Focus on Stakeholder Value to Optimize IT Strategy

Focus on Stakeholder Value to Optimize IT Strategy
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The traditional impression of IT departments is that they maintain the value someone else creates. Because of this viewpoint, key organizational stakeholders may constrain efforts to improve IT’s overarching strategy. Any time new strategic improvements are considered, IT is forced to justify the cost of acquiring technology or making changes to processes. Viewpoints that fail to recognize the value IT creates, therefore, disincentivize any proactive adaptations that could improve both IT service delivery and IT operations.

IT can never deliver the value it is capable of while shackled to the expectation that they will use the bare minimum of resources needed to resolve or prevent problems. To maximize the strategic value creation IT can offer, its current activities must be a visible part of the value creation equation, literally, using analytics.

To create a more purposeful strategy within IT and align key stakeholders behind any initiatives needed to make necessary changes, IT leaders can take a three-pronged approach:

  1. Use stakeholder mapping to strategically identify value metrics that have the biggest sway
  2. Use value stream mapping to identify key points in the product lifecycle where IT contributes value
  3. Track relevant KPIs to visibly demonstrate IT’s value to key stakeholders while driving buy-in towards needed optimizations

An analytics-backed, value-focused strategy can put the entire organization on the same page. IT analytics offers a single source of truth based on objective measurements of metrics that matter most. With this capability, IT no longer has to explain something as simple as a hiring decision when they are a visible creator of value, not just a cost center.

Highlight Stakeholders to Reveal Business Outcome-focused Goals and Appropriate KPIs

The idea of “value” can be highly subjective, especially within stakeholder groups. Without the recognition of different subjective perspectives, the tendency is to shift sources of negative value onto another team ⁠— AKA “passing the buck.” A common example is that development might check in code with a high rate of defects, knowing that IT operations will later deal with the consequences. This situation creates unplanned work for IT, but it reduces the burden on development to create more stable code, delivering them “value” in the sense of easier work while detracting value by sapping IT productivity. 

“True” value is not merely shifting work around but actually creating it in tangible ways. To demonstrate how genuine value travels through daily processes, IT leaders must first consider the perspectives of key stakeholder groups. They can then optimize strategy knowing whose priorities lay where and how IT might be able to achieve buy-in from groups with a perspective vastly different than their own.

Understanding perspectives and approaching them can have a transformative effect on strategic thinking. A certification course on operational excellence from MIT Sloan explains how a shift in perspectives can allow an organization to go from:

  • Agonizing over labor costs to making smarter investments in talent
  • Offering superfluous variety in products and services to only focusing on the ones that offer customers value
  • The idea that IT “fights fires” and execute someone else’s plans to the idea that managers can develop employees and directly fuel organizational performance
  • Having positions with high burnout and high turnover to positions with a high degree of job satisfaction

Identifying all stakeholder groups and their subjective understanding of value enables IT to leverage metrics that have the strongest persuasive power. IT analytics can then unify stakeholder understanding on how value is created.

Examples of value-indicating metrics that can be leveraged include:

Example Value PrioritizationExample Strategic GoalExample Goal-Tracking Metric
Value to end usersImprove uptimeUnplanned downtime
Value to shareholdersIncrease user baseNew customers per month
Value to internal product collaboratorsDecrease impact of production bottlenecksAvg. time for change deployment

Unifying stakeholders’ views can lift the burden of conflicting priorities for IT, allowing them to develop a simplified approach to strategy that can keep everyone legitimately satisfied from a value creation perspective.

Shifting to a Value Stream Management Approach for IT Service & Operations

Once value-indicating metrics for key stakeholder priorities have been revealed, IT can immediately begin monitoring them. Through monitoring, IT can also begin to model how this value-indicating metric is affected by specific processes or events.

However, it may benefit IT leaders to start with mapping the value stream first. Value stream mapping brings a holistic perspective to IT processes. Armed with an understanding of key tasks or moments within established processes, IT can hone in on opportunities for improvement.

Lean.org observes that a value stream approach, “changes the focus of management from optimizing separate technologies, assets and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets and departments to customers.”

One model for value stream mapping is ITIL 4’s service value chain model, as pictured below.

Credit: ITIL 4

The ITIL 4 diagram is a great visual of how activities, teams, processes, and technologies are interconnected in the value chain. Visualizing the entire value stream can help your organization identify the activities, groups, and processes that receive and provide triggers to further action. Even more importantly, this visualization reveals the sum of all activities.

“It’s not the processes or practices or tools that you use that matter,” suggests ITSM Tools’ Daniel Breston. “It’s the way you work together to create amazing things based on technology.”

Track KPIs That Directly Measure Value Creation

Now that you’ve identified goals and shifted to a value stream approach, it’s time to zero in on the metrics and KPIs that’ll help you track it. 

Start by looking at data sourced from the systems of record existing across your organization. Be sure to avoid internal tool reporting, as that can be skewed by a limited view within the tools’ respective silo. 

For example, just looking at support call volumes or support time to resolution numbers doesn’t give you the full picture of how well your organization delivers value to customers. Instead, we recommend a KPI we dub the “service delivery friction index” or SDFI. SDFI combines problem volume with MTTR to show how much the problem impacts overall productivity, creating a more meaningful metric for stakeholders.

Another example is that IT can build a change risk model through ML algorithms. This model allows IT operations to visualize risk and then explore it through drill downs, slices, and other specific views to discover the main drivers of change failure risk on an assignment group, or even an individual level.

These isolated views created by each KPI are tremendously informative and actionable. IT can target critical bottlenecks and sources of lost value.

Once value goals are defined and value co-creation within IT is being monitored, IT leaders can respond with strategic optimizations. This strategization streamlines the view of IT service and operations and unifies its strategic priorities. It also simplifies decisions for things like tech investments or process changes to one question: does this produce net value?

IT should aim to have this level of targeted precision end-to-end across every role they play in value creation.

Focus on Value to Prioritize Focus on the IT Activities and Processes That Matter Most

IT strategy cannot be solely guided by internal department priorities, budgetary needs, or external pressures. Being proactive means that IT leaders need to supply internal pressures through a focus on value metrics. These efforts can motivate behaviors and cause teams to land on decisions that drive value creation, not just things like SLA compliance.

“If IT does not understand the End-to-End value contribution of individual IT components of the service, there is potential for a disconnect to be created between what matters to IT leaders and CIOs,” cautions Deloitte. “For example, it is possible for IT to achieve all of its technical tower-based SLAs and targets, but remain oblivious to the fact that something has fallen over in the wider business value chain.”

Axelos, creators of ITIL 4, advises instead that, “an organization’s IT leadership needs to drive the understanding of why measuring real business value is vital and what to look for.”

As a steward of technology and process, IT can drive innovation through both the use of analytics and the strategic revelations it uncovers. By analyzing the value they deliver and the strategic application of metrics and analytics, IT leaders can create significant new value across the organization. Work becomes more manageable for everyone, and customers as well as other key stakeholder groups will respond more positively on average to the fruits of everyone’s labor.

Learn more about how ITSM can benefit strategically from the use of analytics in our free webinar: “Turbocharge ITSM with AI-powered IT Business Analytics

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