How IT Can Help Companies Make Better, Faster Decisions
How It Can Help Companies Make Better Faster Decisions Of the many different groups that make up a business organization sales, finance, human resources (HR), operations it is the IT staff that is in the best position to deliver timely, relevant information for decision making that will provide significant long-term value to the enterprise. Why? Because IT manages the systems that contain all of the organization s operating data and business processes. The chief information officer (CIO), in essence, holds the keys to the enterprise s operational vault of information. Unfortunately, businesses often fail to recognize the critical role that IT has in the company s success. Too often, lineof-business managers view IT colleagues not so much as strategic partners, but more as support staff. They therefore neglect to take advantage of the technologies and expertise that could improve their departments performance and decision making via timely access to the right information. The organization, then, fails to reap full value from its IT investments. IT managers can and must bridge this gap. They must show business managers how IT can enable them to meet and exceed their departmental goals. They must communicate to line-of-business managers how they can deliver the right information at the right time to support better, faster decisions, and thus ensure long-term company success. IT is in the best position to deliver timely, relevant information for decision making that will provide significant long-term value to the enterprise Aligning IT Projects with Business Goals Too often, IT professionals speak in highly technical terms about protocols and routers and processing power rather than in the language of their business colleagues (e.g., sales conversion, inventory turnover, and liquidity ratios). CIOs and senior IT managers should be able to talk about profitability as easily as they do about such IT standards as service-oriented architecture (SOA), Information Technology Infrastructure Library (ITIL), and Control Objectives for Information and Related Technology (COBIT). Using business terminology, CIOs can then better discuss the ways that technology can provide solutions to business problems. For example, the vice president of sales is probably not interested in the specifics of network bandwidth or
How It Can Help Companies Page 2 server central processing units (CPUs). But he or she would be very eager to hear how IT can improve point-of-sales activities, lead generation, or the responsiveness of the e-commerce application when customer traffic is heavy, in order to ensure customer satisfaction and retention. To really understand the key concerns, objectives, and reporting needs of other department managers, IT directors would be well advised to sit down and talk to the line-of-business managers about their monthly (and yearly) goals and the challenges they face in achieving those goals, especially when it comes to having access to the right information in a timely manner when making critical business decisions. Later, IT can identify some of the specific technologies and IT services that might help to resolve those informational problems (e.g., accuracy and completeness). IT professionals are no doubt familiar with many IT-specific metrics, such as those relating to server response time or unplanned network downtime. But most IT professionals are not so knowledgeable about the numerous business metrics that define success and failure in other departments. Key performance indicators (KPIs) including those relating to sales growth, customer satisfaction, product defects, inventory turnover, and employee overhead, as well as hundreds of more detailed, department-specific metrics are used throughout the enterprise to measure success in meeting corporate goals. KPIs should be metrics that are critical to the strategic success of the company, and should provide accountability for meeting goals they re not just random growth indicators. IT can provide greater visibility into operations and better insight into the root cause of a problem. IT should pay closer attention to the business metrics that drive sales, finance, operations, customer support, and other key departments. Department managers will likely be highly receptive to suggestions on how IT can improve the measurement and tracking of key business metrics that define success in their respective departments and help them better respond to changes in the marketplace. Often, IT is in a position to provide a technical solution for improving the collection, analysis, and reporting of specific business metrics, even though neither the IT manager nor the business managers may realize it. IT may have analysis software and reporting tools that can provide greater visibility into operations and better insight into the root cause of a problem or situation. For example: The sales manager at an automotive dealer is not aware that the sales team is behind on its sales of a particular model. If the manager were able to get sales trends by car model on a daily basis,
How It Can Help Companies Page 3 it would be possible to quickly devise a strategy for increasing those sales. In this case, IT could use reporting tools or business intelligence (BI) software to quickly create a new daily or weekly report with that information for the sales team. Increasingly, managers not only need reports, but they also need real-time data available on dashboards. Dashboards provide interactive interfaces and customized views to charts, graphs, and tools for drilling down into data that is important to a specific user. Dashboards can be used to tap into different databases and applications, and perform analysis and what-if scenarios on disparate types of corporate data. Through dashboards and other types of BI, reporting, and integration tools, IT can provide business managers with KPIs whenever they need it. In other words, IT can improve business operations and provide a very visible demonstration of its value to the enterprise. How Does IT Create an Accurate and Actionable 360-degree View of Information? IT should help each department define the data it needs, and in what form, to best meet corporate goals. Beyond the departmental level, IT can provide information visibility and process automation for the company as a whole in three strategic areas. 1. Alignment of business activities with corporate strategy Just as IT needs to align its projects with the goals of the business, other departments must also align their activities with the overall corporate strategy. IT can turn static data into useful business information by providing analysis, forecasting, and reporting tools, which provide line-of-business managers accurate and relevant information in making key business decisions. IT can provide the visibility necessary to ensure that corporate activities are actually fulfilling corporate objectives. Managers not only need reports, but they also need real-time data. 2. Resource and investment allocation aligned with the right opportunities Businesses need to have the right people, investments, equipment, and assets aimed at the right activities. Lack of adequate visibility into corporate data and resources makes it difficult to assess the needs of the enterprise and to allocate resources and investments appropriately. By leveraging cross-enterprise business software with strong analytical capabilities, IT enables managers to quickly make informed decisions on the deployment of people and resources. 3. Standards, compliance, and risk reduction Companies of all sizes face a range of legal requirements and industry standards with which they must comply, or face penalties. IT can provide real-time information to track and report adherence to compliance standards and regulations, alerting management to anomalies in order to make adjustments more rapidly. With the help of technologies that track key indicators, create reports, and manage business processes, the organization can ease the compliance effort and integrate it into both the business plan and the IT infrastructure. Few modern organizations, whether large or small, can function without an IT department. Consider that the IT department enables such mission-critical systems as e-commerce, customer support, enterprise resource planning (ERP), order fulfillment, Internet protocol (IP) telephony, and, of course, e-mail.
How It Can Help Companies Page 4 CIOs have the ability to provide the enterprise with insight and visibility into the complex web of processes and vast stores of data that underpin its operations. By giving the enterprise greater visibility into its information and more streamlined automation of processes and policies, IT provides business-critical support for the organization in the decision-making process. How Can IT implement a 360-degree view to enable faster, better decisions? There are definite advantages to be gained to achieving a 360 degree view of one s entire repository of information. This does require IT to set up the systems that gather and present the relevant information. In order to do its job, IT must assess its activities and facilitate the assessment of the rest of the company. Help create an accurate and actionable 360-degree view of your company s information, and jump-start the process by following three steps to facilitate better, faster decision-making. Step 1 Develop an IT governance strategy R Get buy-in from line-of-business managers on what key performance metrics to measure and how to measure them. By giving the enterprise greater visibility... IT provides business-critical support for the organization in the decision-making process. R Determine how to track and charge the total costs of IT projects and infrastructure to internal (e.g., HR, sales) and external stakeholders (e.g., suppliers, partners). This includes identifying the hidden costs and opportunity costs so you can pursue the most profitable priorities and opportunities. R Create a governance framework to align IT to corporate objectives. Step 2 Assess the current state of affairs R Assess current IT capabilities and resources so you know what resources you have and what you can potentially do with them. R Identify which IT resources to use on which activities so you are getting the most value out of your IT personnel and infrastructure in relation to the rest of the company. R Understand your goals and how to reach them. This includes having a holistic view of all your IT activities and their interdependencies with the line-of-business managers and corporate executives. Step 3 Execute against the plan and adjust accordingly R Use IT personnel and infrastructure to help the company better allocate people, equipment, investments, and resources at the right time to achieve business goals and profitability. R Track and monitor your IT activities and properly charge for the delivery of IT. This includes conducting a gap analysis so you know what services you are providing that you are not charging for. R Track the performance and costs of your IT personnel and assets so you know how well you are doing in your activities and what corrective action to take, if necessary.
Bottom Line IT management in small and medium companies can and must understand the information needs and language of their business colleagues within the organization. Line-of-business managers can and must see IT not simply as support, but as a partner in the company s growth and success. IT is instrumental in delivering a 360-degree view of the processes and data that drive the company. And it is only this kind of visibility that enables line-of-business managers and executives to make better, faster decisions, essential to success in today s highly competitive marketplace. Authors Wayne Thompson has over 16 years of IT experience in the private and public sectors, with extensive expertise in opportunity analyses, go-to-market execution planning, and software evaluations. He has led best-practice workshops for C-level executives in Europe and North America, and negotiated software licensing agreements for Global 1000 enterprises and government agencies. Thompson advises start-up companies and leading IT vendors in product development and marketing strategies as well as user clients in business process analyses and software procurement. Neil Stolovitsky has more than eight years of IT experience with end-user, consulting, and vendor organizations, along with extensive expertise in business development, software selection, and channel strategies. Stolovitsky has published numerous white papers and articles covering enterprise resource planning (ERP) for service industries, project portfolio management, professional services automation, IT governance, and new product development to a global audience.