CIOs must address IT’s perceived value problem

In a perfect world, enterprise IT should be funded at levels that enable existing operations to function outage– and security incident–free with a smattering of investments in a manageable portfolio of competitive advantage–producing innovation initiatives. Is this too much to ask?

Looking ahead to the 2025 budget season my futurist colleagues forecast a drama-rich street fight for enterprise IT resources. With 2025 budgets expected to be tight, IT must have its “value story” ready.

I surveyed 30 senior technology executives asking the open-ended question, “Does IT have a value problem?” Ninety-plus percent responded in the affirmative. Too often we approach value creation as a binary issue. Value is a multifaceted issue. It should be seen as a dial we adjust.

Perception matters

Marketing is perceived as having a value problem. The most famous and defining quote in marketing is attributed to department store pioneer John Wanamaker: “Half my advertising spend is wasted; the trouble is, I don’t know which half.” Every year at the Super Bowl we are reminded of advertising’s unique ability to make money disappear. To wit, the average cost of a 30-second ad spot at Super Bowl LVIII was $7 million.

The legislative branch of government also has a perceived value problem. Fewer than 5% of bills drafted become law (see Melinda Richie, Backdoor Lawmaking: Evading Obstacles in the US Congress).

While IT/digital can take some solace in not being perceived as the No. 1 “Value Villain,” public and executive opinion regarding IT’s role as a value creator is coming under increasing scrutiny.

Gen Xers (born 1965-1980), Millennials (born 1981-1996), Gen Zers (born 1997-2012) have grown up in a world where IT has been generally thought to be a good, bordering on great, thing. This positive generational bias toward IT is rapidly disappearing. IT oldsters remember the value skepticism of the late 1980s when Nobel Prize winner Robert Solow quipped, “You can see the computer age everywhere but in the productivity statistics.”

I am beginning to sense a societywide attitudinal shift regarding how technology and technology investments are perceived. Technology in general and enterprise IT specifically has a value problem — that is, a failure to deliver the full potential of the technology portfolio available today.

To free up 2025 budget dollars, IT leaders must understand and address what is standing in the way of every dollar spent on IT/digital initiatives generating a maximum return.

Not the user’s fault

I have been an unabashed CIO Cheerleader for almost half a century. My heroes, mentors, and best friends are IT leaders. I become downright feral when academics and consultants who have never walked a step in the shoes of digital practitioners question whether IT matters.

For almost 30 years I have used the bully pulpit of the opinion column to publicize, chastise, condemn, and shame the failings of those outside of IT. I blamed IT’s value problem on users. I was wrong (actually not entirely correct).

As we enter a new world of technology opportunities and risks and as we double-down on our intention to realize the full value of information technology we need to look in the mirror and ask if we, as IT leaders, need to do a better job.

I stopped blaming IT underperformance on short-term thinking, spreadsheet-addicted, digitally unsavvy Luddites when I heard a teacher-turned-politician share their insight that if 90% of the students fail a test, the fault lies not with the students.

It is dysfunctional to proceed thinking that there is something wrong with users of technology, that they are not clever enough to understand the digital gifts we are bestowing upon them. CIOs need to assist employees to embrace their capabilities as empowered technology value creators.

We need to fix how IT value is measured

Most organizations are pretty good at measuring how much is being spent on IT — aka, the inputs. What needs to improve is accounting for the benefits said inputs generate. Vince Kellen, Ph.D., CIO at University of California San Diego, advocates crafting heroic narratives based on unimpeachable measurement of authentic value, for example, “honest time savings, productivity advances, market share gains. … Quarterly statements are not sufficient.”

Cathy Hotka, of the Executive Leadership Council for the Retail AI Council, has had her fingers on the pulse of the always interesting retail vertical and has served as longtime judge for CIO 100 Awards. She believes IT needs to get better at value messaging: “I’ve worked with technology companies for decades, and many of them have real difficulty describing what their technology does.”

Dennis Reiman, recently retired VP of technology and CIO at Southern Connecticut State University (“Fear the Owl”), observes that part of IT’s value problem is the systemic ambiguity regarding who is actually responsible for making sure IT benefits materialize.

What are your thoughts on IT’s value problem? And more importantly, how are you addressing it?