Robert Collins

The Role of Leadership

As the value realization cycle (VRC) shows, it is the entire organization that is needed to get a return from investments in information technology (IT). IT plays a critical role in this, and the CIO must be an effective leader to bring about real value. However, the CIO cannot do it alone. In this chapter, we examine the roles of the various organization leaders in the VRC.

The Agricultural Model

In the previous chapter, we outlined the challenges with adopting an engineering mindset when addressing the issue of business-IT (information technology) alignment, suggesting that this approach is limited and problematic in the longer term. In this chapter we suggest a different way of understanding how organizations can effectively realize business value from their investments in IT. We argue that leaders and managers should adopt an agricultural perspective. This is an alternative to the engineering view that has served us so poorly.

Measuring IT Value Delivery

Throughout this work, we have referenced the harvest based on the Agricultural Model we introduced in Chap. 4. By focusing on the harvest, we have explained how alignment is created and maintained. The harvest has a key role in governance, investment decision making, project management, organizational transformation, and renewal. Being able to clearly articulate the harvest is vital. This section (Chaps. 10 and 11) will focus on exactly that. We will discuss what, when, and where to measure to assess the harvest and how that is expressed in terms of return on investment (ROI).

It’s Not About Technology: It’s About Value

The promise that information technology (IT) holds is immense. The Internet, social media, big data, the cloud, and many other technologies offer almost unlimited potential if we can effectively harness them. They can truly transform our organizations and our world. At the same time, they present us with challenges that range from security to increased expectations. Any organization that is not focusing on how to apply such technology risks becoming irrelevant or fatally uncompetitive in the next few years.

Sourcing IT Services

The last consideration of this section is sourcing. The concept of sourcing was already introduced in Chap. 6, as it is a key focus of governance. In this chapter, we will delve more deeply into various aspects of sourcing with a focus on how sourcing affects the business value sought from investments in information technology (IT).

The Value Cycle

Organizations invest in digital information technologies (IT) to create value for the organization and its stakeholders. They do not (and should not) do it to be up-to-date with the latest technology or to create more interesting work for IT professionals. Shareholders, customers, citizens, and donors put money into organizations to get some value out of them. This is a vital truth that must be understood by people in IT as well as those in other parts of the organization. For business value to be derived from IT investment, it must be possible to clearly articulate what that value is. It cannot be a vague concept that is not measurable. Value must be measurable and must also be measured in practice. Only then can there be accountability for the results as well as learning for continuous improvement. For our purposes, value is the agreed-upon benefit to be derived from applying IT to support the delivery of outcomes customers are willing to pay for or fund. (Customers, in this instance, is used as a generic term to refer to clients, constituents, donors, voters, and other stakeholders for whom value is being created and delivered.) Profit resulting from commercial activity by business firms may be one measure of business value. Other measures could include outstanding public service delivery (such as clear roads in winter, faster ambulance or fire response times) by a municipal government, significant reduction in medication errors in a hospital, or increase in the number of meals served by a not-for-profit or charitable organization. If value is not perceived by customers, they will not pay for or fund it over the long term.

The Engineering Model of Business-IT Alignment

Information Technology (IT) organizations have not been unaware of their challenges in communicating effectively with others. Recognizing that there is a problem, IT departments have sought alignment with the rest of the organization. As noted above, this drive for alignment has been ongoing for decades. It is regularly cited as one of the major goals of IT organizations. Yet the search for alignment has not brought about the desired goals. In this chapter, we will look at why alignment and the ubiquitous Engineering Model for investment in IT has failed us.

Governing IT Service Delivery

In this chapter, we will focus on what we believe is the most important of these considerations—governance. If an organization gets governance right, then it has the means to deal with any problems that arise, regardless of how well it is making investments. If it does not have effective governance, there is a severely diminished likelihood that investments will produce value even when everything else is done well.

The Value Realization Cycle

In Chap. 4, we introduced a new way of looking at information technology (IT) investments—the Agricultural Model. We strongly believe that this model is a more realistic representation of the world in which IT is being applied to the challenges of any organization. In this chapter, we will bring together the Agricultural Model with the value cycle, introduced in Chap. 2, to show how IT investments are turned into real business value through the value realization cycle (VRC).

Business and IT Challenges for Today’s Organizations

Digital information technologies (IT), tools, and services are everywhere and underpin almost all aspects of modern life, whether in business, government, or society at large. Most everything we do nowadays is dependent on them. These technologies make possible new business models; new ways of connecting, collaborating, and creating; new ways of organizing and working; and indeed, new ways of socializing and entertaining. Today, large organizations such as governments and hospitals, once considered bureaucratic and inflexible, are being transformed by the innovative use of digital IT. In fact, their use is key to breaking down the traditional walls between departmental silos in both business and government. This can be seen in healthcare, where large-scale investments in IT seek to create much-needed efficiencies in healthcare service delivery, while at the same time enhancing care delivery quality and positive patient outcomes.