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Making Digital Transformation Work with IT Cost Management and TBM

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by Alex-Paul Manders
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Co-authored by Alex Bakker

Digital transformation is taking on new meaning as it becomes more tactical and relevant to specific lines of business across the enterprise. In a recent ISG Insights™ paper, Driving Digital Strategy through TBM – A Four-Step Approach, we outline four steps to address the common challenges companies face in their digital transformation initiatives. These steps leverage Technology Business Management (TBM) to synchronize Finance and IT functions and control costs from the very outset.

In our survey of IT and Finance professionals in the TBM community who are responsible for IT cost management, we found that 75 percent of their respective organizations have some type of digital transformation already underway. However, despite overwhelming interest, many business leaders do not have an effective way to build a business case across the organization to encourage the follow-through needed to derive benefit from those transformations. Launching a digital transformation isn’t just about technology, it’s about aligning Business, IT and Finance around those new technologies and the new operating models they demand. The same survey showed that 64 percent of organizations lack a formal process to align these digital transformation initiatives to measure, track and monitor key performance indicators.

The first step – identify business stakeholder needs – requires involvement from three stakeholders: Finance, IT and the business. When business units fully understand the overarching business perspective for the transformation, IT can gain a deeper and more meaningful definition of the requirements, allowing it to work with Finance to develop a plan to manage the IT spend.

The second step is to expand the business case to include the TBM framework as a means to quantify costs and expected returns. An important part of this phase is to show how new technologies can be re-used for future projects, thereby increasing the value of the investment.

The third step is to gain support throughout the enterprise by presenting the business case to stakeholders and aligning the IT initiative to all relevant lines of business. To ensure greater acceptance and success during this phase, use demonstrations and proofs of concept that show stakeholders what IT will deliver and how it will benefit them.

The fourth step is to kick off the project. Collaboration between IT and Finance during this phase is essential. Focus on delivering the benefits of the initiative while capturing a real-time view of the efforts that must be invested to make it happen. Kicking off the project with a Multidimensional Framework (MDF) approach prioritizes the people, technology, analytics, strategy, process and data involved.

This four-step process, outlined in more detail here Driving Digital Strategy through TBM – A Four-Step Approach, helps keep stakeholders aligned, so a transformation is successful and sustainable.  

About the authors

Alex-Paul Manders is TBM Practice Lead for the Americas at ISG. He works closely with enterprise leaders, IT finance managers and IT business unit leaders to help implement the discipline of Technology Business Management (TBM) into their organizations and optimize their enterprise IT. Alex advises both commercial and public sector organizations on the adoption of TBM programs, designs fact-based analytical strategies and supports broader IT transformation initiatives. His development of a strategic TBM multi-dimensional framework addressing people, process, data, analytics, technology and strategy is part of ISG’s industry-leading set of market best practices and methodologies.

Alex Bakker is a Principal Analyst for ISG Insights. Conducting research and writing about emerging trends and markets, he focuses specifically on integration, analytics, social business and super emerging technologies, including the Internet of Things, 3D printing, virtual and augmented reality and drones. Alex manages and analyzes survey data, conducts briefings and interviews and publishes research documents as a part of the ISG Insights team.

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