Business value from IT goods and services in a digital world
I think it’s fair to say that organizations’ understanding of “digital” is currently ‘all over the place’, leading to much confusion.
In technology terms, when you’re using IT strategically to drive a business model rather than just support it, then you’ve got a digital enterprise. And digital transformation refers to a radical change rather than a gradual change across the organization.
The confusion that exists around these concepts is not only profitable for consultancy firms but is hindering enterprises’ ability to experience the benefits created by using IT better. An important starting point is to clarify what digital means for organizations so they can focus on the things that make sense to them. Remember, “digital” is an adjective; a word that describes a thing. So, what is that thing?
The digital customer experience
Digital enterprises often offer a mix of digital products and physical product and it’s crucial that the customer has an attractive and coherent experience, whether it is digital or physical.
Unfortunately, many companies are still providing a dreadful digital interface that drives customers crazy, with algorithms that force them in a specific direction that they cannot deviate from.
Theoretically, the user experience should be the starting point, but organizations getting it wrong are confronting the user with diverse, disjointed experiences: they are not integrating successfully the two worlds of the digital and the physical experience.
Some enterprises have become like Jekyll and Hyde across their digital and physical experiences and they need to be more aligned to provide a consistent feel whether customers are dealing with them online or physically. It’s about design thinking in which empathy with customers is the key concept.
In fact, ITIL® 4 – the latest evolution of the best practice guidance – makes customers an essential element in the process of creating value.
Digital transformation: translating technology into business value
If we agree that digital transformation results in better strategic demand for and use of IT, the success of IT comes from defining what it can do to deliver value.
However, the challenge is often that customers have underdeveloped, ambiguous and conflicting ideas about what they want and need. Therefore, before IT comes up with concrete requirements it’s vital to discover the users’ unarticulated needs and translate them into requirements.
The ITIL framework tells us that when organizations use IT more effectively, there is a greater demand on IT services. And when digital transformation triggers IT transformation, ITIL can help with this process. In ITIL 4, it’s about aligning human, digital and physical resources to support faster quality and value-driven delivery for people and organizations.
IT transformation results in improved fitness for use (warranty, the non-functionals), speed and priority of delivery and improved costs and risks of IT services. Consequently, you achieve improvements in the potential value already identified and determined by the business.
It’s important to note that IT service management mustn’t come as an afterthought but is part of the transformation conversation from the start: while development teams are building functionality into applications, ITSM needs to run in parallel to ensure support of the non-functional aspects.
Essentially, it’s the responsibility of ITSM to help co-create and protect the value identified by the business as soon and as cheaply as possible and to ensure that nothing (e.g. an outage) adversely affects the potential value.
The blurring lines of business and IT
What we’re seeing more today is decentralizing of IT capabilities to the various lines of business, where business representatives and IT people work together on IT-dominant products.
As a result, many previous concepts and approaches are now moving aside to allow different ways of working; more based on mutual alignment, close collaboration and adjustment which are integral to the digital enterprise.
And this also needs a wider range of options among the frameworks people are using – in other words providing them with a bigger toolkit.
Co-creating value through service thinking
Equally, there has been a shift from a goods-dominant logic (an organization makes something and sells it to the customer) to a service-dominant logic.
In that scenario, users access resources available to them, interpret information and use the information to reduce uncertainty and make better decisions. But only when people (or things) act on those decisions, can you claim that return on IT investment has been realized. This exemplifies a process of co-creation between the user and IT service management. The more people in IT who are aware of co-creation, the more value will be co-created for the provider and the user.
The benefits of this are not only monetary: both parties learn from the experience and benefit from improved use of resources in future activities.
Transformation and ITIL 4
I believe that, with the need for organizations to continually improve the way they work, there will be more fostering of cultures that encourage and reward ongoing experimentation and responsible risk taking; pushing boundaries to make progress in a climate where people feel safe to try new things and don’t get fired if something goes wrong.
In that context, ITIL 4 links more explicitly to other disciplines, such as DevOps and Agile, as part of transformation initiatives. With an increase in cross-functional teams – such as development and operations working together – there is an even greater need to understand each other’s languages and approaches, creating better mutual adjustment and combined effectiveness.
ITIL 4 offers an approach more relevant to software developers, service management practitioners and businesses by promoting a holistic view of delivering products and services.
For further information about ITIL 4, visit our ITIL Update page.
Read more posts in this series
SLAs of the future: measuring outcomes, not IT availability
Combining different IT and ITSM frameworks for business benefit
The ITIL update in a world of digital and service transformation
Best practice in IT, ITSM and the ITIL update