A Business Value Approach to IT Investing


Business today requires the effective use of technology to create competitive differentiation, drive growth, and optimize profit.   Yet, while business is dependent on technology, increasing IT expenditures can be viewed as a drag on business results. That’s why evaluating technology investments in terms of business outcomes is so important.

We’re familiar with the stories of how technology has changed not only businesses but entire markets.  The first-to-market coffee chain offering free wifi has a competitive advantage. The on-line book seller that leveraged its infrastructure to become an IT service provider realized phenomenal business growth. The brick and mortar retailer that integrated its supply chain and its distribution centers was able to optimize profits.

The organizations behind these success stories evaluated investments not only in terms of cost but also in terms of the value the investment could bring to the business—the business outcome.

In “The Best Path Forward”, an article by Russ Banham about how CFOs make capital budgeting decisions, the author acknowledges how difficult these decisions are, saying “deciding whether an investment is worth funding is not a job for the fainthearted.”  Knowing that CFOs usually are directly involved in most technology decisions or define the criteria by which they’re evaluated, it’s helpful to know how CFOs think about and evaluate investments.  Banham quotes Mark Partin, CFO of the accounting software company BlackLine, as seeing the CFO’s role as “stitching together [the company’s] strategic growth plan and fundamental investment model, year after year.”  Banham goes on to state that David Hensley, CFO at Power Distribution, discovered “the techniques of capital budgeting can be biased toward certain kinds of projects and rarely give CFOs all the answers…it is often the risker, hardest-to-measure investments that can be most transformative for a company.”

As we’ve collaborated with our customers to help them not only to evaluate the potential value of a technology investment decision but to look backward at the total IT, business and financial impact of that decision, we’ve learned that it’s essential to go beyond the “classic” criteria used to evaluate technology decisions, especially those in the data center.

In the classic business model, IT was a cost center and the key criterion when choosing between investment alternatives was to select the option deemed to have the lowest Total Cost of Ownership (TCO).  But TCO allows us to measure only a small portion of the value of any potential investment. TCO not only fails to recognize the transformative opportunities of technology but also keeps IT relegated to a cost-corner rather than positioning IT leadership as equal partners in the business.

At Dell EMC we collaborate with our customers, applying a business value approach that encompasses strategic goals as well as financial and non-financial criteria that go beyond TCO to demonstrate business and IT value, and to position IT as a champion of better business outcomes.

These value principles underpin our unique Customer Value Program enabling us to help customers assess, or forecast, the value of a converged/hyper-converged solution, implement operational and organizational changes to transform and unlock more value from their investment, and use a proactive, continuous-improvement approach to realize, drive and measure the most value from their investment.

The Customer Value Program leverages the successful transformation projects of many customers who have navigated technology, organizational, resource skill, and process changes to enable better planning decisions, mitigate risk and maximize the probability of desired business outcomes. From detailed guidance, assessment tools and expert advice, to educational and certification programs, to quantifying business, IT and financial outcomes, the Customer Value Program provides a comprehensive process to chart a Transformation journey.  Start yours today by going to http://www.dellemc.com/converged-infrastructure/customer-value/index.htm


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