Published on the 26/07/2023 | Written by Heather Wright

Local CIOs are struggling to communicate the business value of IT, with just 30 percent able to create compelling stories for non-technical audiences. And it’s leaving them at risk of being excluded from decision making, having budgets cut, and having the business bypass IT, while putting the business at risk of sub-optimal IT implementations.

Sid Sahoo, Gartner’s Sydney-based senior director analyst says his conversations with both CIOs and other executives in organisations has highlighted the depth of the problem across Australia and New Zealand.

“CIOs are not drawing the relationship between technology changes and business outcomes.”

He told iStart each week he speaks to four or five CIOs about them not being able to engage with senior leadership or not having a seat at the table because the business doesn’t understand the value of IT, or the business engaging directly with vendors and contractors, rather than working with the CIO’s organisation. 

“What tends to happen is that if the value of the IT organisation is not well understood by the business they are seen as just a cost centre and then IT budgets start to get cut. And then IT is excluded from decision making, which means senior executives and business leaders are engaging their own IT. They might hire contractors, deal with vendors directly and not engage the CIOs,” Sahoo says. 

That’s something Sahoo says he saw first-hand in his previous roles and now hears about from Gartner clients.  

For the business, too, it’s an issue.  

“If business doesn’t get the right engagement with the IT organisation, they are going to create sub-optimal solutions. It’s like asking a finance guy to write your sales data sheet. [They just don’t have the skills to do a good job].” 

And the number one reason? Language. 

Sahoo likens it to the pilot on an airplane. 

“About 30 minutes out from your destination they come on – and I don’t think sound systems are good in any aircraft, you can hardly understand them – and they say we’re travelling at this altitude, this is the temperature, the wind speed… 

“I’m like ‘I don’t care!’ All I want to know is are we going to get to my destination on time and safely? 

“It’s a similar thing with IT. They talk a lot about technical aspects of what is being delivered to the business as opposed to the outcome they are driving in terms of business financials.” 

While IT teams are keen to outline all the tech achievements, metrics around work performed, tasks accomplished and resources deployed, CEOs, CFOs and other senior stakeholders are focused on other priorities – usually revenue growth, profit maximisation, or even environmental and social governance. 

“What we find is that when CIOs or heads of IT are communicating to the business, they’re talking about all the technology changes they are making, but not drawing the relationship between those changes and business outcomes.” 

As an example, he cites a data centre upgrade and improvement to security systems. 

“What you need to be identifying is what impact that has to revenue? What did you do to the system that generates your orders for example? How much extra revenue could the company generate because of your automation? 

“You have to communicate the value story, as opposed to talking about technology which, quite frankly, some of the senior leaders don’t understand.  

Sahoo says the changing nature of business, combined with economic headwinds and ongoing disruption, means it’s more important than ever for IT to demonstrate the value of technology initiatives – and that means clearly linking investment priorities to business goals. 

He notes the value is determined by the key stakeholders ­– not IT.  

“It’s important to understand the goals for your organisation, both financial and non-financial and stay on top of the issues the business is facing,” he says. 

Without insight into those business priorities, IT is likely to remain focused on the delivery of technologies and platforms, rather than business objectives, benefits or outcomes.   

Communicating regularly, and openly, with the business to understand those priorities, ensures IT stays aligned to what the business is trying to do and doesn’t become siloed.  

Identifying your audience – whether the chief marketing officer, head of HR about Workday systems, or head of finance about SAP or general ledger systems –  is also key, Sahoo says, as is choosing the right metrics. 

“Make sure that when you have that conversation you are talking about metrics that matter.  

“You’re not talking about the plane or how fast you are going. You’re telling your passengers you’re going to land them in the next 30 minutes and you’re going to land them safely.” 

Robert Naegle, Gartner VP analyst, says IT’s impact should be measured on stakeholder’s objectives, not IT effort expended or resources consumed.

“Measure business outcomes, not IT work. Platform, systems and infrastructure performance make up elements of IT production, they do not represent quantifiable value to the business stakeholder,” Naegle says.

“Measure IT’s impact on mission or contribution to business outcomes and avoid metrics that communicate effort, work or technical output.”

Instead of saying IT delivered 99.9 percent uptime, Gartner says CIOs should tell the business how IT supported the transaction rate and enabled $X in revenue booked, or $Y revenue growth, or had X percent impact on transactional capacity.

Likewise, improving system and network availability can be reframed as increasing point-of-sale transaction capacity X percent by reducing time per transaction, and an error reduction in the production management system’s business impact story could be that automation of data entry in production management reduced manual entry errors, which in turn reduced legal liability, cost and downtime by X percent.

Adds Sahoo: “The trick is to start early and make sure you stay on top of it and make sure your value message and communication is aligned to the business deliverables, or business outcomes, you are trying to drive.”