In various panels during the recent MIT CIO Symposium an oft repeated theme was the continued need for CIO’s / IT departments to adopt thinking in “business terms” and not technology. This comment isn't new and is epitomized with the fact that in most cases CIO’s still don't have a seat at the table. Infact according to new survey from Gartner and Financial Executives Research Foundation (FERF), it indicated that CFOs are “increasingly becoming the top technology investment decision maker in many organizations”.
The study revealed that 42 percent of organizations reported that their IT department (and, presumably, the CIO) reports to the CFO, 33 percent to the CEO, 16 percent to the COO, 2 percent to a chief administrative officer, and 7 percent to other officers. (This stands in marked contrast to CIO magazine’s 2010 State of the CIO data, which found that 43 percent of CIOs report to CEOs, and just 19 percent report to CFOs.
In total, 482 senior finance managers responded to the 2010 Gartner/FERF technology study.
So how do IT organizations do a better job at this? SAP probably has one good answer with their SAP Value Engineering group. It got mentioned during the last Sapphire, but looks like they are now ready to take it mainstream.
This effort in the group was initiated by Bill McDermott when he joined the company in 2003. This group tries to address many of the issues that confront IT departments today - Changing the discussion from Technology to business terms, Measuring the business benefits of IT engagements, Putting a framework & methodology in place for business & IT to work with each other etc.
Nowadays building business cases in organizations for IT projects has become common practice – 87% of organizations do it, but only 4% of the organizations have a formal process to confirm that “defined business value” was delivered.
At the recent Sapphire (2010- Orlando) i attended a session titled - “Best Practices for Unlocking the Value of IT Investments (Value Engineering)” this was a panel that included Dr. Chakib Bouhdary is the Customer Value Officer, Global Field Operations at SAP. Who has responsibility for the Value engineering division. He reports dually to Bill McDermott and Jim Hagermann Snabe, co-CEOs of SAP and members of the Executive Board. The session also included Jeanne Ross from MIT, Mike O’Dell from Pacific Coast Companies & representatives from DuPont & Forest labs.
Chakib indicated that the value engineering team is evolving greatly having completed “benchmarking effort” for more than 5000 companies, with 8000 surveys. At this time they are doing 30 surveys each day.
Value engineering provides a strong process to build a strong value lifecycle for customer IT investments from discovery to optimization:
- Value Discovery: How do you align your business and IT strategy?
- Value Realization: How can the business value be captured?
- Value Optimization: How can you maximize the value from your investment?
Customers / organizations seem to be adopting this deeply in their IT departments creating specific groups focused on Value engineering. Infact during the session the group from DuPont (i think) indicated that they are now providing this a service to other customers/organizations.
Prashanth Rai
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