Translating technology into business valueVegard Ottervig on
How can you use technology to reach your business goals in faster, safer, and more effective ways?
Don’t float around without connection to reality—instead make sure that your organisation’s technology and software are translated into real and long-term business value.
This is easier said than done, but there are certain things you should keep in mind when attempting to justify, demonstrate, or make the connection of technology to business purpose, KPIs, and revenue.
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Leadership issue, not technology
First, it is important to remember and realise that achieving business value is primarily a leadership issue, not a technology issue. It is your organisation’s leadership, board of directors, C-suite, and management who point the direction and pave the way to success—or the lack thereof.
Second, do not simply buy technology—like a new marketing suite, a digital platform, or a complex piece of software—on the sole ground that it exists or appears to be fresh and new. The grass is not always greener on the other side. Technology should always be used for a purpose, and in this case it means to support your organisation’s business processes.
Your job is to convince your leadership why the organisation needs a specific technology.
CIOs are both a part of the leadership in an organisation and a technologist delving into the more technical sides of your solutions. McKinsey suggests that CIOs that successfully grasp the business value from IT broaden their scope of action beyond the technical realm.
With your aid, the CIO should consequently demonstrate tech-generated value in core business priorities and core IT performance, optimise investment value, measure operations value, discover common ground between IT and business, seek alliances with finance, HR, and other departments, and build better governance.
As an added measure, TechRepublic details how an organisation can build up leadership skills in technologist, in order to make for more informed tech decisions regarding business value. Their key takeaways include working on communication and management skills, choosing to become a leader by yourself, and by observing current leadership and seeking out managers to assess an action plan for potential advancement.
The business-minded technologist
To better appreciate the function of translating technology into business value, 3coast has created an elegant analogy: Even though everyone has learned to read and write, they are not necessarily authors. In the same way, just because someone knows how to count, it does not make them into business people.
To translate technology into terms a business owner understands requires that the technologist has identified the business pain points and areas where technology can make the processes and products more efficient.
Connecting the world and terminology of the business operator and the convoluted details of the technologist is essential. The mentioned CIO might be the right person to perform this particular task, but given his busy schedule, he might delegate the task to a more fitting candidate in the hierarchy.
Rasmussen College details what skills a business technologist needs and what path one should take to become one. As they say: “It's not enough to just be knowledgeable about relevant technologies and business issues. In order to be effective, you must understand goals and challenges at company, department, and individual levels.”
Also, embrace digital transformation. This phenomenon is a key driver behind making an increasing number of your core business processes digital. Therefore it is profoundly important to demonstrate the business value of the underlying technology, in order not to fall behind on the market.
Innovation vs. maintenance
The age old question of whether to assign assets to innovate upon your existing products or to simply maintain them because they work here and now is a classic conundrum. If your goal is to increase revenue, you will get no new business value by managing old business processes.
What you need is a renewed focus on innovation, an innovation platform, and—if the circumstances require it—a change in the organisation culture and mentality.
In terms of translating innovation to business value, consider this: of the Fortune 500 firms from 1955, only 60 remained in 2017, according to AEI. What fueled this drastic change? Mainly new technology and whether or not companies, both new and old alike, were able to innovate upon the new possibilities brought in by technological progress and development.
HSO, however, argues for a more balanced relationship between innovation and maintenance, emphasising collaboration with partners to accomplish both goals. They think that a “great managed services provider is a reliable partner in keeping your systems and data running, so your business can focus on staying ahead of your competition.”
Whatever option you land on, make sure to weigh all the advantages and disadvantages with each model up against each other, and not be blinded by hype or the seemingly greener grass on the other side of the fence.
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More business benefits
The Houston Chronicle lists additional benefits you can take into account when making your case of translating technology to business value:
- Benefits to communication
- Improved workplace efficiency
- Competitive advantage over rivals
- Cost reduction and economic efficiencies
New and innovative technology tools like Slack and Google Docs can drastically improve the communication and cooperation within your organisation, thus making you more efficient and valuable in the bottom line. Similarly, acquiring better tools for ERP and CRM can gain you competitive advantage over your competitors, by leveraging customer journeys and allocate resources optimally.
ScienceSoft lists further advantages with IT and business alignment, including:
- More efficient risk and compliance management
- Improved products and services delivery
- Analytics driven decision-making
They also list potential pitfalls:
- Lack of technical literacy
- Blurred business strategy
- Lack of strategical agility
Making a business case
In their book In Search of Business Value, Robert McDowell and William L. Simon claim that it’s the business side that needs to take responsibility for building a business case for technology—in contrast to McKinsey’s emphasis on the CIO. The business unit leader needs to team up with IT and justify technology spending, and he needs to own the project and make it chiefly a business project, and not a technology project.
A benefit analysis should be performed, and whether it’s ROI, net present value, or another standard is up to your team to decide—but they all need to stand united. Furthermore, the business case needs to stay in touch with the current technology trends, and must be updated accordingly if it is to be viable.
Finally, in the business case you must demonstrate value after the fact. After having determined a value standard, you should perform follow-up audits regularly to identify strengths and weaknesses, and whether the technology has lead to a net benefit for your organisation in terms of increased revenue, saved time, and optimised resources.
An audit should also review how well the change management process was handled. You should keep the project owners accountable, thus motivating them to optimise performance continuously.
Measuring business value
Even though business value may consist of several different factors, and may vary from organisation to organisation, Vincent Bieri of Nextink lists three key measurements of true business value according to the viewpoint of a CEO or a corporate board:
- How well technology increases revenue
- If technology can lower costs
- How technology improves productivity
Identifying the value of technology prompts you to discover the right metrics showing technology's effects on revenue, cost reduction, increased productivity, differentiation, and client satisfaction. These metrics need to be immediate, accurate, and completely tied to end users.
As a final note, Gartner has made a list of ten principles to translate IT into business value for executives and approving authorities.
Translating technology to business value is certainly not an easy task, but keeping in mind that it’s primarily a leadership issue and not a technology issue may help you find a suitable starting point. Building bridges between IT and business units is a logical next step, as is weighing the relationship between innovation vs. maintenance. Bringing in more benefits, making a business case, and discovering a robust method of routinely measuring business value are the final steps to keep technology a driver behind business value, and not simply an interesting sidenote.
First published 22 May 2019, updated on 23 March 2020.
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