3 Ways to Structure a Robust Business Value Conversation
A Google search for “communicating value” produced 106,000,000 results in .58 of a second. For someone who is constantly investigating methods of measuring and communicating business value, my first reaction was relief but only for a moment. That many results indicates we should not be surprised that there is no agreed, simple and repeatable way to discuss business value.
After looking through a few of the Google links I decided to expand my catchment to take in peer reviewed research and business magazine articles. This was a rich vein of content and I was especially drawn to a paper in MIS Quarterly Executive from March 2011:
“Measuring IT Performance and Communicating Value”, Sabyasachi Mitra, Georgia Institute of Technology (U.S.); V. Sambamurthy, Michigan State University (U.S.); and George Westerman, Massachusetts Institute of Technology (U.S.).
This paper discusses the transitory path in large companies where IT continues to move from being almost exclusively a “cost out” discussion to one of value adding and enabling growth.
As with any conversation that is 2-way, there is need for clarity of communication and the following construct allows for great flexibility and adaptability of dialogue that enables business owners and enablers such as IT teams to be clear on their focus.
As the language of business has moved from being about IT to being about digital and digitalisation, the need for a single framework is even more important for technology practitioners through to the Board. This has been understood by the business savvy B2B selling companies for decades and now the opportunity exists for the B2B buyers to bring a consistent value dialogue to the table.
Over the last 5 years there has been an increase in the use of the term “DevOps” which shares a lot of common language with the “Portfolio of Metrics” above. Important to this conversation are the four types of work as explained in The Phoenix Project by Gene Kim, Kevin Behr and George Spafford as being:
· Business Projects.
· Internal IT Projects.
By establishing four categories, you immediately eliminate noise and share responsibility for clarity amongst all participants both internal and external.
Also, a model that I have used over the last decade is my Business Value framework which is similarly designed to simplify communication.
This model drives the conversation in directions that are about decisions and actions that will change metrics:
· Ratios: affect financial or operational ratios.
· Compete: win against traditional or emerging competitors.
· Leverage: drain the maximum value from sunk costs.
· New: make new investments that effect ratios and competition.
My closing two points are:
1. Settle on a single model that will enable your designers, business unit leaders, technologists and procurement teams to have a single language.
2. Expand that single language to include you suppliers.
All too often there is a barrier between buyers and sellers that the seller works to break down or at least through. If the buyer establishes the value measurements then buying decisions can truly be about business value.