IT has often been viewed as a cost center rather than a portfolio of solutions to enhance a company’s competitiveness and market actions. In those situations, IT has been allowed to evolve under the aegis of “IT experts”, leaving many companies with a legacy IT solution portfolio that is cost or technology rather than business value focused. As a result, a significant imbalance in the understanding of costs versus business value of IT related investments occurs. Part of the issue stems from the limited level of business know-how among IT executives who may not be aware of the risks that companies are exposed to whether they are competitive, financial or market-driven. And, how to utilize financial valuations models that shed light not only on the risk’s impact but also on the actions that CIOs need to consider so that their decisions are aligned with the company’s revenue goals. “Companies must rein in control of the IT solution portfolio and make the shift from a legacy burdened project based approach to a business driven portfolio approach,” comments Olaf Tellefsen, Director, Group coordinator for PD and PLM at the Volvo Group CIO office. “Such a process must be addressed by a CIO who is sufficiently empowered to lead the transformation.” There are three inter-dependent components that must be in place in order to transform the IT solution landscape into a powerful weapon that contributes to a company’s bottom-line. But, to do so successfully, companies need to embrace new tools and talents in order to exploit that value. Examples are:
- Bring on a business-driven CIO – an individual who is able to recommend courses of actions to the executive management team that leverage both technology and business knowledge and the utilization of powerful financial models to manage the portfolio
- Understand what best practices are needed to master the solution portfolio to drive significant areas of IT spend and guide the make/buy/collaborate choices that CIOs make daily
- Utilize financial valuation models that bring clarity around the business agenda and the technologies that comprise the IT solution backbone
“Our concept provides executives with the opportunity to compare separate portfolio scenarios based on strategic and financial value, levels of risk, uncertainty and technical and commercial maturity,” says Anders Johansson, Principal in Arthur D. Little’s Technology & Innovation Management Practice. “IT can therefore be managed in such a way that it becomes a powerful executive weapon not only for the CIO but for the company itself as it expands into new markets and geographies.” To access the full report, please visit:
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Notes for Editors
Founded in 1886, Arthur D. Little was the world’s first professional management consulting firm. Arthur D. Little is a global leader in management consultancy, linking strategy, innovation and technology with deep industry knowledge. These last years, Arthur D. Little developed partnerships with more than 70% of Fortune 100 companies. Its teams conceive and implement sustainable, innovative and operational solutions. Arthur D Little is present in over 20 countries with more than 1000 consultants. With its partners Altran Technologies, the firm has access to a network of over 17.000 professionals.