The Business of Technology
Why Business Acumen Matters to the IT Profession
Whether you’re in the C-Suite as Chief Technical Officer, an IT Director or an IT project manager, it’s imperative to ensure that your initiatives are aligned with the firm’s strategic intent, and that you are part of a team moving in the same direction.
Why is this important? According to research done by Business Acumen Institute, 62% of people who work within the information technology ecosystem are working on projects that don’t contribute to the business goals of the company. These issues appear when people acquire systems that don’t meet the needs of a supported operating department. Or when a software project is undertaken without complete business requirements. When rework is required, more resources are wasted. As yourselves what percentage of projects you work on are done on-time, on budget – and – that really hit the mark.
Technology professionals can make a have a more significant impact on the company’s goals and amplify their influence by developing a deeper understanding of the business, and this means developing business acumen. But what is business acumen?
Business acumen is a portfolio of skills, behaviors, and capabilities needed to support an organization in the achievement of its financial and strategic goals.
While the definition may seem simple, there are several building blocks that need to be assembled to form the required foundation, and to build the structure of integrative thinking that will lead a deeper understanding of what’s needed help the company exceed its goals. At Business Acumen Institute, business acumen is explained using a Business Acumen Canvas.
START WITH AN OUTSIDE-IN PERSPECTIVE
IT and technology professionals need to cultivate the outside-in thinking that allows for a deep understanding of customers, the problems they experience, and the value they seek in products, services, or interactions. For IT people, the ecosystem of the company has similar constructs. Users and decision-makers across the enterprise are also “customers.” And customers of the IT organization behave similarly to customers of the company; they have choices. Why should any customer choose one product or service over another, which is why it’s important to understand the competitive landscape. This market-first perspective is vital. Furthermore, IT people must understand the business model of the firm – or how it makes money and how the services and support function enable the company to improve revenue, mange costs, and be more profitable.
DEVELOP STRATEGIC MINDSETS and INTEGRATIVE THINKING
Every technology professional must develop a sense for how things fit together in a business. Sometimes, the retooling of our thinking is needed to be effective collaborators with others as problems are discovered and solutions sought. Every successful IT professional must assess situations, process data, and think about available options to make good decisions. Strategic thinking is needed to participate in intellectual conversations that consider many different perspectives that need to be harnessed. The more you understand how to connect the dots and contribute to value-oriented solutions, the closer you’ll get to being a major influencer of the company’s strategic direction.
BUILDING BUSINESS ACUMEN CAPABILITIES
There are eight core capabilities required to build business acumen. Each one is summarized here. Mind you, these are not linear pathways to success. Rather, they’re identified so that you can see how they are all connected. People are connected to processes. Projects are connected to products, strategy, and finance. All are connected to business performance. The eight items include:
- Leading Teams and Influencing People: To be a good partner it’s vital to understand the structure of the organization, how roles & responsibilities are assigned, and how to build relationships in a collaborative culture. This organizational awareness and can help an IT person to benefit from collective energy of others toward the goals that matter most.
- Using Processes to Get Work Done: All processes are guided by people and require clarity of goals, roles, and interdependencies. Most process-oriented initiatives require IT support. These might include business process automation, an AI initiative to aid in creative problem solving, or the organization’s support CRM, financial, or supply chain management systems. Process knowledge is important to help the organization by monitoring process efficiency and productivity.
- Managing Projects to Achieve Goals: Projects help to create value through a product or result. Each project utilizes the talents of team members, are assigned a budget & schedule, and must deliver the intended outcome. Projects are a part of all jobs, and this skillset should be developed. These help build leadership skills, collaborative teams and help teams achieve project goals.
- Understanding Products and Markets: Products are the lifeblood of any company. All IT people must understand customers served, competitors faced, and value delivered. They must also have a sense of the problems faced by customers and how the company’s products solve those problems. This is why the external dimension of the canvas is so important.
- Utilizing Finance and Financial Analysis: Money is the language of business, and every business decision has a financial consequence. It’s vital to understand the essential elements of budgeting, forecasting, tracking metrics, reporting, and analysis.
- Formulating Goals and Strategies: Strategies are game plans that help a company achieve competitive advantage. Strategies are built on the goals of what’s to be done along with the activities and actions that spell out how it’s to be done. IT people need to understand the strategic goals of the company to logically link the goals of their initiatives with those company objectives.
- Analyzing Data, Solving Problems, and Making Decisions: Businesses run on data. It’s a premium fuel that gives everyone in the business the wherewithal to create strategies, uncover and solve problems as they arise, and steer the business. IT people not only need to understand data, they must contribute to data management strategies to support the business. Problems also arise when there are deviations from plans, and IT people need to uncover root causes, offer options, and contribute to effective decisions.
- Assessing Business Performance: The achievement of positive business results requires discipline, tools, and the consistently applied practice of analyzing financial and non-financial metrics (KPIs). Since all business outcomes invariably contribute to company goals, their collective performance needs to be monitored with proper feedback loops to every other capability.
As you master these capabilities, consider the decisions that need to be made and the outcomes that need to be attained. Think about what’s needed to harness the power of people through thoughtful negotiation, or about human capital development through coaching and mentoring. After a while, you’ll realize you’re inspiring a culture that serves the company’s business strategy. This is the point where everyone wins!