Posted by Christoph Goldenstern

Many CIOs and senior IT managers still don’t feel they are getting the respect their colleagues at similar levels from other business functions are getting. That’s because IT is still largely viewed as a support function of the business, not as a key capability, but as a cost center!

What’s so bad about being a cost center? Nothing really… if your business isn’t too worried about profitability. Assuming it is, however, the problem with being a cost center is that you are mostly going to be valued by productivity of your people and assets without a clear link to value. Each year’s budget conversation will then focus on how to simply squeeze more out of IT. When every last dime has been squeezed out, we can finally outsource IT, because it’s not a critical capability, right?

So how can IT break with that perception? For starters, start leading IT like a true business… then manage it as a profit center.

I deliberately choose the word leading because there is a difference between managing and leading. Many people can manage as in “getting things done according to plan”. Leading, on the other hand, requires developing a vision, a value proposition and an element of differentiation. Then comes the hard part: motivating your subordinates and colleagues to participate in the realization of that vision.

First we have to internalize though that IT can be viewed as a “business within the business”. Why? It has all the attributes of a business:

  • customers (perhaps internal, but still customers)
  • services
  • it produces quantifiable outputs
  • it consumes resources

Looking at your IT function in that light will force you…

  • to link cost to value delivered (which will help you defend your budgets and resources),
  • to think about how to differentiate yourself at an IT level (which may help you from being outsourced),
  • to look at how to monetize the IT services you provide (which will make the consumers of your IT services realize your value), and
  • to look at efficiency and effectiveness in your operation (which will balance cost with quality orientation)

To quote a good colleague: ”It is then that IT Service Management will take its rightful place, shoulder-to-shoulder with Sales and Product Development as a direct contributor to profits, growth, and shareholder value”.*

Christoph Goldenstern is a Global Vice President and Principal with Kepner-Tregoe. He has more than 15 years of strategic and operational consulting and management experience with focus on Customer Service, Technology and other B2B industries.

*Source: “ITIL v4?” by Steve White

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