Introduction

In today’s rapidly evolving digital landscape, IT and technology have become pivotal to business success and as a result, navigating IT investments has become a critical challenge for modern organizations. Aligning these investments with business strategy has become not just a necessity but a strategic imperative to ensure that each investment not only supports but also drives strategic objectives.

Furthermore, funding from continuous improvements and operational excellence initiatives driven within the business or IT organization are often expected to drive out cost, releasing funds that can be used for transformation and change rather than operation.

In this article, we will present an introductory overview of the Opticos model, designed to address these key challenges. The model assists organizations in adopting a value governance approach for IT investments. The aim of the model is to create a comprehensive model that supports the reader in connecting tangible business values to IT investments ensuring a clear connection between technology initiatives and business strategy. This alignment is crucial for realizing the full potential of IT in driving business success.

We’ll explore how the Opticos model facilitates this alignment, transforming IT investments into strategic assets that propel organizational growth and operational excellence.

The Opticos Model

The Opticos model is an evolution from common concepts addressing areas such as value governance, portfolio and investment management, and business impact value tracking, in combination with customer assignment experiences.

Opticos has built its service offering and advisory around the three-step approach and the four key dimensions. The foundation of the model is depicted in a three-step approach that when done right will ensure that IT investments within an organization will always support the strategic objectives of the business, and by so doing ensure the realization of business values. The four key dimensions are interconnected and essential to drive business value by identifying and prioritizing what IT investments will support the business the best based on its priorities. Both these concepts will briefly be introduced in the following.

The three-step approach

The three-step approach can be used regardless of operating models or organizational design. However, it is important to keep in mind that to navigate through these steps, different tools need to be used to successfully implement the model, and that the tools are chosen with regard to organizational procedures and existing governance.

What the three-step approach offers is a structural approach to aligning IT investments with business strategy and ensuring that each investment has been approved and that it is providing the value that was intended by value tracking through the entirety of an investment’s lifecycle.

1. Business strategy change implies that each organization’s business strategy normally contains elements where change initiatives have been identified as required for the strategy to materialize and be achieved

2. Strategic objectives define the requirements for executing the identified changes into a select number of objectives that can be further detailed and prioritized. These objectives can put focus on any function or area within the organization such as HR, Sales, Supply, R&D, ESG, etc.

3. Business capability mapping breaks down the strategic objectives from a business capability perspective, and by doing so, also provides the foundation for what IT needs are required to secure the business capabilities at an enterprise

4. Investment domains define the specific IT requirements at a platform or solution level, closely aligning with the conceptual mapping of business processes. This approach ensures that the IT investments support the operational and strategic needs of the business

5. Investment management is where the investment domains within IT have been converted into specific IT solutions, platforms, domains or transformation activities that will support the strategic objectives to materialize and subsequently enable the business strategy to be fulfilled.

At this stage, identified change initiatives have been converted into programs or projects that need to be priced in order to be prioritized. To facilitate this, an initial business case is typically required. This business case should originate from the originally envisioned business benefits and expected value outcomes.

6. Value tracking is needed during the entire lifecycle of each investment in order to ensure that the expected values identified and showcased in the approved business cases are realized. For this, clear ownership and metrics are key

Four dimensions

The four dimensions can be used to manage IT-driven change where IT is leveraged or required to fulfil the business strategy and the expected values. The tool can be used as an end-to-end process to ensure value realization as well as a tool to transform the current IT organization focusing on operational efficiency and the release of IT funding that can be used for transformation instead of operations.

DEFINE – The desired outcome of the business strategy provides guidance for how funding should be allocated to ensure that the expected business values can be realized. To ensure the right focus, the three-step approach can be used to convert the business strategy into tangible strategic objectives, and business capabilities that are easily mapped to enablement and requirements within IT

TRANSFORM – Focuses on achieving operational excellence and cost optimization within both the business and the IT organization. Traditionally, standardization, consolidation, and sunsetting of the current IT landscape contributes to release funding by lowering operational cost that can be used for change initiatives requested by the business

INVEST – This dimension is the culmination of DEFINE and TRANSFORM where available funding is distributed to IT investments that contribute to fulfilling the business strategy and the strategic objectives set by the business. By doing so, IT investments will only be realized where tangible values have been identified that in a cohesive way can be measured and tracked

TRACK – Focuses on accountability and responsibility for the investment, business case ownership, and tracking value realization over the entire lifecycle of the investment. It is not uncommon for organizations to focus on the project phase and take control over project execution, capitalization, and cash flow, but lose themselves in the actual operational phase of the outcome from the investment in question.

It is important to, for instance, reflect over: “Did we manage to automate the intended processes so that x number of FTEs could be used elsewhere? Did we manage to decrease our storage footprint by consolidating and lifting local storages to the cloud and applying active management of the solution?” just to give a few examples. Securing the full potential of value realization is only possible by adopting a lifecycle perspective

Putting it together

Jointly, the three-step approach and the four dimensions offer a powerful toolset that can be used to align IT investments with the business strategy where transformation requirements are driven or leveraged through IT and new technologies. While the three-step approach addresses how the business strategy in a structured way manifests itself in IT investments, measured and prioritized by business value, the four dimensions put the realization of the business strategy in an IT strategic and operational perspective.

Given the output from the three-step approach, how should IT (and the business) distribute its funding given current operational requirements and future transformation expectations? How should the IT organization balance funding of its own service portfolio to the portfolio of investment, e.g. portfolio, program, and project management, and how should the expected and realized values be quantified, prioritized, and tracked? With the Opticos model, the users can choose to apply the whole model as well as cherry-picking relevant or prioritized parts. The model can be used as a toolbox of governance activities and metrics as well as a means to build understanding and collaboration between IT and the business.

Summary

Organizations of today need to ensure that IT investments are made based on what business values they will contribute to realizing. Strategic objectives of the business strategy need to be linked to business capabilities, processes and supporting IT solutions. With limited funding, only investments in IT that contribute to fulfilling strategic objectives should be approved and prioritized. To raise and enable funding, many organizations need to optimize and streamline their current business and IT operations, often through digital transformation or automation, consolidation, and modernization.

Regardless of where you are in your business transformation journey, scaling and leveraging new technologies and IT to become more competitive, more innovative, or more agile, Opticos can help you ensure that your IT investment portfolio is governed, tracked, and aligned towards your long-term strategic objectives of your business.

 

Authors

Mario Gonzalez Muñoz & Teodor Danielsson