenda and to facilitate more influence and clout for technology leaders in strategic decision making. Highlighting IT business value is integral for organizations aspiring to become cloud native and leverage all aspects of digital transformation!