Strategic Business Value

For the majority of companies, IT is a component of the business, not the business itself. IT services enable a company to build things, deliver things, and sell things, but IT services are usually not the product that is sold to the end consumer. A company will build cars, ship packages overnight, or sell consumer goods in retail outlets to generate the profits necessary to satisfy its shareholders and owners. In all of these cases, the IT organization provides a varying degree of services that support those primary activities. These supporting IT services vary from the mundane and necessary to the truly strategic. As expected, the value of the delivery of those IT services varies accordingly.

Strategic flexibility promises to deliver a service-centric, systemic, quality-driven, just-in-time IT infrastructure in support of the business. This rather technical definition is aimed squarely at providing a greater degree of strategic IT services to the business. Strategic services are IT services that can truly bring competitive advantage to the company that executes them appropriately, resulting in the delivery of strategic business value. The focus on delivering strategic business value through IT is a very important. There is a lot of discussion in the industry about whether or not IT can actually deliver strategic value to the business.

The May 2003 edition of the Harvard Business Review included an article by Nicholas G. Carr titled "IT Doesn't Matter." The article caused a firestorm in the IT industry because it proposed that IT no longer delivers strategic value to the business. The following quote from the article summarizes Carr's thesis:

Information technology is best understood as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries from the railroad to the telegraph to the electric generator. For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages. But as their availability increased and their cost decreased as they became ubiquitous they all became commodity inputs. From a strategic standpoint, they became invisible; they no longer mattered. That is exactly what is happening to information technology today, and the implications for corporate IT management are profound.

This article resulted in a flurry of responses as the ability of IT to deliver strategic value was debated. In one such response, "IT Does Matter" (Computerworld, May 2003), Patricia Keefe responded to Carr's thesis with the following comments:

We still need IT leaders who can think conceptually, who can dream of ways to further business goals via technological advances. No matter what your present circumstances, you need to keep an eye on the future. Carr advocates taking a more defensive posture toward IT investments. But sometimes the best defense is a good offense. What's needed now is to go back to the chalkboard and figure out the best strategy.

While the academic argument of whether IT can deliver strategic value in the future continues on both sides of the issue, there is no doubt that companies worldwide are under ever increasing pressure to deliver more, better, faster, and cheaper. This drive to improve business services drives all of the components of that business to contribute to that improvement. So the IT organization must step up and deliver.

The best summary of the IT situation is given in "Disconnecting IT from Reality" by Thornton A. May (Computerworld, December 2003). While only subtly referring to the debate over the strategic value of IT services, May sums up the current global opportunity for IT very succinctly:

We stand at a moment unprecedented in the evolution of IT. I use the word unprecedented because at no previous time in history has technology possessed more promise or its value been so seriously doubted.

The ongoing global economic climate demands continuing improvement in business services for companies. As a functional component of the business, IT must continue to be a part of the delivery of strategic business services. By focusing beyond the commodity nature of its own industry and remembering that innovation matters, IT can move beyond doubt by the successful rollout of the very services it is not expected to deliver. Future IT services can be strategic to the business, and with the concept of strategic flexibility, as delivered by N1 Grid solutions, IT can continue and even improve the opportunity to deliver a direct and compelling impact to the business it serves.

IT Efficiency and Strategic Flexibility

How does the linkage between IT efficiency and strategic business value really work? For an IT professional mired in a lack of IT efficiency, that question is tough to answer. It is good that half of the definition of strategic flexibility is focused on pure IT efficiency. That is a core requirement and unfortunately needs to be the focus of many IT organizations first and foremost. But there is more to IT than just improving core efficiency. There is a tremendous opportunity to deliver strategic value to the business. The opportunity exists, but the question remains, "How?"

The "how" of business and IT linkage is also a tough question for the business executive who never sees any strategic value from that same inefficient IT organization. Gains in IT efficiency do not offer anything compelling for the business. There is promise in strategic flexibility if the IT organization could deliver a service-centric environment. But, how does the business pull that value up through the IT organization? The answer is found in the two-part definition of strategic flexibility: It is the combination that matters.

The IT organization should not be expected to realize strategic flexibility all by itself. Likewise, the business should not be expected to articulate all of the requirements and supply all of the funding to make it happen. The IT organization should recognize the value of delivering strategic flexibility and push it toward delivery. The business should recognize the potential value of strategic flexibility and pull it in wherever possible. That combination that linkage truly enables the achievement of strategic flexibility.

Leverage and OMCM

Operational maturity still matters. In the introduction to Part 2, "Preparing for N1 Grid Solutions" on page 37, the Operational Management Capabilities Model (OMCM) was defined as a key process that provides a measure of the people, process, and tools that give an organization the ability to deliver IT services to an agreed-upon service level in a predictable fashion with acceptable risk and cost. Given that definition, how can this model be leveraged?

It is clear that to deliver the kind of value expressed by strategic flexibility, the IT environment cannot be operating in "chaos" mode. Beyond aspiring to improve IT efficiency, there is value in operational maturity and the goal of strategic flexibility. The goal of strategic flexibility can be leveraged as an incentive to achieve a greater level of operational maturity. Like the business linkage, there is a trade-off between strategic flexibility and operational maturity. One way of expressing it is to say that strategic flexibility both requires and enables operational maturity.

Remember that IT efficiency is the foundation of strategic flexibility. You cannot achieve the goal without it. Analyzing the people, process, and tools in an organization associated with each OMCM level can help an organization prioritize its improvement efforts. The goal of strategic flexibility and the value it delivers is clear, so leverage it to pull IT efficiency through to higher OMCM levels.

Strategic flexibility enables strategic business value to be achieved, based on the foundation of core IT efficiency. With ever-improving operational maturity and a firm link to and from the business, the path of the IT organization is clearly focused on the potential that realizing N1 Grid solutions can deliver. The chapters that follow will provide directions for achieving the promise of strategic flexibility. Those directions, or guiding principles, are delivered through architecture.