August 24, 2022
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7 Rules for Demonstrating the Business Value of IT
Contributor: Robert Naegle
Change the way you tell your IT value story to drive greater impact.
With digital strategy taking center stage in the fight against today’s economic headwinds, there’s never been a better time to bring your technology initiatives to life through a compelling value story. That requires unwavering focus on the outcomes and goals your stakeholders really care about.
At its core, a great value story resonates with business leaders, supports their decision making and aligns to their key objectives or concerns. Focusing on measurements of work performed, tasks accomplished or resources deployed won’t get you there; instead, focus on communicating outcomes delivered.
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7 rules for creating a compelling value story for IT
We developed seven rules that CIOs can follow to craft and articulate stronger business value stories. Gartner predicts that through 2027, CIOs who implement these seven rules will be 75% more successful in elevating their strategic contribution to their organizations’ missions and increase approval rates for funding requests by 30% over current levels.
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No. 1: Remember that the IT stakeholder always determines value
IT stakeholders and consumers, not the providers/producers, determine what is of value. When identifying what is valuable, it’s essential to align tightly with the business. Without a clear line of sight to business priorities, IT is likely to stay focused on delivering technology or platforms , rather than meeting business objectives, benefits or outcomes.
Identify your key stakeholders and/or consumers, starting with business leaders as the primary stakeholders. Capture, validate and regularly reassess their needs.
No. 2: Note that not all outcomes are equally valued
Team with business leaders to identify and rank their business priorities (for example, value/revenue increase, or cash savings then efficiency gains) then align IT resources to deliver the prioritized outcomes. Capture and validate quantified benefits with key stakeholders and leadership.
Note that your organization will typically value impacts to mission and revenue growth more highly than spend avoided and cost reductions, and budget contributions are considered more valuable —and easier to measure — than efficiencies gained through process improvements.
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No. 3: Build two value narratives, for operating and transforming
IT can enable the business to run (operate) and change (grow/transform) but its value for each objective is perceived differently by stakeholders so value measures for ‘run’ and change initiatives should differ. If one initiative covers both, highlight both the differences and the interdependencies in any related communication.
Measure the value of:
change spend with metrics like return on investment (with returns owned by those receiving the benefits).
run spend through price for performance (striving for more performance at a better price).
No. 4: Measure IT’s impact on stakeholders’ 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.
Document the desired/intended business outcome, as agreed to with your stakeholders. Measure IT’s impact on mission or contribution to business outcomes and avoid metrics that communicate effort, work or technical output.
No. 5: Align IT costs to the business services they enable
Stakeholders will better understand IT’s value when IT costs are linked to the business services and capabilities that IT delivers. Costing parts or technologies does not support a value conversation. Value conversations must include both cost and benefit.
Cost the value delivered at the business outcome level (e.g., cost per seat of an application or cost per transaction of critical business services). Include both costs and benefits in all project proposals to determine net value.
No. 6: Communicate IT value in the language of the stakeholder
Use business language, not technical terminology and acronyms, when communicating IT’s value. Keep communication with business leaders clear, relevant, easily understood and designed to drive decision making.
Avoid deep dives into technology and platform capabilities and translate value messaging into actionable insights that support critical business decision making.
No. 7: Ensure those who fund IT understand its contribution to their objectives
Finance and business leaders who fund IT must understand IT’s value and impact on business outcomes, even when they are not the direct recipients of the value. Engage economic buyers early in the value definition process. Make spend justification and value definition a collective effort between IT and key stakeholders.
A productive CIO-CFO relationship is critical to ensuring digital strategy receives appropriate funding. Strong CFO-CIO relationships are more likely to find funding for digital initiatives readily and to keep digital spending in line with the budget plan. Digital funding will lag if CFOs and CIOs don’t align onan enterprise-level view of how to measure the outcomes and success of digital initiatives.
Adapt these rules for your organization
For maximum impact, use these rules as a starting point for framing and guiding your IT value narratives. To adapt to your organization, ask:
Does this rule apply to our organization?
How should we customize this rule for our organization?
Can we emphasize this rule in our business value of IT communications? When and how?
What else should we do differently to communicate a more clear and impactful value message?
In short:
IT and digital strategy is critical in today’s economic conditions. You need an impactful IT value story to help business stakeholders make sense of and buy into your technology initiatives.
Follow these seven rules to ensure IT and digital strategy stay focused on the outcomes your business partners care about.
Hint: Don’t talk about IT in terms of the technical work performed, tasks accomplished and effort required.
Robert Naegle is a Research VP focused on CIO issues of finance, economics and business value. His coverage areas include IT financial management best practices and technologies, business value of IT and cost optimization strategies.
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Recommended resources for Gartner clients*:
7 Rules for Demonstrating the Business Value of IT
Divide Business Value of IT Conversations Into a Run Story and a Change Story
Tool: IT Business Value Investment Framework
Map IT Value Stories to Business Outcomes That Matter
4 Steps to Effectively Communicate the Business Value of IT
*Note that some documents may not be available to all Gartner clients.