We talk a lot about helping IT leaders manage the business of IT. Sounds smart, right? Given how challenging it can be to communicate cost and consumption impacts, build stronger relationships with budget owners, and establish credibility among senior executives, helping IT better manage the business of IT is almost a diplomatic mission, a way to help an essential team better contribute to an executive dialogue about business objectives and innovation initiatives. Technology impacts service, competitiveness, and productivity at every level of the organization, so it stands to reason that the same standards and measurements used to run other business units would apply to the IT department too.
We nod our heads in agreement (right, yes, okay maybe). But quietly, we still wonder… what do we have to change to better manage the business of IT? And what are the practices and methodologies that other parts of the enterprise use to earn their seat at the executive table?
I'll admit, I've had this question. To break it down, I had to first devise a theory of how successful businesses are managed. Here's what I found: they follow the money, making sure every dollar spent creates value for the company and contributes directly or indirectly to corporate objectives. Easy to say, harder to do.
So how do they do this? By listening to Apptio’s customers talk about their ideas over the last few weeks, I’ve developed a list of best practices that capture common themes.
They plan strategically
Strategic planning is led and owned by department leadership, and focus is critical to success. You already know this. CIO-level strategies need to zero in on key initiatives, quickly decreasing uncertainty and improving decision-making at the management level. But what’s often missing in the IT department are the tools necessary to help CIOs effectively evaluate areas that need attention, which makes building a strategic case for anything absurdly difficult.
They establish discipline
Not the rigidity that mandates cost cutting to satisfy stockholders and other investors. Rather, discipline, in this case, means establishing a level of predictability that can be used to generate consistent (or better) outcomes over time. This baseline requires adherence to systems that establish common platforms for planning, review, and forecasting, creating a much-needed structure for analysis and evaluation.
They create accountability
When business owners understand their impact on corporate goals and innovations, they become better decision-makers and are able to drive meaningful change. For IT, accountability is really about giving people the ability to respond to facts versus emotions or gut feel and adjust their behavior based on more accurate assessments of cost, consumption, and overall value.
They cultivate collaborative relationships
Breaking down silos by encouraging cross collaboration between IT and business functions builds trust, underscores common objectives, and helps leverage the value IT can provide. This is critical in organizations that have grown in size and complexity, as the need for efficiency often results in teams that work more for their own group than for the overall organization. This can result in app teams over-building without knowing long-term run costs, for example.
They foster financial literacy
Not everyone can (or wants to) be an accountant. But being able to interpret financial reports, build a cash flow plan, manage a budget, and forecast accurately reduces unpleasant surprises (and stress!) and helps business owners acquire and manage the resources they need to be effective. The gap in IT is often taxonomy related; i.e. finance, business units, and technology aren't using the same language to describe value. Literacy is improved when teams are working with platforms and tools that translate key data relationships, making it easier to review and plan.
They reward the right behaviors
Culture is tricky, but managing a business well requires cultivating behaviors that drive performance. Building relationships, fine-tuning critical processes, and minimizing risk while maximizing opportunity are examples of behaviors that have positive impacts on performance.
They provide great customer service
This is critical in successful business environments. Business owners want the convenience, data, and empowerment you can provide to make an impact, feel like a superstar, and achieve fabulous results. Translating IT results into language business folks can understand is great customer service and goes a long way toward improving the relationship between cost centers and IT.
Ideally, the end game of using these principles to manage a business is a reasonably predictable cycle of revenue coming in and profit coming out for the organization as a whole. For IT, maybe this is more of a funding-coming-in and value-coming-out equation that works the same way. If discipline, accountability, collaboration, literacy, and service are hallmarks of successful business operations, it isn't a big leap to see how adopting these best practices might impact the way IT teams deliver value to the enterprise.
What's the missing ingredient here? Enterprises use key frameworks to support these best practices. Sales teams have CRM, Finance has ERP, and HR has HCM tools, reasonably sophisticated and targeted platform/software solutions that help their departments demonstrate value to the organization and track their investments to business goals. Here's the rub: until recently, IT hasn't had the same, expertise-specific software from which to manage its business. In fact, many IT departments are still trying to measure and optimize enormous investments and initiatives via spreadsheets that are laboriously constructed to provide only brief and 10,000 level views of their contributions.
Managing IT more strategically, managing the business of IT, means adopting a new framework of IT's own. Enter TBM. TBM's whole reason for being is to drive a data-driven discipline that provides insights across the entire IT value chain, helping execs better create and communicate business value. As our customers adopt TBM solutions, they are transforming their organizations into best practice models for IT teams worldwide.