Run IT as a Business: Part 2, How?

April 8, 2008

In “Run IT as a Business: Part 1, Why…?”, I stated that we need to run IT as a business because our very existence is at stake. For IT to remain a factor alive it needs to compete. I talked about IT acting as a monopoly within the average company and how monopolies are bad for everyone; high prices, long wait and bad service. I also noted how competition is like the sandpaper that makes that rough wood beautiful and safe to handle. Well, today’s post is about the How.

The question then becomes how do we compete? There are strategic and tactical answers to this question. First, the strategic. Very easy…one word… “VALUE”. To compete in an economy one must provide more value than another. Its as easy as a man buying cloths but can be as complex as a women buying cloths J. I say this tongue-in-cheek, but the value equation is not straight-lined. Rather it has an infinite number of arrangements that are different to everyone and changes over time. Lets take a closer look.

Given: Value is relative worth, merit, or importance (www.dictionary.com).

Expanded, value can be represented as follows:

When we put this definition on the table, we cannot pretend that we don’t see the impact that image and relationship has with value. Nor can we escape that iron triangle (Time, Cost, Functionality)…and this value equation adds a fourth dimension; quality. I suppose that adding quality as a fourth dimension would make for a nice pyramid representation of that Iron Triangle (if someone creates one, I’ll post it here and give you a nice reference).

Take the example of my car buying value equation over time.

When	Drivers	Outcome
Teenaged boy	Car had to be fast, cheap and wanted it now.	Picked up a 72 cutlass from some guy living in a trailer down by the river. Got it now, but it lasted 2 years.
Married, first car together (how romantic)	Cheap, cheap and good on gas.	Bought a new 1985 Ford Escort for $6250. Financed it but wife wrecked – we drove it rebuilt until…see next box.
Wife pregnant with first baby and I was working a lot.	Price had to be decent, but wanted to reclaim some of my coolness. Wanted it black and sporty.	Purchased a used Camaro from an Acura dealership. They took my wrecked Escort sight unseen and let me just finance the gap (what a sucker I was).
Wife pregnant with third baby and we had no money.	Needed it now and needed a miracle.	Father in law gives us his Dodge Omni as it comes off of lease. I wasn’t choosy!
Kids are growing older.	Wanted a good quality van with leather and all the options so I can honor my wife. Wanted an extended warranty from a good place.	Purchased a Chevy van with all the bells and whistles. Still have it, fantastic service department. 140k miles and running great!
I turned 44. Two of the three girls are now driving.	Wanted a sports car (convertible), black with manual transmission (so no one else in my family can drive it). Price still important as is image and relationship of dealer.	Entered in to a partnership with the local dealership and picked up a new Crossfire with lifetime warranty. They know me by name and that’s important to me.

Value is value, but it changed for me over time. Notice how even my term for buying a car changes…(picked up, bought, purchased, then partnership). At each stage of my life, I still made my decisions based on the value that I perceived, but my needs and current situation dictated which of the value elements were important to me.

It’s the same way with your customers – whether internal or external customers, they each have their own unique value equation and their current circumstances dictate even their own perceptions of their value equation. Often, it is a moving target that even changes between project stages. It is up to the IT leader to engage the customer and build a relationship – this means that during this partnering, we need to be learning how to calibrate our solutions into their value expectations.

But this is only an overview of the first part; strategy. The next part is where the work begins, tactical. How do we demonstrate to the organization that we have delivered this value? Tune in next time for Part Three: Run IT as a Business – Demonstrating the value of IT.

Drive safely,

~ Scott Felten

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