Mapping The Value of IT to Business Value

Here are several excerpts from an article by Dan Woods, CTO and Editor of Evolved Technologist, The Over-Commited CTO:

At the beginning of a project, the CTO is excited that the business is going to invest in technology and is all too eager to please.

Let’s say a new CRM system is being implemented. Each department wants a specific function and the requests stream in: Can we get a mobile app for the sales staff? Can we integrate the real-time inventory into the Available To Promise functions? Can we, can we, can we? Like the suits in an ad agency, CTOs do not want to upset the client by telling them there are limits to what can be done with the resources available.

Then comes the crushing reality, often called “Death March” projects. The CTO cannot deliver on all the promises in the time available with the resources he has. Often, this is not clear at the beginning of the project, but at some point a project manager looks at the progress being made and informs the CTO that all is lost.

If you think this is just too stupid to be true, think again.

The big ERP vendors have been sued by multibillion- dollar companies over deals worth hundreds of millions that went awry because they were oversold.

I recently came across a book that can help CTOs who are stretched to the limit. In Selling to Zebras, the father-son team of Jeff and Chad Koser explain how sales professionals can escape the trap of being busy all the time and instead learn how to focus on the clients that are most likely to close. A Zebra is their metaphor for the perfect client, one that really wants your product and can benefit from it. The book shows how to create a Zebra score that indicates if the client is compatible with the solution being sold. The higher the score, the more likely the client will be a good match. The book then goes on to outline a process of how to partner with the client to prove how much value the solution will provide. The model is sophisticated in that it recognizes that the value provided by existing processes must be taken into account. The value claimed is based only on improving existing operations.

Creating a defensible model of value is the key to avoid being beaten down in price. A salesperson can say to a client, “Look, we can reduce the price only by reducing the value you are going to receive. Which part of the benefit do you want to do without?”

CTOs need to create their own Zebra scores so they can set expectations accordingly. But most of all, CTOs need to evaluate each request in terms of the business value provided (See “How to Run IT as a Business“).  Then, when people ask for more value, instead of just saying yes, you can happily say, “I would love to provide that for you, but how do we make the case for the value provided to fund the needed investment.”

The key is being able to map the value of IT to business value. The suits have a tough time doing this, but CTOs should be able to if they can become less eager to please, develop the needed skills and take the time to do the analysis.

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