Discover Performance

HP Software's community for IT leaders // May 2013
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Finding your true value

IT leaders looking to truly provide—and prove—value to the business should start by understanding the ‘value streams’ under all the technology.
 
The problem isn’t that we—vendors, IT leaders, analysts—are talking too much about trends and technologies like cloud, big data analytics, and mobility, but it might be that we’re not talking enough about the core values these technologies deliver or impede.

HP has been working with a group of our Fortune 500 customers to figure out what, underneath all the tech and terminology, a CIO is actually delivering to the business.
 
Getting to the root of business value isn’t a new idea—we’re borrowing it from Michael Porter’s 1985 book, Competitive Advantage: Creating and Sustaining Superior Performance, by way of Lean Manufacturing and the well-known Toyota success story. With so much of IT being upended not merely by trends, but by the rise of consumerization and “shadow IT,” the time is right to reassess how IT serves the enterprise.
 
The result has been a series of “value streams” meant to identify the basic concepts of what is delivered by any IT department, large or small, cutting-edge or legacy-bound. We’ve put the concepts into a free ebook, released with this issue of Discover Performance. With this article, we introduce the concept and provide an executive summary of the implementation.

Out of ‘alignment’

The four core value streams we’ve identified with our client consortium involve making the link from:

  • Strategy to Portfolio
  • Requirement to Deploy
  • Request to Fulfill
  • Detect to Correct

And we see a fifth value that’s not a stream, but one that permeates the rest: support activities, which include financial management; governance, risk, and compliance; analytics/insight; and more. These activities are not a fifth stream because they are embedded throughout the other four and cannot be viewed separately.



The result of making sure that what you do matches what you’re supposed to deliver? Better performance, and the metrics to prove it to the C-suite. “It’s been said that ‘aligning with the business’ is dead,” notes David Wray, CTO of IT Performance and Governance for HP Professional Services. “It’s no longer acceptable for IT to simply ‘align’ to the business—it must be a cohesive part of the business, defining and measuring its value in business terms.”
 
Looking past the trends and terminologies du jour (cloud, DevOps, mobile, big data), and instead clarifying the flow of the four value streams in your enterprise, isn’t an overnight activity. But the first step for any IT leader is to apply the right metrics.

Crunching numbers

To really turn the value stream concept into something that makes you manage IT as a business function, you need the numbers.
 
“The four value streams are building blocks,” says Keith Macbeath, a senior principal consultant with HP Professional Services. “You add your metrics to specifically determine whether these streams are working at the right level of performance for your customer segments, from a business perspective.”
 
Critically, you have to make sure your metrics measure your delivery of value, not how well you’re accomplishing legacy tasks. What does it matter if your developers meet internal delivery goals for a mobile app if your competitors are still getting to market faster and better?
 
“Don’t start with current processes,” Macbeath says. “That leads to doing things the comfortable way. Tie metrics to business imperatives, not current IT functions. Then you’ll force yourself to make hard, but necessary, choices.”
 
This is particularly true when existing processes generate conflict. Classically, a dev process might be geared toward speed, while a more deliberative ops process would focus on the reliability of the systems, which essentially leads to resisting change. The real business goal is to have high-quality code, in production ASAP—which you can achieve only with a value chain approach, measuring value chain outcomes rather than individual processes.
 
“Traditional measures still have value, of course, but new metrics are rising,” notes Wray, who consults with the U.S. Department of Homeland Security and other federal agencies. “You can take your value stream and incorporate some of your new-world measures, such as app consolidation and innovation. You can see, for instance, the need to free up resources for innovation.”

Proving value

For CIOs, one of the biggest current transformations is the move from being the enterprise’s sole provider of IT capabilities (or one of two in the case of large outsource arrangements) to a kind of “broker of services.” As ecosystems of specialized providers flourish, the value streams become a critical way to frame what you need to deliver, so that you can figure out how to deliver it—internally or via the ecosystem—and how to measure the results.
 
This is a lot of change, and many IT leaders aren’t ready yet to get out of the daily mire to really grapple with the core of what they do. Macbeath suggests those are the ones who should heed the endless stream of articles warning that CIOs could become mere IT managers, or entirely obsolete.
 
“The exposed CIOs are people who just do their jobs,” Macbeath says. “The most successful CIOs are the ones who prove value, and have a seat at the table with the business because they can talk about the outcomes they just delivered and what they will deliver next, in business terms.”
 
Download the free ebook, “Value Streams: A User-Centric Model for the Enterprise CIO” (reg. req’d). For more on transforming how your IT organization delivers value, check out the HP Professional Services page.


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