The need for business acumen in today’s IT landscape
By Fred Latala
Business acumen is a curious term to many. Some people focus on the textbook definition, others make assumptions and a select group take the time to invest in themselves to truly understand the in’s and out’s of a situation from the view of the company’s stakeholders. Business acumen is not just about financial statements. It is about understanding the complete business situation, drivers, inhibitors and linkage to strategy.
So why is this important to IT professionals at all levels? Ultimately every investment that is made in IT is made for the benefit of the business. For too long, IT was looked at as a cost of doing business and not as a strategic tool of the business. Admittedly there were some great pioneers in the IT industry that were able to break out of this mold early on but they were the exception. Things have changed over the past few years with the advent of the cloud. The cloud has put creativity and business differentiators in the hands of the entire organization with impressive speed and ease. This broad cloud adoption has brought with it a new set of challenges for IT leaders to demonstrate the return on investment (ROI) in IT. In a majority of organizations today, IT spend has become hard to track and the same old questions arise about the value of dollars spent on IT. IT leaders often struggle to demonstrate a tangible ROI for the money that is spent in the IT budget and across the company in often untracked cloud expenditures.
So how do you break the cycle? IT professionals need to invest in themselves and improve their business acumen in order to enter into business level conversations with their peers in other organizations and with the executive leadership team. By demonstrating this competence and equating IT to the business, IT professionals will be included earlier and more often in strategic planning and decisions making.
A great example of this occurred when my team and I were asked by a CIO of a large specialty retailer, both brick & mortar as well as web sales, to come in and spend a day with the Executive Leadership team (ELT) which included the Chairman of the Board. The CIO was struggling to connect with the ELT on the value of money invested in IT and how to explain in business terms what the cloud meant to their company. We began the meeting with introductions and each member of the ELT spoke about their area, strategic plans, challenges and needs. The CEO and the Chairman both asked for an explanation of what the cloud really is versus what they read in trade publications. As we began to get into the heart of the meeting it was apparent we were striking a nerve because we were able to talk in business terms versus IT terms. The ELT was fully engaged and started discussing a variety of current and planned strategic initiatives. Yet, the most significant breakthrough occurred with the CFO. The CFO was not as engaged as the remainder of the team and displayed closed body language. I took the opportunity to ask the CFO a question to bring them into the conversation. I asked if they followed a fixed or variable cost model. The CFO was adamant that they followed a fixed cost model and reiterated with the CEO and Chairman their support of this model and why it worked for their company. Fixed cost allowed them to have an accurate budget so they knew in advance what their spend would be. This was the opening I was looking for to bring the value of cloud to life and help the ELT understand what cloud was in business terms. We tied in the various strategic initiatives and the business cycle and like all companies they have elastic demand. Some is seasonal, some is tied to the economy and some is just tied to consumer preferences. We also began to show the value of the cloud to support elastic demand. It did not take long for the CFO to see the opportunity, literally stood up and implored the CEO and Chairman to adopt a variable cost model.
What a triumph for that organization and for that CIO. As the ELT collaborated, CIO felt that they were truly a team for the first time. The CIO followed our lead, engaged as a business peer and the company went on to incorporate IT as a critical part of strategic planning and decision making.
Business acumen is not just knowledge but a skill to be honed like any other tool in your professional tool bag. IT professionals at all levels need to be capable of having business conversations as they are engaged in closer proximity to the business, think DevOps… The speed of change is increasing and the options for the business to procure IT functionality are increasing exponentially.
Get ahead of the curve and invest in yourself.
Be sure to check out the next article in the series “How to improve your business acumen as an IT professional” for some practical tips on how to get started and take your skills to the next level.