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April - 2011 - issue > In My Opinion

Transforming IT Through Technology Business Management

Sunny Gupta
Thursday, March 31, 2011
Sunny Gupta
If you spend enough time with CIOs from large enterprise organizations, you will hear the word “transformation” thrown around quite a bit. That’s due largely to the fact that CIOs are under increasing pressure to evolve IT from a department that “keeps the lights on” to one that can transform the business itself. So what strategies and best practices are these transformative CIOs putting in place to evolve their organization to become more business focused?

This is what we set to find out when we convened our most recent “CIO Technology Business Management Council” meeting. More than 65 enterprise CIOs and IT leaders gather twice per year to discuss how they are applying transformational strategies in their organization via the emerging discipline of Technology Business Management, also known as TBM. The vision of TBM is to bridge the widening gap that exists between IT and the business units it serves. For too long now, these CIOs have had to combat the perception that “IT is too expensive” and demonstrate the business value that IT provides to the business. And with clouds quickly gathering on the technology horizon, it has become even more important for IT leaders to be able to clearly articulate the value of IT to the business in a language the business understands: finance.

One way to think about the “New IT” is in the context of a classic supply chain. To truly understand your cost of goods sold (COGS), you need to also understand the fully burdened costs of all the raw materials that comprise the finished product. In the supply chain of IT, these raw materials consist of everything from data center facilities and labor costs all the way up through the server and application tier. Taken together, these components make up the IT services that the business units eventually consume. However, getting a handle on what these services actually cost to deliver and how they are being utilized — has up until now been more dark art than science. Could you imagine a manufacturing floor running at 10 percent utilization? IT should be no different.

In order for CIOs to effectively run IT like a business, they require a new set of purpose-built tools that can unify financial metrics (i.e., GL, payroll, and more) with key utilization metrics (i.e., server usage, ticketing, and more). Just as a modern manufacturing enterprise could never imagine running their business without an ERP system in place, today’s CIOs are demanding new performance metrics that provide the same level of cost transparency and accountability from their organization.

Among the three presenters at the last council was Rebecca Jacoby, CIO for Cisco who is currently in the midst of a multi-year services transformation initiative and Charlie McNerney, GM for Microsoft Global Foundation Services, which represents one of the world’s largest IT deployments. What follows are four best practices identified by our panelists:


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