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IT: Transforming Business, Part I

By Stacy Smith

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The primary role of IT is to keep the business running. While this has been the case, now, when IT is emerging as a competitive enabler for business—offering solutions that combine transformative technologies with innovative business process—keeping the lights on is no longer good enough.

However, with economic challenges and the ever changing marketplace, IT is routinely being asked to do more with less. When revenues are up, IT is asked to meet escalating demands on a flat budget. When revenues decline, IT is asked to streamline business while its own budget is facing reductions.

But, with the substantial increase in system price/performance over the last decade and new technologies such as wireless mobile devices, IT has the capability of transforming business through maximizing efficiency and effectiveness.

This process can be achieved through a two-pronged IT strategy which uses IT to streamline process and gain efficiency, then use savings to invest in high-potential technology solutions that fundamentally change the way people work and what they can achieve.

In short, it’s finding a way to cut costs while generating business value.

Articulating ROI

Companies have to articulate ROI, calculate business value and make the case of any investment the company is considering, whether it’s the next factory or the next product. It is important for companies to create optimal conditions for making the right decisions at the right time.

One of the best practices for a company is to view IT as a business; one that can measure, manage and deliver business value. Companies should use consistent and repeatable methodology to predict and track project value before, during and post-implementation. This includes measurement and management of total IT costs to make people, processes and technology visible and quantifiable.

We have used this approach at Intel and found it possible to cut costs and generate business value. The transformation began at the end of 2001, when senior management challenged the IT department to prove the ROI of its solutions.

The result was a program that focused on quantifiable metrics designed to ensure that IT products, services and support delivered real business value. Rather than focusing on traditional IT metrics such as network capacity and uptake, the company looked at things like customer satisfaction and profitability.

By measuring the business value of IT, companies can optimize resource allocation and remain focused on continuous improvement while getting a clear picture of IT contributions to the companies’ bottom line.

For Intel, the contribution and results have been enormous. From 2002 to 2004, Intel IT initiatives created more than $2.5 billion in business value for the company.

Several methods can be used to streamline IT and implement the two-pronged approach. In part two of this article, two case studies will be examined to demonstrate the approach and the effectiveness of these methods.

In the mean time here are some best practices to consider:

  • Run IT like a business.

  • Measure and manage IT business value using a consistent, repeatable methodology to predict and track project value before, during and post-implementation. This includes measurement and management of total IT costs to make people, processes and technology visible and quantifiable.

  • Move toward continuous process optimization and IT modernization to sustain competitive advantage.

  • Measure and manage overall IT capability—including infrastructure, operations and skill sets.

  • Characterize the costs and risks of not moving forward. Research new technology trends that could transform your business or industry and use small pilots to evaluate potential value.

    Stacy Smith is vice president of Finance and Enterprise Services and CIO of Intel Corp. In this role, he is jointly responsible for leading Intel’s global Information Services and Technology Group (ISTG), which provides technology solutions to more than 75,000 Intel employees in 50 countries as well as 17,000 Intel engineers worldwide and Intel's manufacturing divisions.