Many companies are contemplating what digital transformation means to them. If you are a leader of the IT organization for your company, I have two questions for you.
First, do you WANT to be part of your company’s digital transformation?
Of course, you do.
Secondly, have you defined your service catalog? What are the contents of your service catalog?
If your answer is a “listing of things like PCs, smartphones, password reset requests, and applications”, your IT organization will find itself on the outside looking in as your company embarks on its strategy for digital transformation. If your answer is “we don’t have a service catalog”, your IT organization is on the path to be outsourced.
Why? Because both of the answers listed above are indicative of an IT organization that does not know how it contributes real business value.
Information technology is a part of every aspect of a business. IT can and should be a key player in every organization’s digital transformation journey. The use of information technology is key in designing digital ecosystems,the critical foundation that enables digital transformation. But in many organizations, IT can’t seem to rise above the “bits and bytes”, because it only thinks in terms of applications and infrastructure.
In “The Ecosystem Advantage: How to Build the Digital Ecosystem That Will Help You Win in the Digital Era”, Charles Araujo discusses that “every ecosystem requires an element which enables the interconnect between different and often disparate players within it… [this element] allows the members of the ecosystem…to connect, which in turn allows the entire ecosystem to function”.1
Many IT organizations may read that statement and immediately think in terms of networks, interfaces, applications, servers, and the like.
But that kind of thinking would be the exact wrong way to begin to think about a digital ecosystem, states Araujo. Araujo further states that the ecosystem should be designed from the perspective of differentiating business value and the workflows that support that value. Infrastructure and applications are not the starting point. Understanding how the business enables and delivers value and the underpinning workflows that support that value delivery is the starting point.2
Which points out the problem in many IT organizations.
What is the problem? The IT organization doesn’t understand the underpinning workflows that support business value delivery. As a result, many IT organizations are unable to define or articulate how it supports the delivery of business value. IT can discuss how many PCs it supports. IT can discuss how many calls come into its service desk. IT can develop application code and implement systems. But IT is not able to map or describe how what it does enables or delivers business value.
It’s About the Business
While technology is critical to businesses, technology is simply a tool that business uses to deliver value. Business value is based on the core competencies of a business. For example, healthcare companies deliver healthcare. Banks deliver banking services. Manufacturers deliver widgets. Technology does play a role, but business value is derived from a business’ core competencies.3
And strictly speaking, a business can get its IT from anywhere.
What this means is that a company’s IT organization needs to become a partner to the executive management team in helping the company achieve its objectives. The pathway to becoming a true partner is delivering business value. Business value includes five very specific things4:
- Increase revenue
- Decrease cost
- Improve productivity
- Differentiate the company
- Improve client satisfaction
This means that to be a partner to the business, IT has to understand:
- How does the business enable and deliver value?
- What are the value chains that support value delivery?
- How does IT contribute to or support these value chains?
IT Services are how IT contributes to or supports those business value chains. IT services are not just the delivery of a new PC or smartphone. IT services are not just providing and supporting an application or resetting a password. While all of these activities may be part of an IT service, in and of themselves, these things are not IT services. Strictly speaking, these activities can be done by anyone.
To say it differently, if an IT organization can’t define and describe its services in terms of business value, that IT organization will face a future of simply being “order takers” at best. That IT organization will not play in its company’s digital transformation strategy.
Why does this matter?
If your IT organization can’t define or articulate its services in terms of business value, then why should the business invest in your IT organization? If your IT organization doesn’t understand the how the business delivers value, how can IT even attempt to partner with the business in building the ecosystem needed for digital transformation? Your IT organization will not be part of your company’s digital transformation; however, other IT organizations will.
Define Your Services…. or Get Left (Pushed) Out of Digital Transformation
Do you want your IT organization to be a player in your company’s digital transformation? Then define your IT services in terms of business value and outcomes, not applications, products, and activities. Answering the following questions will help you get started.
- What are the value chains – the activities within your company that result in a product or service that delivers value within your business?
- What role does IT play in delivering or supporting those value chains?
- Does IT’s contribution to these value chains actually provide value in terms of customer satisfaction, company differentiation, cost optimization, productivity, or increased revenues?
- Where are the gaps? Are there opportunities to invest in IT or partner with others to fill these gaps?
Having the right answers to these questions will help ensure your company’s digital transformation includes your IT organization.
1 Araujo, Charles. “The Ecosystem Advantage: How to Build the Digital Ecosystem That Will Help You Win in the Digital Era”. The Institute for Digital Transformation. 2016.
3 Sisco, Mike. “Business Value Is Key to IT Success.” PRACTICAL MANAGEMENT TIPS FOR IT LEADERS. CIO from IDG, 6 Oct. 2016. Web. 12 Dec. 2016. http://www.cio.com/article/3128724/leadership-management/business-value-is-key-to-it-success.html
About the Author:
Institute Fellow Alumni
Doug Tedder is the principal of Tedder Consulting LLC. Doug is an accomplished and recognized leader who is equally adept in interactions from senior leadership to day-to-day practitioners. His attention to detail, industry knowledge, emotional intelligence, and the ability to “see the big picture” and make it actionable has resulted in a track record of success in helping IT organizations transform into business partners in value delivery.
Doug holds numerous industry certifications in disciplines ranging from ITIL, COBIT, Lean IT, and Organizational Change Management. An active volunteer within the IT Service Management community, Doug is a frequent speaker and contributor at local industry user group meetings, webinars, and national conventions. Doug is a member, former president, and current board member for itSMF USA as well a member of HDI.