BSM Views

Psychologically, consumers derive value a item from the price they pay. Otherwise, who would buy $450 designer jeans? Recently, I listened to a Stanford talk where Christine Benninger, President of the Silicon Valley Humane Society, has dramatically and positively transformed the organization. One of the first major changes made was to increase the animal adoption fees from a paltry $45 to over $100 with cats and dogs being valued equally. This change increased the perceived value of the animals and had the desired effect of dramatically reducing the returns by 90% .

This got me thinking about IT and how perceived value matters in IT. As IT continues its evolution from the obscure back office to the strategic limelight, its customer service orientation becomes critical. There are two sides to customer service, the actual service delivered, and the perception of IT in customer’s mind (brand image). The service delivered can be improved via process and tools, but to directly effect perception, minds must be altered.

One straight forward method could be to use fake charge backs. Institute displayed prices for the services offered by IT, but do not actually charge the customer on the back end.  By making customers aware of the value of the service being offered, it helps instill the idea that tangible value is being received.  When Mary accesses self service for a password reset, she understands there is an associated value/cost of $25. “Wow! that is like 5 Starbucks Lattes”, she says.  Value is reinforced, and it might even help reduce the request activity of that special group of high maintenance users.

Beyond the customer perception, tracking charge backs , without the financial follow through, will have the benefit of adding a financial dimension to the service management reports, an important step in migrating IT from cost center to profit center.

Now, I do not know if this has been tried somewhere, or if it would have the desired effect, but is something to think about for IT organizations working to improve their brand.

I hear time and time again about the IT still being seen as a cost center, and the CIO as management rather than executive, despite the title. This is changing, but it still, there are lots of organizations where IT still has a unflattering reputation, and it not viewed as strategic to the bottom line and success of the company. This is really ironic, as it seems that Wall Mart took over world with great logistics, supported by great IT, is this example not good enough for people.

The reality, as anyone in IT knows, is that IT is now a critical part, and likely most strategic gear in the company whether it is acknowledged or not. As this transformation occurs, the CIO gains greater power, and greater responsibility. Some still ask, why CIO’s are not yet equals with the C execs. Lots of writers postulate reasons, and there are seminars to go with those reasons, but in the end it comes down to the leadership of each CIO. As one CIO I know put it “If you run a tight ship, it will be recognized and you will have a place at the table.”

Here is an interesting article on all the other reason: Why CIOs Struggle to Become More Strategic.