Chapter 1 From Technology to Value PDF

29/01/2024 Chapter 1 From Technology to Value IT Strategy & Innovation Edition 5.0 Jam...

29/01/2024 Chapter 1 From Technology to Value IT Strategy & Innovation Edition 5.0 James D. McKeen, Heather A. Smith Chapter 1 Learning Objectives  Why IT value is difficult to assess  IT value dimensions and organizational practices  Common IT value challenges  Importance of clear IT values  Relating IT metrics to IT value  Leading practices in delivering IT value James D. McKeen, Heather A. Smith © Prospect Press 2022 1-2 1  29/01/2024 Figure 1.1 Value is a Multi-Layered Concept James D. McKeen, Heather A. Smith © Prospect Press 2022 1-3 What is IT Value? 1) Layers of value 2) Perceptions of value 3) Types of value 4) Context James D. McKeen, Heather A. Smith © Prospect Press 2022 1-4 2  29/01/2024 (1) Layers of Value Value Layer Successful Practice What is being delivered? Use stakeholder agreement Where is it created? Assess organizational levels and functional units Who is responsible? Include people, processes and technology How long will it take? (time) Allow learning and adaptation of users How is it delivered? Enable budget synchronization and infrastructures James D. McKeen, Heather A. Smith © Prospect Press 2022 1-5 (2) Perceptions of Value  Expectations and perceptions of IT affect stakeholder behavior  Impacts quality of business-IT partnership  Influences efficient use of IT resources  Higher expectations of IT reduce impressions of value James D. McKeen, Heather A. Smith © Prospect Press 2022 1-6 3  29/01/2024 Figure 1.2, The Business Hierarchy of Needs James D. McKeen, Heather A. Smith © Prospect Press 2022 1-7 (3) Types of Value  IT’s ability to deliver value are also hierarchical:  Competence in delivering the basics  Demonstrating business understanding  Developing trusted relationships  Participation in strategic decision-making  Delivering strategic, transformative and innovative products and services James D. McKeen, Heather A. Smith © Prospect Press 2022 1-8 4  29/01/2024 (4) Organizational Context  Extent of IT adoption  Organizational effectiveness of IT leverage  Resources based upon size  Extent of cultural flexibility  Nature of revenues or industry: shrinking or growing? James D. McKeen, Heather A. Smith © Prospect Press 2022 1-9 Challenges in Delivering Technology Value (1 of 3)  Cost focus  Reduced payroll as the only measure  Other benefits not recognized  “Silver bullet” thinking  Value will be delivered at installation  Role of business functions ignored  Inability to articulate value  Difficult to identify strategic benefits  Classic versus agile development James D. McKeen, Heather A. Smith © Prospect Press 2022 1-10 5  29/01/2024 Challenges in Delivering Technology Value (2 of 3)  Unrealistic expectations  Multiple stakeholder objectives misaligned  Unknown organizational capabilities  Compliance requirements  Security and compliance needed for all projects  Technical debt  Older technologies not updated  Escalated by short term planning James D. McKeen, Heather A. Smith © Prospect Press 2022 1-11 Challenges in Delivering Technology Value (3 of 3)  Financial processes  Short budget cycles inhibit value delivery  Long term strategic projects unsupported  Movement from capital to pay-per-use  Shadow IT  If without IT input undermines IT value  Delayed value delivery and increased risks James D. McKeen, Heather A. Smith © Prospect Press 2022 1-12 6  29/01/2024 Telling the IT Value Story  Demonstrate understanding of business goals and strategies  Shows IT contribution at multiple levels  Moves from IT strategy to specific contributions James D. McKeen, Heather A. Smith © Prospect Press 2022 1-13 IT Value Story Communication Methods 1) Provide convincing business narrative 2) Use appropriate metrics James D. McKeen, Heather A. Smith © Prospect Press 2022 1-14 7  29/01/2024 (1) Provide Convincing Business Narrative (1 of 2)  Talk about the business, not IT  Relate technology to overall business objectives  Tailor impacts to stakeholder groups  Use business language and terms James D. McKeen, Heather A. Smith © Prospect Press 2022 1-15 (1) Provide Convincing Business Narrative (2 of 2) Explain:  Importance (why to care, the “so what?”)  Specific benefits (what)  Business engagement expected (how)  Value results (outcomes) James D. McKeen, Heather A. Smith © Prospect Press 2022 1-16 8  29/01/2024 (2) Appropriate Metrics (1 of 2)  Support value to justify investment  And to demonstrate value delivery  While keeping sight of strategy to  Help stakeholders understand value James D. McKeen, Heather A. Smith © Prospect Press 2022 1-17 (2) Appropriate Metrics (2 of 2) Build a few metrics that:  Are organizational/situational specific  Are defined at the outset  Can be readily determined  Provide leading indicators of change  Consider underlying fundamental IT costs James D. McKeen, Heather A. Smith © Prospect Press 2022 1-18 9  29/01/2024 Best Practices in Enhancing Technology Value 1) Articulate business strategy 2) Ensure business engagement 3) Use business metrics 4) Manage for value 5) Little things make a difference 6) Remember IT operating costs James D. McKeen, Heather A. Smith © Prospect Press 2022 1-19 (1) Articulating Business Strategy  Clear business strategy aligned with IT strategy  Enable selection of metrics  Match IT investment to strategy  Enable focus for organizational value  Engage both IT and business people  Multiple levels of achievement James D. McKeen, Heather A. Smith © Prospect Press 2022 1-20 10  29/01/2024 (2) Ensuring engagement at all levels  Business leads or co-leads projects  Clear IT understanding of business  Focus on business outcomes  Talk about the need, not the technology James D. McKeen, Heather A. Smith © Prospect Press 2022 1-21 (3) Using Business Metrics  Break strategy into business outcomes  Relate them to IT deliverables  Use on-time, on budget and other metrics  The optimal business metric is money James D. McKeen, Heather A. Smith © Prospect Press 2022 1-22 11  29/01/2024 (4) Managing for Value  Enable change during projects  Consider agile development  Break large projects into chunks matched to funding  Match staged outcomes to strategic value themes  Consider experimental projects  Adopt change management practices James D. McKeen, Heather A. Smith © Prospect Press 2022 1-23 (5) Little Things Make a Difference  Address basic technology problems since they disrupt value realization  Have methods to identify simple problems  Provide IT facilitation of shadow IT James D. McKeen, Heather A. Smith © Prospect Press 2022 1-24 12  29/01/2024 (6) Remember IT Operating Costs  Value includes demonstrating IT’s operating abilities  Value metrics include IT operating costs  Link metrics to opportunity costs (e.g. downtime to lost revenues) James D. McKeen, Heather A. Smith © Prospect Press 2022 1-25 Chapter 1 Conclusion  IT experiences many challenges in delivering value  Value is evolving past on time on budget  Delivering value requires: 1) People, processes and technology 2) Commitment over time 3) Addressing multiple stakeholder needs James D. McKeen, Heather A. Smith © Prospect Press 2022 1-26 13  29/01/2024 James D. McKeen, Heather A. Smith © Prospect Press 2022 1-27 14