If the car runs fine, we do not think about taking it in for service. If we are lucky, the car might indicate that it needs service.
It might be a simple analogy, but it describes well the way many businesses and organizations manage their critical software and IT systems. The problem is that those who have the main responsibility for the business as a whole are usually focused on the business and customers, and less so the software and IT systems that the business and customers depend on.
Although businesses are becoming more and more digital, and even though technology operates a greater part of value generation, when it comes to software and IT solutions that are absolutely essential to the business, senior management has a blind spot. They take it for granted that everything is running well and will continue to do so.
But that has no basis in reality.
When business critical software is not maintained, one of the biggest problems is that when faced with the consequences of this, it is too late. In our daily work, we seldom see or feel the need for maintenance. Eventually, systems can no longer be repaired or serve customers or help the business achieve its targets, and then it feels like a bomb hit. In a worst case scenario, we find ourselves in a situation in which the company’s business is seriously threatened due to events such as data loss or lack of accessibility.
At IT ADVISORY we recommend that you ensure that senior management has ongoing focus on how IT and software contribute to value creation. Specifically, we recommend making an effort in the following areas:
- Map out the business and technological value chains
- Explain how software and technology contribute to which values
- Determine which software and technological components it is important for the company to have full control over
Focusing on these three points makes it possible to evaluate business needs and opportunities and make qualified decisions as to which to software and technologies are in line with them. This helps to avoid blind spots that can have extensive, far-reaching consequences.
“When business critical software is not maintained, one of the biggest problems is that when faced with the consequences of this, it is too late. In our daily work, we seldom see or feel the need for maintenance
1) Map out the value chain for the business and the technology
The value chain describes the value creation of a business’ products, solutions and services, and how they are delivered to the customers. In order to ensure the best possible overview of the company’s business critical software and IT systems, a good exercise is to map out the value chains for the business and the technology. It can be worked out as illustrated in the example below, where IT solutions are mapped into the business processes.
Mapping helps ensure a coherent understanding of a company’s most important IT and software systems. At the same time, it is an important starting point in the prioritization process.
Keep in mind that a value chain is never stronger than its weakest link. Business risks and opportunities can be influenced by many different systems. When mapping the technology, it is important to cover very area, including standard software, SaaS, cloud solutions, proprietary systems, open-source components, integrations and more. There is often a combination of internal and external systems.
2) Make explicit exactly how software and technology contribute to value
After the business and technological value chains have been mapped out, it is time to look at what specifically each individual software and individual IT system contributes to the greater whole. Does a software component play an active role in the preparation of the product, a solution or a service for the customer, or does it play a smaller role?
A company needs to know exactly how software and IT systems form part of value creation, especially as seen from the perspective of the customer. This creates clarity, which leads to sharper focus and enables effective prioritization. In this way, a company can avoid situations in which it is unable to deliver to the customer because business critical systems have not received enough attention, and then fail suddenly. Our suggestion is that companies analyze their software and IT systems based on the matrix below.
The vertical axis measures business value, indicating how critical a system is within the value chain. The horizontal axis measures how much attention and maintenance the system is getting at present. According to the matrix, the primary focus should be managing the systems that are located in the blind spot, and secondarily, to evaluate whether too much is being invested in systems that fall under the category ‘waste of money’. An example of a typical blind spot could be a software component that no longer works, either because it was designed for a technology that has not been upgraded, it is outdated, or is no longer relevant in the market.
At IT ADVISORY, we ask the following three questions when we examine the criticality (business value) of an IT system or software program:
- How do we generate value if the system is inaccessible?
- How long can we generate value if the system is inaccessible?
- If the system breaks down, how vulnerable are we to data loss?
3) Determine which software and technological components a company needs to have full control over
When it has been determined (1) which software forms part of the value chain, and (2) the degree to which it contributes to value creation, then (3) focus can turn to how software and IT systems can best be managed as far as regular maintenance and their life cycles.
It is worth noting that critical systems do not necessarily have expensive maintenance contracts or tech support 24/7. What is most important is to come to a decision on the risk and its management, and know what can and should be done.
It is also important to decide which software and which systems a company needs to have full control over. At IT ADVISORY, our recommendation is clear. It is essential to be in control of the systems and software that directly affect the value chain in a big way, and to keep focus on their maintenance since the company’s business model is based on them.
If a company is not in control of its critical software elements in the value chain, the consequence could be that the company is unable to respond quickly to changes such as new customer needs, new opportunities, and new products released by competitors.
This is why it is important to always ask the following questions about the management of your critical software and IT systems.
- How much freedom do we have to act ourselves? How dependent are we on external suppliers and collaborators?
- What are the risks associated with the degree of control we have over individual systems?
Do you have insight into your business and technological value chain?
At IT ADVISORY we work in the field between IT and business. We are 100% independent and can help your company or organization evaluate business needs and risks that are related to technology. We offer a free consultation where we serve as a sounding board and give you feedback on your specific situation. You can hear more about our strategic work with managing keeping a check on software and technology.
Give us a call or book a free consultation with us here .
About the authors
Kristian Sørensen is CEO & Sr. Principal at IT ADVISORY. As a trusted management advisor and IT strategy expert, Kristian helps organizations set structure and direction for strategic initiatives and projects. Reach out to him at firstname.lastname@example.org.
Peter Dalsgaard is Ass. Partner at IT ADVISORY. He is a business-oriented IT management consultant and operates on all organizational levels. Peter is a specialist in software development, technology, design and the management of agile transformations in the IT sector. Reach out to him at email@example.com.