Three Paths to Enhanced Value Creation
As leaders steer their companies to succeed in the face of an uncertain economy, disruptive competition, and changing customer preferences, they must be laser-focused on creating value. And as we all know, “value” in this context is about more than just financial gain. In additional to profitability, long-term relevance also depends on delivering meaningful value to customers, employees, vendors, communities, and society as a whole. Creating more value in this broader sense is what drives engagement and loyalty, enabling companies to thrive long-term.
Increasing your value “output,” however, is easier said than done. Today’s leaders face numerous challenges – legacy technology platforms that need modernization, lack of adequate resources to make progress, and business-critical regulatory requirements that can’t be missed, to name just a few. Additionally, they can’t just create more – they also have to deliver faster. But there’s a balance. Companies that move too slow risk obsolescence. Those that try to deliver too fast often make bad decisions, putting quality and customer satisfaction at risk.
So what’s the right way to tackle this “more value faster” challenge in your organization? It begins with leaders working together to develop a clear understanding of what forms of value are most important to the business and then looking across the organization to document how it collectively creates those value streams. Understanding core value streams – which define what the enterprise must produce to satisfy customers, compete in the market, deal with suppliers, sustain operations, and care for employees – provides the insight leaders need to continuously improve the three most important contributors to value creation: technical investment, performance, and operational excellence.
1. Maximizing Technical Investments
Today, business and technology are inextricably interdependent. Improving value creation depends on investing resources in the technologies that contribute most to business strategy and keeping pace with disruptive technical evolution that can give the competition a great advantage.
To meet this goal, organizations need to evaluate how technology can and should support business capabilities across their value streams – both today and for anticipated growth in the future. They must understand how their current systems perform and where there are gaps and inefficiencies that can be solved by technology. This is key, because people and process problems are rarely solved by technology change. It’s essential to identify and gain consensus from key business and technology stakeholders who understand explicitly what needs will be addressed with technology investments. These individuals are key to helping people and processes evolve in lock-step with technology changes.
Tying technology back to business value and performance enables leaders to create a thoughtful, pragmatic strategic technology roadmap that focuses on desired business outcomes. This roadmap guides investment decisions during execution – for example, deciding whether to upgrade or replace; buy, build, or integrate; or host internally versus in the cloud. It also provides the information needed to select best-fit technology platforms, vendors, and partners, optimizing the organization’s ability to create more value as they move forward.
Critical success factors for creating a valuable strategic technology roadmap? Carve time out of busy experts’ schedules who need to participate. Create and maintain “living” documents – not point-in-time pictures. And engage trusted partners to help if you lack the time or expertise you need in-house. Often an outside, objective view helps to align stakeholders, provide alternative thinking and gain clarity around challenges and issues.
2. Optimizing Performance
Optimizing performance – looking holistically at people, processes, and platforms – is another path to improving value creation. And while organizations view performance from many angles, most focus at a minimum on three key measures:
Throughput: To stay competitive, organizations must get products and services to their customers (both internal and external) as quickly as possible without sacrificing quality or missing key requirements. Improving throughput – whether measured by releases, velocity, or project completion – has the potential to dramatically accelerate value realization.
Quality: Speed cannot come at the cost of quality, which is about more than defects. It’s also about usability, security, performance, and maintainability. Most importantly, quality measurement should incorporate the aspects of business and end user satisfaction. If a product doesn’t meet business and customer needs, it will never deliver its intended value.
Predictability: A recent Harvey Nash/KPMG CIO survey indicates that the number one issue IT leaders are trying to resolve is that of delivering consistent and stable IT performance to the business. This can encompass an array of IT activities – from releasing software to maintaining network connectivity to rolling out new hardware. Successful technical organizations not only deliver fast and with high quality, they do so predictably to build trust and heighten engagement.
Most organizations are adopting Agile as a way to optimize performance. In fact, the latest State of Agile report shows that at least three-quarters of respondents have realized benefits of improved productivity, delivery speed, software quality, and project predictability through the use of agile methods. There is still room for growth, however, as 60% of respondents say they use agile practice and techniques but are still maturing.
Performance optimization is a continuous improvement activity that depends on maximizing the skills and knowledge of the people involved, the processes (both manual and automated) that are executed, and the health of the systems used. Key to success? Establish internal benchmarks (for example, the time it takes to execute a process or resolve an issue) and measure change over time. This is the most effective way to gauge continuous improvement.
3. Driving Operational Excellence
Where operations used to take a back seat to innovation and development, it’s now widely recognized as essential to long-term business success. The Harvey Nash/KPMG survey mentioned earlier shows that increasing operational efficiencies is the number two issue IT leaders are trying to address (with 62%). And The State of Agile report shows that 71% of respondents are in the process of planning or executing DevOps initiatives.
Operational excellence entails optimizing technology management (from a CIO perspective) and technology development and operations (from the CTO point of view). It’s about making sure the right resources are in place to support initiatives, ensuring everything from strategy to execution and measurement has been well-planned-for, and putting consistent processes and rules of engagement in place where needed, for example, to manage vendors and orchestrate cross-team processes.
As with performance optimization, look to advance operational excellence by understanding and improving people, processes, and technology. For people: Invest in skills and knowledge development, and involve operations team members on project and product teams. For processes: Document the current and future state processes. Analyze them to improve efficiencies and decrease execution time. Consider automation where possible. And for technology: Make sure operational systems are well-represented on the strategic technology roadmap mentioned earlier.
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