It’s More Than a Model

Once you’ve built a realistic financial model of IT you are poised for the real transformation work to begin.

While I’ve discussed the multitudes of benefits in creating a financial model of IT throughout this series, in this article I want to stress that the model is not the final stage of the transformation. Running IT like a business requires you to leverage the creditability you have gained in building, evangelizing, and educating leadership about the model and the value IT provides to push the business forward.

In the early stages of model building you likely encountered data collection challenges and data integrity issues that you solved. Your service catalog has been iterated upon and you now have rich descriptions of the work and value your organization provides. The IT “black box” has been torn down and you now live in a more transparent world. You have established, at least baseline, rules and metrics that provide a consumption based financial show-back to your business lines. You personally spent time discussing the approach, model details, and educating the finance and general managers of your business lines. Your team has hit their stride producing the model output each month and you are starting to see insightful decisions based on this data.

By design, the credibility of IT has risen. It may be that you are seen as forward thinking, collaborative, and a true change agent. Now is the time to cash in on some of this goodwill by kicking off a transformational project that propels the company into the modern age of computing.

In my case I kicked off two large initiatives within the first year of demonstrating our model’s value:

  1. A radical 5-year data center strategy
  2. A public cloud usage roadmap

It is my belief that the approval granted for both of these projects would have been far harder to receive, if given at all, without first demonstrating our commitment to transformation by building the IT financial model. We demonstrated our value, and then we upped the game by committing to transform other parts of our service catalog, parts that have meaningful impact on the overall company.

Your specific transformation projects may be different than mine, however the importance here is that you need to be prepared to cash in when the support of the work you are doing is high. Don’t let time pass and diminish your opportunity, plan for what these transformational projects will be as you are building your model and gauge when to introduce them as you build support for your work.

Both of the initiatives I introduced were multi-year and required an initial investment. They both will fundamentally change the way we use technology and infrastructure at the company. They will help us address technical debt, improve compute utilization, and position us to be disruptive and build better products and services. These are examples of the big initiatives you should be considering as well.

Running IT like a business requires courage, commitment, and a long-term vision for consuming and making technology. Ask yourself this question: Do you want to help set the strategy moving forward, or have it set for you? If you answer this question the way I do, then your best bet is to build a plan and leverage the increased credibility that your financial model has provided.

~


In a twelve part series about IT business transformation, James LaPlaine explores the need for the modern technology leader to be a catalyst for change, leverage IT value as a corporate strategic weapon, and lead the way for complete financial transparency. Utilizing this approach, today’s technology leader can provide the foundation for the company to build better products and services and gain approval for technology led initiatives that often struggle for executive support and funding.

Previous articles in this series are:

Part 1 – IT is a strategic weapon

Part 2 – Moving IT from Cost to Value

Part 3 – Addressing Technology Misconceptions

Part 4 – Start with a financial model

Part 5 – Goals of an IT Financial Model

Part 6 – The Model Flywheel

Part 7 – Lessons from AOL’s TBM Journey

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