Businesses are at their best when investments are directly tied to their desired business outcomes. In the case of technology, however, this is often not the case. Part of the reason is because leaders commonly judge technology projects by the twin metrics of on-time and on-cost delivery. These metrics encourage a narrow view of the business, invite technical debt, and deter innovation. Businesses that insist on their services and applications having business models, however, encourage accountability and efficiency in their technology stack
The Problem with Time and Cost
IT projects often fail to meet the expectations of the business even when delivered as expected. As many as 60% to 80% of IT projects are never delivered.
This is because those projects are not accountable to metrics tied to business value. Instead, most IT investments are judged on only two metrics: on-time delivery and on-budget delivery. This is tolerable when launching the service, but where does it leave the service from there? Once the service is delivered, those metrics can no longer be used as a north star and the service is directionless.
Increasingly, an effort is being made to track the lifetime cost of ownership of IT investments. Additionally, a special effort is being made across industry to manage exorbitant cloud spend. These efforts however, are deeply misguided.
Every penny spent on technology should offset spend or enable value creation in other areas, justifying that spend. Making cost the enemy threatens to stymie progress and innovation.
Business Models for Services and Applications
A straightforward way to align IT investments with business outcomes, is to insist that services and applications have business models. A business model ties these technologies to the bottom line of the business, increasing accountability, and driving efficiency.
Accountability comes because now every service can be tracked to the bottom line. Managers are already familiar with how to run their P&Ls: they can run their technology efforts in the same way. Drive up profits and minimize losses.
Efficiency comes because the profit and loss are meaningful business metrics. For internal services and applications to generate profit, they must deliver value to their customers throughout the business. And when those same services and applications can reduce their costs, they improve their own bottom line and the bottom line of the business as a whole.
The Trufflow Advantage
Trufflow is a software platform that makes it easy to tie business value to enterprise software, including homegrown applications, commercial SaaS offerings, data, and everything in between. The Trufflow platform provides IT product owners key metrics used across the software industry like active user counts, month-over-month revenue retention, and churn. With Trufflow, you can increase the efficiency of your technology spend and gain unprecedented visibility into your IT value chain.
