Almost every SME IT leader I know wants to learn how to better provide business value through IT .... and there is plenty of advice going around. The problem is that there is so much information that it has become very difficult to know what is applicable and what should be focused on when.
Fortunately, we have worked on this since 2010 and accumulated quite a lot of knowledge on the way.
This is the first blog of two where I will:
- Introduce the "15 essential Business Technology Management Competencies every IT leader has to master" (this article) and then
- share guidance on "How to best prepare for your next IT Budget" which includes the BTM Planner, a free tool to help with budget preparation.
Before we dive into the 15 essential Business Technology Management (BTM) competencies, let us first take a step back and understand what BTM is and why we absolutely have to develop these competencies.
What Is Business Technology Management?
Techopia defines BTM as follows:
Business Technology Management (BTM) is a set of processes and services that unite an enterprise's business technology (BT) and business management (BM) strategies to extract total BT solution value potential.
Ok, if this was a mouthful, then let me elaborate:
Most SMEs have arrived at the point where they, in general, are happy with the way technology is managed in their organisation.
Instead of sitting back and being content with the status quo, however, they realise there is a lot more business value IT could deliver.
So businesses everywhere are upgrading their expectations of what they want from their IT investments.
In short, they want a digital transformation in their businesses.
To deliver on these upgraded expectations we have to start managing information technology investments in a more holistic manner that integrates both technology and business imperatives in a way that leads to increased business value.
From this it follows that Business Technology Management, when implemented correctly, is the link that bridges the so-called business IT divide. The next evolution of IT management.
Unfortunately, however, one cannot just flick as switch to enable BTM and business and IT leaders have to acquire new competencies, many of which do not come naturally!
What Are BTM Competencies?
The Business Dictionary defines competence as follows:
A cluster of related abilities, commitments, knowledge, and skills that enable a person (or an organization) to act effectively in a job or situation. Competence indicates sufficiency of knowledge and skills that enable someone to act in a wide variety of situations.
BTM competencies are the management competencies business and IT leaders need to acquire to manage IT with the aim of deriving more business value.
The question for the IT leader now becomes:
What are the BTM Competencies I have to acquire?
As already mentioned, this is where it becomes really tough to get a clear answer. And since the solutions range from online reading, to executive leadership development, to full-blown MBA for IT programs (which often are not applicable to SMEs), deciding on an appropriate course of action is so complex that many IT leaders have just chosen to put their head in the sand and not do anything.
Doing nothing, however, is not a good strategy if business leaders everywhere increasingly demand more business value from IT.
The good news is that we (at Xuviate) have done all the research on what those competencies are while building our Relevant IT Framework.
What Does Relevant It Teach Us About BTM Competencies?
First of all, what is Relevant IT?
Relevant IT is a step by step approach for improving business technology management competence in SMEs. The methodology was developed by multiple experts over a period of 6 years and continues to evolve.
Although the methodology is a bit more complex than this, at its most basic level it provides us with a list of the 15 most important BTM competencies identified for business and IT leaders in SMEs.
An added bonus is that the methodology prioritises these 15 BTM competencies in order of implementation importance.
So, not only do we get our list of 15, well-researched BTM competencies, but we also get out of the box guidance on how we should prioritise our developmental efforts.
My next blog article will spend a lot more time on how to align the acquisition of these BTM competencies with your organisation's internal calendar.
What follows is a list and short introductions to the 15 BTM competencies every IT leader has to master.
BTM Competency 1 - Envisioning
Our first competency focuses on establishing a shared vision for the potential value of information technology in your business. With a total of 4 distinct value propositions to focus on, it is surprising how divergent the beliefs of different leaders can be.
And this can be really bad if one of the leaders who has a low belief in the value of information technology happens to be an influential person (like say the CEO).
In this case there is often not much IT leaders can do directly apart from continuously evangelising and pointing out how IT is being used by other, similar organisations.
One tool you may want to use to support your arguments is produced by the Envisioning Virtual Research Institute and helps to visualise what technological developments will likely effect a specific industry in the future.
There is no consensus on how exactly to create a vision for a digital future and it is helpful to learn from others. Cap Gemini Consulting and MIT Sloan provide a good case study (Developing a Transformative Digital Vision) to get started.
If aligning our beliefs about IT is the first step, the next step is to get agreement on what it is the business actually expects from information technology.
BTM Competency 2 - Setting Expectations
Most organisations start with very broad expectations of IT and only learn over time (usually when key projects back-fire) that it is best to be much more specific about the outcomes desired.
A McKinsey-Oxford study in fact identifies Missing Focus as the top reason why large projects fail.
Apart from the obvious financial implications, another problem with this gung-ho approach is that IT leaders feel torn between many different (and often conflicting) requirements.
This makes them feel completely overworked, undervalued and generally misunderstood in their organisations.
Fortunately, incorrectly setting expectations is not unique to the IT leader (as this HBR article points out in behaviour trap 1) and much can be learned from generic leadership advice such as Management 101: Set Clear Expectations.
Once stakeholders agree on their expectations of IT, the next step is to eliminate all-to common obstacles that can derail even the best change effort.
BTM Competency 3 - Creating Urgency
To create the appropriate urgency, IT leaders have to evaluate their operating environment and identify structural, cultural and behavioural obstacles that may stand in the way of delivering the expected results.
Figuring out what these obstacles are and how to either overcome or mitigate them is unfortunately often overlooked by IT leaders who just want to continue implementing the next big technology project.
Consider these questions and find out for yourself how big the challenges in a typical SME can be:
- How likely are you to succeed if you are held accountable for achieving specific outcomes yet have to ask permission to incur even the smallest expenses?
- How often do you need to make critical IT decisions, only to struggle with getting everyone required to make the decision, together in the same room?
- On a scale of 1 to 10, how important do other business leaders consider the work of IT to be?
Let's be honest with ourselves: Some of these obstacles are so significant that they can easily derail the best efforts.
Learn from Dilbert and ignore this competency at your own peril.
After working on the first three competencies we are now ready to consider a very important question every SME IT leader should ask frequently:
What can I outsource and what should I do in-house?
BTM Competency 4 - Strategic Sourcing
Everyone working in a small or medium business (SMB) will know the truth of this statement:
There are many, many more roles than people in the organisation.
In plain English this means we need to find additional skills on a very tight budget.
Good IT service provider selection can help as it not only frees up expensive internal resources or complements non-existent internal skills, but can also significantly contribute towards achieving business goals.
Unfortunately the most significant consideration for many SMEs when considering outsourcing is what are the cost-advantages such a relationship could bring.
Such a simple approach, however, could be quite harmful as it completely ignores the strategic consequences of the decision. Especially now that IT outsourcing has become an accepted strategic management tool.
As far back as 2000, Richard C. Insinga and Michael J. Werle introduced a two-dimensional matrix to link outsourcing to business strategy.
We have taken this concept a little further and have created a simple to understand outsourcing decision-matrix for SMEs.
Now that we have a simple tool for making decisions about what activities to focus on internally versus outsourcing them, our next priority is about making sure that our IT leadership structure is up to the task.
BTM Competency 5 - Leadership Structure
To fit into the type of organisational structure your business has implemented, the IT leader has to ensure that leadership roles for all deliverables of IT are clearly defined, properly mandated and appropriately resourced.
If you are the IT leader, ask yourself the following questions:
- Is there clarity about what the business expects from IT? This clarity should not be in the form of a job description but rather a list of outcomes at an appropriate level of detail.
- For this list of expectations, do we know who is accountable and responsible for each one? Consider reading up on RACI and the ITIL RACI Matrix or event consult SFIA online, the ultimate resource on modern-day IT skills.
- Is the IT department sufficiently resourced to achieve all the listed outcomes?
If you are working for the average SME, the chances are good that you will have your first problem when trying to tick off question 1.
This implies that question 2 will be a challenge as well, leading to a scenario where you are in absolutely no position to know whether the IT function has been appropriately resourced or not (question 3).
You are playing an IT version of Russian roulette!
It doesn't help to have the correct IT leadership in place without ensuring that the leaders are also supported by people on the ground with the right mindset and skills, which is the focus of the next competency.
BTM Competency 6 - Team Composition
Imagine defining and selecting the right leadership (previous competency) without continuing and applying the same rigour to the other IT roles.
Yes, you are absolutely correct, it sounds ludicrous, yet this is what often happens in SMEs. The argument I hear from other business leaders is usually along the following lines
We only have a limited amount of money. Since our IT leader has all the requisite skills we expect from him/her to also be the person that "crawls under our desks" to fix the technical problems. This will not really happen often...
And as soon as this becomes a reality, the day-to-day running of IT starts taking precedence and Business Technology Management will fore-ever remain elusive.
Unfortunately there is another complication in that successfully leveraging technology requires not only new skills but increasingly skilled people to deliver them. A study by the UK Commission for Employment and Skills clearly highlights this trend ... and it is disconcerting to say the least.
The only way to prepare for these changes is to start thinking about IT skills development and recruitment in a much more strategic and deliberate way.
We have now worked through the vision and people competencies and are ready to figure out how we reach common understanding when making decisions about IT.
BTM Competency 7 - Common Language
Even in the present day, one of the most significant challenges for any IT leader is that there is no commonly accepted business IT language to communicate with other leaders and make complex decisions.
The big Gap theory cartoon is only really funny to people that have never had to deal with the effects of the business IT divide.
To everyone else it is an accurate depiction of reality!
Although IT has not yet evolved to the level of the Finance function (which has successfully introduced concepts such as net profit, depreciation and EBITDA to bridge their own divide) a lot is won by defining the business services IT provides (e.g. in a Service Catalogue) and to then agree to religiously use them in day to day communications.
Defining the services, however, is only half of the equation and will not amount to much if the service outcomes cannot be mapped to the costs of producing them.
BTM Competency 8 - Financial Modelling
In an ideal world all costs associated with delivering a specific IT service can be allocated directly to the business users and functions that consume them.
Still in this ideal world, the business users can then choose where to procure the services from, based on their own needs.
Unfortunately SMEs are very far removed from this perfect system of supply and demand and struggle tremendously with allocating costs of shared resources equitably to the various business lines.
For many the (non-)solution has become to accept the status quo as inevitable and treat IT as a back-end cost that has to be minimised as a percentage of overall business spend.
With IT costs and complexity rapidly increasing, however, this approach becomes less and less of an answer and we need to find an answer to the Financial Management of IT challenge in SMEs.
One way out of this dilemma is to shift more and more of the IT spend to cloud providers who can provide accurate pricing which can again be allocated to business functions that consume the services.
And this is exactly what SMEs seem to be doing according to this study commissioned by BCSG in the latter half of 2014.
Irrespective of how much work we put into Common Language and Financial Modelling, working together and making good business IT decisions remains complex. We have one additional opportunity to simplify our interactions. This is where benchmarking, our next BTM competency, can help identify which elements of our service delivery really warrant our attention (either because they are much better or much worse than the average).
BTM Competency 9 - Benchmarking
An important part of reaching shared understanding between business and IT leaders is to know how the company's IT choices and performance relate to other, similar organisations.
This is called benchmarking.
Have a look at the below Google Analytics page comparing web sessions for a company vs an industry benchmark. The data is further broken down according to the source of the traffic.
Without having to say more you will be able to figure out which traffic sources need more attention.
And that is the awesome power of benchmarking.
Although detailed information technology benchmarking for SMEs will remain elusive as long as we don't have appropriate financial modelling tools (see the previous competency), we should never forget to keep this requirement top of mind.
Fortunately, the adoption of cloud-based services will also have a direct impact on the amount and quality of data points that become available for benchmarking.
Xero, a provider of cloud-based accounting software for SMEs, for example, recently announced benchmarking for their software and provided a glimpse of how services such as theirs could enable IT benchmarking in the future. Very exciting!
The 9 BTM competencies described so far are all essential preparatory building blocks for the all-important next three competencies which are about planning ahead and making good business IT decisions that deliver value.
BTM Competency 10 - Situational Analysis
Taking a step back to occasionally look at the bigger picture is an essential management competency for all business leaders.
Even fewer take the time to reflect and follow the advice given by HBR to periodically consider these 5 strategy questions.
The result is that most decisions in SMEs are often made without proper consideration of the long-term implications.
And no-one feels the consequences more acutely than the IT leaders who often have to make decisions with long-term implications with woefully inadequate context.
In parallel to the business's situational analysis process, the IT leader also has to spend time to review the entire portfolio of business services provided by IT, governance and regulatory compliance requirements, hardware replacement cycles, licensing agreements, benchmarking results and other requirements established when working through the earlier BTM competencies.
After this step we are finally ready to consider the strategic technology options available and to make long-term decisions that are in the best interest of the business as a whole.
BTM Competency 11 - Strategic Positioning
Many business and IT leaders still mistakenly believe that making choices such as between "Microsoft Office 365" or "Google Docs" is strategic planning.
Well, they are wrong!
Consider the following questions in the context of our example above:
- Is it our goal to reduce IT costs throughout the business?
- Is it our goal to increase office productivity?
- Is it our goal to enable a remote work-force?
- Is it our goal to reduce complexity within the IT environment?
- Are we trying to achieve all of the above?
Can you see how the answers to these simple questions potentially lead us to very different outcomes, depending on what we choose to prioritise?
Of course you can, and that is what strategic planning is all about:
To establish the critical Must-Win Battles that help all of the leaders to prioritise and focus on what is truly important to the future of the business.
The objective of this competency then is to ensure that long-term (1-5 year horizon) business and IT planning happens and that decisions are made to narrow down the options and provide a guiding framework for making more specific decisions (such as in our example).
It is important to highlight the following:
- IT leaders can make a significant contribution towards establishing the must-win battles for the business. As business requirements have an effect on IT thinking, IT capabilities and thinking can have a material effect on the choices available to other business leaders. Strategic business and IT planning should always go hand in hand.
- There is no such thing as a stand-alone IT strategy. There can only be a business strategy, which allows IT to strategically position itself in support of the business objectives.
After working on 11 BTM competencies we are finally in the position to make good, tactical IT decisions for our immediate future. This process is called operational planning and is also the focus of the next BTM competency.
BTM Competency 12 - Operational Planning
This competency is best known for one of its most well-known outcomes: the annual IT Budget.
Many IT leaders dread the time of the year when budgets are due as they have to wade through often vague research reports and other forms of "educated thumb-sucking" to figure out what they should focus on next.
And the good The good news is that by focusing on the previous 11 BTM competencies well in advance of the budgeting period you have just made the compilation of an IT budget a lot less stressful!
Why is that?
Well, let's list the reasons. We have:
- Engaged all business IT stakeholders, agreed on what IT should focus on and started to align business structure and culture with these choices (BTM competencies 1 - 3)
- Ensured we have the right IT leaders and people on board (BTM competencies 4-6)
- Worked on establishing a common language for making complex business IT decisions collaboratively (BTM competencies 7-9)
- And also set the right strategic context for the best use of technology in creating business value (BTM competencies 10 and 11)
Now compare this to the situation where you start thinking about your IT budget and what to put in it shortly before the time you need to submit your first draft.
Unfortunately this scenario is all too common in SMEs and I myself have often been called in as a consultant shortly before the budget is due.
Naturally such a scenario will lead to serious scrutiny during the budget review process!
In addition to the preparation of the annual IT budget, operational planning includes other activities such as resource requirements planning, high-level scheduling and also communication of the approved plan to all stakeholders.
In the next two competencies the rubber hits the road as the IT leader has to now deliver on the expectations that have been generated thus far.
BTM Competency 13 - Projects
Implementing technology projects is a core competence for every successful IT leader.
And it is a lot more difficult to achieve than it sounds,
Not only do we have to continuously guard against bad multitasking (which is a real problem in SMEs where resources are shared across multiple projects) but the statistics of project delivery are just plain against us, as the previously cited comprehensive McKinsey-Oxford study shows.
But there is an even bigger challenge and this is that we need to transition from technology management and become more customer-driven and agile in our focus, as this Forrester article about Managing business technology outcomes, not IT assets so nicely explains.
Fortunately there is a lot SME IT leaders can learn from combining corporate portfolio, programme and project management ideas with newer, more agile approaches.
The bottom-line is that we learn how to deliver the project outcomes in a way we have agreed with the business (BTM Competencies 2 and 12), while keeping the doors open for situations where quick-thinking and implementations can deliver rapid business advantage.
While this competency focused on the major IT projects, the next competency is all about the myriad of IT processes and how we ensure they remain fit-for-purpose and continue to put smiles on the faces of all users.
BTM Competency 14 - Processes
IT processes are defined as the activities IT undertakes, on a day to day basis, to deliver value (in the form of business services) to its business community.
Although many of these processes are internal to IT and cannot directly be observed by the business community, the effectiveness and efficiency of such processes is a major contributor to overall satisfaction with the business services provided.
Similar to actual products, the perceived value of IT services for users diminishes over time. What was good enough today might not be good enough tomorrow.
You can watch this introduction to the Kanu model to understand why this is so.
It seems obvious that IT leaders need to periodically evaluate the performance of all IT processes against expectations and find and implement solutions to the most common problems or service improvement requests.
This is usually accomplished by implementing an IT-focused continuous improvement program, such as the one suggested by LeanKit.
As process improvement goals are identified they could either be fed into the major project pipeline (BTM competency 14) or handled as minor changes as part of regular operations (this competency).
The hard work is now almost behind us and we feel we have earned the right to sit back and relax a bit. But before we do that, there is one more BTM competency we need to master and that is to review our overall BT Management performance to date.
BTM Competency 15 - Results Focus
So, after all this time, have we achieved the outcomes we set out to deliver as early as in BTM competency 2?
Well, you may believe so, but what do other business stakeholders really believe?
The simple answer is you won't know as your own leadership blind spots and cognitive biases may very well give you a false sense of achievement and seriously hinder your ability to move forward in your career.
One of the options is to employ a 360 degree survey to obtain feedback from your superiors, peers and subordinates. Just beware of the pitfalls of the methodology as highlighted by Harvard Business Review.
Another option is to follow a more holistic approach and use the Business IT Gap Analyser tool from Xuviate to engage all business IT stakeholders and obtain their views on how well the different BTM competencies have been implemented across the organisation and the 4 value propositions of IT.
Since the whole is not necessarily equal to the sum of the parts, we may find ourselves in a situation where IT does well in all previous BTM competencies but still fails to deliver against the overall expectations of the business community.
When this happens it is either because of some critical blind spots IT has or because IT fails to successfully market itself and its successes to the IT user base.
Once we are aware of the issues, it is usually quite easy to address them.
Acquiring or shoring up existing BTM competencies looks like a very time consuming process.
While it is certainly true that there are no short-cuts on offer, it is very helpful to again emphasise the following:
- You are on a journey and any skills acquired will contribute towards more business value from IT (i.e. doing something is better than doing nothing)
- Settling for "good enough" now and moving to the next competency is better than getting stuck at any particular point (i.e. make a note and do better when the cycle repeats itself)
- BTM execution competencies 13, 14 and 15 are ideal for IT leaders to demonstrate business value. (i.e. never forget why you are on this improvement journey)
And most importantly, don't forget that the BTM competencies have been arranged according to the order they should be implemented.
This means that even if you have very little time on hand, you can still find out where in the process you should be according to the current phase in your business calendar.
Armed with this information you can then decide on the immediate next competency you should focus on.
And this is exactly what our next article will focus on. Click here to continue reading.
Are you missing a critical BTM competency you feel should be part of the framework? Do you agree that all BTM competencies are essential?