Monday, August 9, 2010

What Is Business Value?

Given the prior post, "Business Architecture Definition", I thought it would be useful to post a similar fundamental question, What is business value?

A few years ago I was sitting in a discussion next to a former Gartner analyst, and I mentioned that IT needs to be more business focused.

I know that this blog is not about IT, but IT is my own original background, so please bear with me.

The Garnter guy looked at me and said, "People have been saying that IT should be more business focused for at least ten years" - and that was some years ago.

The problem is, many - I would say most - people in IT do not know what it means to be business focused. (I come from IT so I feel I can make that introspective criticism of my own profession.) To be business focused, one has to know what business value is, and I would venture as well that the very phrase "business value" is misunderstood within the ranks of IT - including the ranks of business architects who work within the realm of IT.

If your background includes training in business, then you can probably answer in short order that business value pertains to realization of the organization's goals; in a for-profit entity, that is profit, and in a corporate entity it is primarily shareholder value.

Within the realm of IT, "business value" is often understood to mean something like one of the following:
  • Doing what the "business side" tells you to do, as if they were a "customer". (They are not: they are a partner.)
  • Realization of business processes that perform business functions.
  • Minimization of costs.
These are all worth considering as important elements of planning and operation, but none of them are true to what "business value" is: the realization of the firm's goals.

It is a fact that many business architects originate from the ranks of IT. They have the advantage that they have a deep knowledge of how the organization can leverage technology. At the same time, they tend to be handicapped by having less understanding of business analysis techniques. For most people with an IT background, standard business tools such as spreadsheets tend to make the eyes glaze over. (This is why I developed the free Expressway business value analysis tool. See http://ValueDrivenIT.com.)

For business architects who originate from the ranks of IT, the implication is that some initiative and training is called for, such as the Business Architect Certificate Program at De Paul University, or even an MBA; or for those who are truly self-starters, I believe that one can even learn what is needed on one's own through aggressive self-study.

In any case, the call is clear: be business focused, and understand what business people mean when they talk about "business value".