IT: We Have a Problem

Looking to communicate the value of IT? Download a new executive brief, 6 Best Practices for Communicating the Business Value of IT” today.

Of all the talents within an IT organization, effective business communication skills isn’t one often associated with this group. To be fair, that isn’t even a commentary on the people, but rather a reflection of the structure IT operates within.

If your IT organization is like most, you lack the cost and resource visibility that other business leaders take for granted. Conversations about IT economics are difficult because the necessary data is fragmented across finance systems, IT operations systems, and spreadsheets. Inventing and maintaining a cost model is labor-intensive, error prone, and of dubious credibility. 

Financial data available to leaders of specific IT functional areas or technology centers lack the granularity or IT context to be actionable. The result is that when business unit peers question the value they get for their IT budget allocations, IT leaders struggle to respond in language and terms that are meaningful or actionable to the business. There’s often little connection between the BU’s consumption of IT and the cost they pay for those services.

A Tall Order

Even if you had an accurate model of IT infrastructure costs, that wouldn’t be enough to satisfy business unit stakeholders. For business units (BUs), IT costs are rarely presented in a context they understand or value, and BUs don’t see how their projects impact IT run costs or what they can do to change them. 

Infrastructure and operations (I&O) drive significant IT costs, but they’re not connected to things the business values, such as applications and services that support business capabilities and drive growth. BUs see the straightforward cost and value of public cloud services and now want similar transparency from IT.

If you’re in IT finance, you know the struggle of Excel-built cost models that lack granularity and pivots needed to be defensible and understood by BU and I&O leaders. You’re all-too-familiar with the problem of BUs funding projects without seeing the long tail of OpEx and fixed costs they create for IT. You have had more than your fill of painful discussions with the business about allocations they see as unfair.

Can You Afford to Work This Way?

Because of these challenges, it takes too long to answer financial questions, harms IT’s credibility as business leaders, and results in rushed decisions and missed opportunities. BUs treat IT as a cost center – one that can’t explain or defend its budget. As a result, they often leave IT out of key technology decisions, which corners IT into reactivity.

Furthermore, BUs exhibit unchecked demand, over-consuming I&O resources because they don’t understand the cost impact. In coping with the resulting high run costs, I&O is unfairly seen as the “department of no” because it can’t keep pace with unfunded demand.

Worse, the choices made by leaders outside IT actually lock IT into fixed cost structures that keep costs high even when business demand declines. When it’s time to restructure, BUs actively or passively resist efforts to partner on cost optimization. No one wants it to be this way, but BUs lack the information to be more financially accountable for their consumption and quality choices.

Communicating Business Value

Fortunately, there’s a way to change BU behavior and position IT as a trusted business partner, which must start with IT getting a grasp of their own business. Want to find out how to enable business-technology leaders to understand and communicate IT’s business value by showing cost, consumption, and choice in business terms? Download our new executive brief on best practices for communicating business value.

Then, consider this comment from Apptio customer Bradd Busick, Senior Manager of IT Planning, Analysis and Program Management for the Bill and Melinda Gates Foundation. Busick said, “If you can’t articulate your ‘what’ and your ‘how,’ you probably shouldn’t be in IT leadership.”

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