IT Execs To Solution Providers: You Must Demonstrate Business Value

The need to clearly demonstrate business value before even the smallest deal is signed off is becoming standard operating procedure within IT departments, said executives.

The mood of IT executives attending this year's annual gathering of the technology industry elite is much more business focused than in years past, when 'show me the latest and greatest technology' was the order of the day.

"IT is no longer a service provider, they are a business partner," said one IT executive here, who attended the jam-packed opening session of Gartner's Business Value IT track and did not want to be identified.

"Solution providers need to be selling solutions not technology," he said. "I'm not out to buy CRM (Customer Relationship Management).Solution providers need to be able to look at the whole business--the processes and technology with it."

The executive, who has recently been given a new job as relationship manager at his company to drive business value with top executives, said his budget is flat for the next year and his company is in the midst of a merger, making it even more pressing that there is clear business value for any technology spending.

It is more critical than ever that IT departments are able to manage their portfolio of initiatives so that they allocate the appropriate amount of resources to the higher return investments, said Alex Lobba, vice president of product management and product marketing for Kintana, a software maker that sells an ERP-like system for determining business value of IT projects.

The demand for specific business-value metrics is "here to stay," said Lobba. "IT organizations [and solution providers are assessing hundreds of projects ever year," he said. "They have to be able to decide which ones to do and which ones not to do. They can't do that if they don't have a standard way of measuring business value and a standard set of metrics."

Audrey Apfel, a Gartner analyst, said that Gartner has established specific methodologies for determining business value, including weighing the project's financial benefits, the project cost, options, IT capabilities and what Gartner calls "five pillar diagnostics:"

Apfel advised IT executives to look closely at risk and at whether the organization can execute or absorb the change. Furthermore, she said, executives must consider the technology risk and whether the vendor they are engaging could fail or go out of business and whether or not there is a fallback position.