Innovation, Technology, and Life in the Cloud

George Watt

Measure the Cloud for Business Value

brand center_two people speaking_smDespite decades of talk about how IT needs to align to the business, in many organizations, IT and the business are not speaking the same language — if they’re speaking at all. In fact, nearly half (41%) of the business managers surveyed in a recent CA Technologies study said IT lacks communications skills.

This communication gap exists, in large part, because often we in IT don’t focus on the right topics. We’re likely to talk about service metrics: how long systems are up, how quickly systems that are down are brought back up, how many help desk calls are resolved, and that sort of thing. These metrics matter, but they’re tactical to the business, perhaps aside from their use in preventing finger-pointing about lousy service.

Today, IT should be measuring and talking about business value. This goes double when the discussion is about cloud computing which, despite its deafening buzz, remains the great unknown for many large organizations. The best and most efficient way to make the cloud tangible to the business is by going beyond the memes and quantifying its business value in terms that are relevant to the organization.

Picture this. The CIO reports that the big accomplishment of the month was the upgrade of the “ABC” package to release 3.61. Is the CEO excited? Now imagine a different conversation. By measuring the business value delivered, the CIO can talk instead about how IT slashed the time it takes a customer to search the online catalog, and how, perhaps not coincidentally, sales increased by $X a month.

How can the CIO determine business value? IT pros for generations have not been trained to think this way. If they think about business value at all, it’s in terms of saving money on license fees, hardware costs, and other capital and operational expenses. Certainly these elements are part of cloud computing’s value proposition. And I would bet my lunch that there isn’t a CIO reading this who hasn’t run the numbers on the back of a napkin or in a spreadsheet.

But there’s more to measuring business value than doing more with less. The cloud, for one, is more than a cost-saving proposition. It’s a new business model with profound implications for business alignment and value. Ditto other disruptive technologies that, when measured properly, can deliver value beyond dollars and cents.

None of that matters, however, if the CIO and the IT team aren’t working hand-in-glove with the business. To that end, here are four simple ideas that will help your team calculate and communicate the business value of IT.

1. Listen more than you talk. As the old saying goes, there’s a reason you have two ears and one mouth. You learn more by listening than by talking. Active listening is a difficult skill to learn, because often we get so wrapped up thinking about what we’re going to say next that we stop hearing what others are saying.

2. Understand the metrics that are important to your stakeholders. If you understand how they’re measured and how they measure success, you’re closer to knowing how you can deliver business value they’ll appreciate. For example, two general managers in the same organization might drive their groups differently. They’ll be interested in different metrics that relate to their different management objectives. You’ll have to talk with both managers and come up with separate metrics to use as KPIs. Here’s a tip that will help you get there: Focus on the metrics that are exciting to their customers. People care about what their customers think. If you can help them excel with their customers, you’re increasing the value of IT in one of the most relevant ways.

3. Tailor your message to your audience. We reduced IT expenses significantly as we deployed our cloud service at CA Technologies. Certainly the CFO was pleased. But we also had “collateral greenage,” because the cloud lets us be more efficient with our IT resources. That reduced our power consumption. So if I’m talking to Cynthia Curtis, our chief sustainability officer, I’m not going to lead with how the cloud reduced our CapEx or OpEx. I’m going to lead with how it cut our carbon output by 6,200 tons. That’s what is important to her, that’s how she’s measured, and that’s how I can prove IT’s business value to her.

4. Find a mentor who can teach you the vocabulary. This might well be the most potent suggestion. Every job function has its own specialized business vocabulary. CIOs and IT folks are, naturally, schooled in the language of IT. Unfortunately, we’re often challenged when it comes to the language of other parts of the business. The solution: partner with the business leaders across your organization’s org chart. For instance, we built a partnership with a mentor in our finance team. They explained the language of their aspect of the business to us, and helped us identify and understand the important metrics. This paid off when we helped consolidate two offices across the street from one another. Our mentoring relationship with finance ended up saving the company over $12 million. Could we have achieved those savings without such a close working relationship (read: alignment)? It’s doubtful.

Measuring and communicating IT’s business value demands more than knowing the right metrics. It requires a true embrace of your stakeholders, internalizing what they’re trying to achieve, and aligning IT’s activities with stakeholders’ strategic goals. That, in the end, is how we drive business value and innovation. And that works whether we’re rationalizing the cloud, birthing Big Data, going mobile, or capitalizing on whatever future disruptive trends come IT’s way.

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2 comments on “Measure the Cloud for Business Value

  1. Pingback: The 4 MYs of Cloud Computing and IT Transformation - Cloud Storm Chasers - CA Technologies

  2. Pingback: The 4 MYs of Cloud Computing and IT Transformation | Pragmatic Cloud

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About

This site contains articles regarding the practical aspects of deploying, providing, managing, and using cloud computing, and other technologies. I also share my thoughts and experiences related to innovation, consumer driven IT, social media, management issues, and about what some refer to as “soft skills”.

All works copyright (C) 2009 - 2015 George Watt - All rights reserved.

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