During geek-fests like CiscoLive, it’s easy to become hypnotized by all the amazing technology. So many smart people are innovating in so many amazing ways. When the party’s over, though, we all need to get back to business. Not just CIO’s and CTO’s – everyone in IT needs to focus on business outcomes – now more than ever. Here’s why.
IT is under increasing pressure to innovate and help deliver business results, as evidenced by several new data points in our industry. Understanding these trends and next steps can help IT, business, and operations teams all work better together to deliver more value from technology.
1) IT Budgets Continue to Decline
Until recently, many IT analyst firms, including IDC and Gartner, projected an average 3 to 4% budget growth for 2014. However, Gartner just issued a new IT spending update, revising the number for the rest of this year to just 2.1% growth. This means IT people will feel increasing pressure to do more with less and wring even more value out of existing systems.
Where can IT budgets still grow more? Wherever IT can demonstrate the strongest technology ROI to the business. Which technology areas deliver better business outcomes? According to our Cisco Business and IT Priorities Survey of 3,000 people in May 2014, business and operations leaders believe that mobility, cloud, collaboration and application services are the technologies that will deliver the most business impact. To take the survey and see results from your peers in most industries, click here.
Because it’s so important to understand how IT solutions can directly support your most important business initiatives, we’ve created a new tool called Solution Central. This tool shows the direct business benefits of Cisco Enterprise Networks solutions for many industries.
In this example, Solution Central shows how the most important business priorities for the Retail industry are linked with technology initiatives. See more industries here.
While the business and operations focus on technology ROI can be perceived as a challenge by some, the savviest IT people are actually turning this budget scrutiny into an opportunity. They’re teaming more with business and operations groups to establish direct alignment and shared accountability for business results.
This teamwork is particularly valuable for IT when you consider our next trend – that business’ and operations’ technology budgets are growing much faster than IT’s.
2) Line of Business and Operations Budgets are Growing
According to our Cisco Business and IT Priorities Survey in May 2014, business and operations spending on technology is growing at 9% annually (these numbers align with similar reports from Gartner). This growth sits in strong contrast to IT’s budget declines, and should send a strong message to every IT professional – demonstrate and deliver more business results, or suffer the budget consequences.
Business and operations budgets are growing, in part, because these groups are able to quantify ROI on their technology investments. Demonstrating technology ROI is a big challenge – so how can IT do better at this?
Clearly understand not just the business priorities, but also the associated goals and metrics for each and every project. If these goals aren’t clear, use some of the examples provided in our Solution Central tool to get the clarity you need before starting the project.
Here are a few great examples of strong technology ROI and clear IT alignment with business priorities:
- Dundee Mining quadrupled production and saved $2.5 million in long distance costs over two years using Cisco Wi-Fi, collaboration, data center, and Internet of Things solutions
- Transwestern unlocked business intelligence that reduced energy costs by 21% in the first year using Cisco switches
- Columbia Sportswear eliminated the time and cost of sending technicians to more than 100 countries, and reduced power costs by $20,000 annually using Cisco routers
In all these examples, the complete alignment between IT, business, and operations priorities is a key success factor. So how aligned are these groups in most organizations?
3) IT, Business and Operations alignment
Over the past few quarters, we’ve measured the level of alignment between different business groups in the same organization, and we’ve noticed an important trend. Business, operations, and IT leaders are indicating that there is less alignment between these groups now than there was six months ago.
As of June 2014, only 34% of the 3,000 business and operations leaders who participated in our Cisco Business and IT Priorities Survey felt their priorities and IT’s were “very” or “completely” aligned. Six months ago, the perceived level of “complete “ or “very strong” alignment was 70%, with some variations by country, industry, and role.
While we need to collect and analyze this data for more than just a few quarters to see the longer term trend, this current data point is another indicator that everyone needs to work together more to align around business priorities and objectives.
How can IT, business, and operations teams get more aligned around business outcomes? We’ll share some best practices and more case study examples in the next installment. For more blogs in this series, click here.