Jeff Nicoll – Whitepaper January 10, 2025
Introduction: IT Value Under the Microscope
In today’s digital economy, CIOs often face a familiar demand: “Prove that IT is worth the investment.” Showing an expense ledger demonstrates how much you’re spending. Sharing operational metrics highlights how extensively systems are being used. But neither approach, on its own, answers the deeper question of how technology drives business outcomes.
Increasingly, forward-thinking organizations are treating IT budgeting as a continuous process—not a once-a-year ritual. When IT budgets are specifically aligned to business goals, the organization gains a competitive advantage. For example, if your core business objective is to grow revenue via customer retention, your IT strategy might focus on improving the customer success manager (CSM)-to-customer ratio. That focus will likely feature a clear success metric (“increase our Net Promoter Score by 25%”), which in turn links back to the broader corporate mandate.
This shift in mindset—moving beyond “feeds and speeds”—positions IT as an engine for innovation rather than a cost center. It asks a more powerful question: “How can technology investments fuel strategic objectives such as revenue growth, market expansion, or deeper customer engagement?” The answer lies in an integrated approach that pairs Strategic Portfolio Management (SPM) with Technology Business Management (TBM) to make every dollar of IT spend both transparent and impactful.
1. Why “Feeds and Speeds” No Longer Cut It
Traditionally, IT performance was measured by system uptime, ticket resolution times, or bandwidth utilization—often summarized as “feeds and speeds.” Although these metrics matter, they don’t reveal whether IT is cultivating customer loyalty, boosting operational efficiency, or supporting new product launches. They reflect activity, but not necessarily outcomes.
From Operational Data to Business Impact
- Operational Data: Tells you how busy your IT environment is.
- Business Outcome Data: Shows you why that work matters—e.g., how many customers were retained or how much revenue was generated.
Emphasizing outcome-oriented KPIs and linking them to strategic targets provides the evidence needed to prove IT’s contribution to the organization’s core goals.
2. The Power of SPM + TBM: Strategic Direction with Financial Clarity
- Strategic Portfolio Management (SPM) ensures each IT project, service, or product directly supports an overarching strategic aim—like entering a new market or boosting customer retention.
- Technology Business Management (TBM), on the other hand, surfaces the real costs of these services in a way business stakeholders understand (OpEx vs. CapEx, consumption-based spending, etc.).
By uniting these two approaches, you enable:
1. Strategic Alignment
- Confirm each IT initiative ties to a specific business need.
2. Transparency and Accountability
- Show how much each project or service truly costs, distinguishing “run” from “grow and transform” investments.
3. Actionable Insights
- Quickly spot high-return opportunities or potential overspend, then shift resources before it’s too late.
3. Ten Outcome-Focused KPIs to Demonstrate IT Value
When combined with SPM and TBM, these ten KPIs clarify how IT spend moves the needle on revenue, efficiency, and customer satisfaction:
1. IT Spend vs. Plan (OpEx & CapEx)
Ensures financial discipline and early detection of misalignment.
2. Total Cost of Applications & Services
Unmasks hidden expenses, guiding portfolio rationalization.
3. Percentage of IT Spend Allocated to Cloud
Tracks consumption-based costs that can unexpectedly balloon.
4. Lead Time for Product Delivery
Gauges IT’s agility and speed to market.
5. Quarterly Business Value from the Project Portfolio
Ties each release to outcomes, ensuring teams stay focused on results.
6. Ratio of Run, Grow, and Transform Investments
Protects your innovation budget from being overshadowed by maintenance.
7. Percent of Customer-Centric Project Spend
Demonstrates how much of IT’s investment supports revenue-driving initiatives.
8. IT Spend by Business Unit
Shows which areas receive the most resources and why.
9. Customer Satisfaction Scores for IT Services
Reflects how well IT supports both internal and external users—often a leading indicator of retention or revenue impact.
10. Percentage of IT Investments Aligned to Specific Business Initiatives
Makes strategic priorities visible and measurable at the budget line level.
4. Fostering an Agile IT Budgeting Mindset
Shifting from “annual IT budgets” to ongoing strategic budget updates can be a cultural leap. However, agile budgeting:
- Improves Responsiveness: Rapidly pivot resources when a new priority emerges.
- Builds Trust with Business Units: Open discussions of where and why IT funds are allocated.
- Prevents Technical Debt: Continual re-prioritization ensures less money is locked in low-impact legacy systems.
5. Closing the Loop: Continuous Improvement and Executive Buy-In
An outcome-driven reporting cycle—fueled by SPM, TBM, and the ten key metrics—supplies the executive-level narrative that IT is more than just a cost center. It showcases how technology budgets directly advance strategic goals like market share expansion, customer retention, or product innovation.
Key Benefits
- Executive Alignment: Clear data on project ROI fosters collaboration with CFOs and business unit leaders.
- Risk Reduction: Early visibility into cost overruns or sluggish performance keeps strategic plans on track.
- Culture of Ownership: Transparency in costs and outcomes encourages project owners to deliver measurable results.
Conclusion: IT as a Catalyst for Growth
Moving beyond “feeds and speeds” requires showing that IT’s role is fundamentally strategic. By combining SPM and TBM with carefully chosen KPIs, CIOs can demonstrate not only how much they spend, but also why it matters—and how it ties to the organization’s core objectives.
Ready to Elevate Your IT Strategy?
- Adopt SPM: Align every IT project and product to explicit business outcomes.
- Apply TBM: Gain transparency into the costs of each service or application.
- Focus on Outcome KPIs: Prove value by highlighting IT’s impact on revenue, efficiency, and customer loyalty.
When these components work together, IT transforms from a reactive utility into a catalyst for innovation and competitive differentiation—proving value in ways that no simple operational ledger could ever reveal.
