It's time to deliver VALUE Mr. CIO

Michael Platt has picked up on some research done by Gartner stating that IT must start demonstrating value – not just cost reduction.

CIOs need to establish a track record of creating value faster than reducing IT costs by 2009. CIOs are now expected to provide high-quality, secure and cost-effective services. CIOs must deliver a record of high performance to establish their position and contribution in the organization. To do this, CIOs will need to create business value faster than the market and technology can reduce IT and business costs.

I’m just adding my voice to the chorus here. The primary role of IT needs to be the delivery of VALUE and not just the reduction of cost of the existing.

We’ll see whether reports from people like Gartner have the same effect they did when they made created a huge hullabaloo about TCO some years back. A hullabaloo I have to say has enabled IT organisations to reduce cost and also to massively reduce the value. High value and high cost has been replaced in most organisations with lower cost and lower value.

The cost centred thinking may have been appropriate in the last economic cycle. As the cycle turns another corner it’s no longer appropriate, it’s time to think value. Value thinking will require a huge metamorphosis for most IT organisation and many won’t be given the opportunity. What I see happening is that businesses will focus parts of their organisation on innovation. It will be the innovation function that drives expenditure on IT. The innovation expenditure will be focussed directly on creating innovation and on supporting the innovations that they develop, this will normally result in some IT expenditure but probably not by the IT function. The IT organisation will get given the technology that supports the innovation only when it is no longer innovation and requires a run-and-maintain, cost-centred approach.

Engineering organisation have worked this way for years; the IT organisation rarely supports the IT for the engineering part of the organisation. The the engineering function fund and normally support the technology themselves because they need to be closely intimate to the value it delivers, because value it the primary driver and not cost. Having the IT function supporting the engineering function normally has the effect of slowing down the engineering, the same would be true for the innovation function.

If the IT function only looks after run-and-maintain why bother having an IT function. Most organisation let someone else run-and-maintain their buildings, why should the run-and-maintain of IT be different.

Tags: Gartner,TVO,TCO