The IT department is the engine that keeps a company running smoothly and manages the data that drives growth but it is still often seen as a cost centre.
In fact, only one in three senior IT execs recently revealed to Forrester Research they are calculating the department’s ROI.
The main reason IT struggles to proves its worth is that it does not associate the investment it receives closely enough with the eventual business outcome. The value of IT can be seen in two sections, the ‘hard’ benefits such as efficiency gains, and the ‘softer’ benefits such as streamlining the processes of the organisation. Therefore to prove the true worth of IT, executives need to examine both of these areas to understand in which areas IT has added value to the organisation.
Here are some pointers to begin proving the real value of IT:
Ditch the jargon
In order to start proving the real value of IT one of the first things the CIO or IT manager must do is ditch the jargon. By communicating the achievements of IT in hard business terms, particularly in the support of new projects, the department’s worth becomes clearer to the whole business.
Enable remote collaboration and reduce travel costs
The IT department can demonstrate its value through the introduction of technology that enables remote employee communication and collaboration.Virgin Media, for example, reduced it staff travel costs and expenses by20%through the introduction of technology that enabled staff to do just that. Show the C-suite the real value of IT through the estimated cost savings such technology could deliver as well as the benefits of empowering a mobile workforce.
Drive business innovation
48% of digital leaders surveyed by the 2015 Harvard Business Report ‘Driving Digital Transformation: New Skills for Leaders, New Role for the CIO’ stated that IT’s most important role in the next three years would be in driving business innovation. Prove the real value of IT to your organisation by demonstrating how the department has enabled this innovation by breaking down internal silos.
Mobility
Chances are, new IT has empowered frontline staff to be more productive on the move. So measuring the extra hours of productivity per employee will give a good idea of the ROI.
Downtime and availability
These are pure IT metrics but if investment in new systems has led to better availability of work applications, it is definitely worth quantifying. When you consider the average cost of per-minute downtime is $ 7,900 this very quickly becomes a business critical issue.
De-risking through compliance
It is increasingly critical that IT executives look at the benefits of IT systems ensuring the organisation stays on the right side of regulators. The EU’s proposed General Data Protection Regulation looks set to raise privacy breach fines to either a million euros or 2% of a company’s annual global turnover, not being compliant is now business critical.
Drive customer spend
Closer alignment with the Sales team can enable IT to move into a more strategic business role through the development of improved CRM systems. Working closely with Sales, the IT department at Intel proved their worth to the entire business by building data models that empowered the Sales team to better upsell and cross sell products resulting in an increase in revenue of $ 264 million in the first year of implementation.
Fewer penalties
Has digitisation meant the business faces fewer, or even no, penalties or interest surcharges for late payment of bills or document handling?
Reduce costs related to employee churn through ironing out IT issues
Flexible working policies and supporting systems are critical factors for job satisfaction. The HR savings are easily quantifiable. Oxford Economics recently calculated that the total cost of losing and replacing an employee is £30,000.
Takeaways:
- Reduced staff travel costs through enabling remote communication
- Prove value through driving business innovation
- Work with Sales to drive forward revenue
Discover how to increase ROI on your IT projects by reading: ‘The connected business: ROI=(user adoption + strategic allies)’.
This post first appeared on the Arkadin blog.
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