The IT Value Stack
by Ade McCormack

     
   

Many executives question the value IT delivers. The IT department could very easily demonstrate their value but I wouldn't encourage you to press them on this. Turning the servers off for a few hours would certainly remind you of why you need IT. However you may well harbor a lingering feeling that you are paying too much for the service.

I have spent the last few years developing a model to maximize the value obtained from one's IT investment and have developed a simple model for measuring it. I have documented this model in a recently published book, called the IT Value Stack (Wiley, 2008). As well as my own perspective it includes those of many influential people in the end-user and technology arenas.

The underlying drivers for the IT Value Stack are:

  • The IT industry has a poor delivery record and needs to 'grow up'

  • Business people do not know what IT people are talking about (and this doesn't seem to bother IT people)

  • Users are generally suspicious of IT people

  • Executives are frustrated that they cannot measure whether they are getting good value from their IT investment

  • There is a perception that all problems involving IT are ipso facto the fault of the IT department

  • Many businesses do not know what business they are in.

The IT Value Stack is so called because each of the areas that need to be addressed are distinct and so can be stacked rather than blended, so to speak. The stack model highlights the dependence of a given layer on the layers below it. Addressing a layer without having addressed the layers below it will not generate the IT value optimization intended. This is a key point and a painful one. There are no two ways about it. If for example the Strategy layer is not addressed then one is building on sand.

So taking each layer from the bottom upwards:

Strategy Entwinement

To obtain real value from the IT investment, the IT strategy cannot simply be a response to the business strategy. The IT department needs to play a role in determining business strategy, and at times actually driving it.

Process Entwinement

The IT department needs to become business process consultants. This will increase the chances of systems being built that actually support the needs of the business users.

People Entwinement

Users and technologists need to be on the same wavelength. For starters technologists need to use a little less IT jargon. Users in turn need to learn a little more IT jargon.

Technology Management

Technology Management is where the 'rubber hits the road'. Without technology one can of course forget seeking value from IT. Given the inherent complexity of technology it can be considered an accident black spot, and if not managed carefully can lead to business failure.

Service Management

Many IT departments have put a service layer around the technology in order to protect the users from the associated complexity. The level of that service needs to be consistently high. Impressive technology with a poor service ultimately results in a disappointing user experience.

Circulation Management

The best IT systems in the world in respect of data processing will yield very little value if their outputs are not available to those that need them when and where they need them. Accessing organizational data, information, knowledge and even wisdom needs to be managed.

Value Management

Executives need to feel that they are receiving value from their IT investment. The CIO thus needs to be in a position to demonstrate this. There have been a number of attempts at value measurement, but there is a lingering sense that they are pseudo science, or at least inappropriate for IT value measurement.

The IT department/industry must become a strategic partner (entwinement) rather than simply a well-behaved supplier (alignment). I believe the cultural issues that separate users from technologists and the CIO from the boardroom need to be addressed if organizations are to leverage best value.

     
   
     
   

The Author

Ade McCormack Ade McCormack is the author of The IT Value Stack - A Boardroom Guide to IT Leadership (Wiley, 2008) and IT Demystified. He writes a regular column for the Financial Times advising business leaders on business-IT issues He is the founder of Auridian, a people-development business focused on helping organizations get best value from their IT investment. For more information or to contact Ade, see www.auridian.com and www.itvaluestack.com .
     
   
     
   
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Copyright 2008 by
Ade McCormack. All rights reserved.

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