Although IT performance management has a major impact on key business goals, the magnitude of that impact isn't obvious. Consequently, many organizations are still trying to figure out how to calculate the true business value of effectively managing IT performance.
That's according to "The Total Business Impact of IT Performance," a study published by the Digital Enterprise Journal. The DEJ surveyed more than 2,300 organizations to quantify the correlation between the value proposition of IT performance solutions and various business areas.
Here are four key takeaways from the report.
1. Most organizations can't calculate IT's financial impact
"One of the key messages is that IT technologies are not known to have a direct impact on business results," said Bojan Simic, president and chief analyst at the DEJ and author of the report. "You usually have to do your homework, or you have to connect the dots" to determine the impact.
The financial results of some enterprise technologies on the top line and on business goals are obvious, he said, but those are the technologies that are closer to the customer, such as those that allow sales. The impact of other technologies is hidden.
In fact, 82% of organizations don't have the ability to calculate the financial results of IT performance, Simic said.
"I thought that was a fascinating stat—that they couldn't tie this back into the business goals," said Jon Kies, manager of ITOM product marketing at Micro Focus. "Companies want to improve their customer satisfaction, they want to enhance revenue, all the things that you would normally do within a business. But the fact that they can't tie the impact of IT performance into financial impact is very interesting."
A least half should be able to align their business goals and IT goals and understand what the result is, Kies added. "Otherwise, you're operating out of a black box," he said. And if you can't prove your importance to your customers, "then your budget will likely get cut."
Addressing this issue is becoming increasingly important, because connecting technology value to business outcomes and translating the importance of effectively managing IT environments into the language of business is one of the key user requirements, according to the report.
"That was important [for deciding] if you want to buy technology and how you're going to approach the purchasing process," Simic said. "However, in the state of the world that we have today and what we went through the last 18 months or so, it's becoming even more important."
That's because business executives and people who aren't technology-savvy don't care about features and functionality. They want to know what the technology means to them, translated into language they understand, he said.
2. Cost optimization, innovation, user experience are top business goals for next 12 months
The study's authors asked organizations what has changed since COVID-19 hit and what has become more important. The three most important things were:
- Cost optimization (but not cost reduction)
- The ability to innovate, and innovate fast
- Improving the user experience because people want to get back to the market with something that's different and something that is going to drive new customers and the quality of the user experience
"These are becoming more important because the competitive landscape is becoming more fierce," Simic said. Top-performing organizations are much more likely to look for a balance between cost, speed of innovation, and user experience, according to the report.
"It's increasingly important to have data-driven processes to identify cost efficiencies and ensure that technology spend is more predictable," the report said. "Taking a traditional approach for looking at IT and technology management as a cost center is a road to business failure in the digital economy. However, to create a business value at optimal cost, organizations need to deploy a new set of capabilities that will allow them to be effective in modern dynamic environments."
3. Top performers are more likely to create new revenue streams from technology
According to the DEJ report, 62% of business and IT decision makers said that enhancing revenue resources is one of their top business goals. However, the top-performing organizations are 3.2 times more likely to create new revenue streams from technology deployments.
That's because they're solving problems quickly and moving on, Kies said. They're not spending a lot of time trying to figure out why things are happening.
The report said that some of the core capabilities that can help organizations enhance their revenue streams are:
- Creating actionable insights from IT data
- Using context-based automation and autonomous technologies
- Providing true visibility into user experience
- Building reliable and resilient systems
4. IT needs to better communicate value proposition
"If you look at this whole IT performance space, there are hundreds of vendors there," Simic said. "They're either tackling different use cases or just the overall end result. If you look at some of their messaging, it's really centered around what they can do. It's about features and functionality."
But if you talk to business executives and even IT executives, he added, they want to know the "so what?" They want to know why they should care.
"Taking the value proposition of any kind of IT performance technology and translating it into the language that business folks understand ... will take a few steps, but it's well worth it," Simic said.
The bar is rising
The approach to managing IT for the past 20-plus years has been about reducing costs, Simic said. Now, it must be about how to find the right balance between speed of innovation, cost, and reliability.
Translated into pure business language, "it's how to be fast to market, how to provide optimal or better customer experience, and how to do it at optimal cost," he said.
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