August 21

Some meetings ended early on one of my trips away from Boston a few months ago, and I took an Amtrak "Regional" train back. Not an Acela Express, this train makes 6 or 7 stops (compared to 2 on my Acela trips) and can't reach Acela's speed, but it made no sense to wait two hours for the faster train.

At about 6:30 I went to the café car for dinner. Noticing that there were only 3 passengers in business class, I asked the café attendant if this was normal for a Monday on this train. She didn't know because she didn't serve this train regularly.

But, the conductor happened by and she asked him.

"A Monday? It's like this on every Monday after Labor Day, ramping up slightly to Columbus Day, then dipping, rising slightly again for Veteran's day, then down until it goes crazy before Thanksgiving."

To the conductor, the pattern was clear from years of observation. He understood the value proposition and his customers: This is a train for students and for family members who have more time than money. Low cost matters most, speed of service less so, and (as one can guess from experience with these trains) on time performance isn't part of the consideration. Business class only fills up when coach sells out.

The conductor knew his value proposition. What's yours?

IT's Value Proposision

As we head into the new year, you, as IT leader, may well be budgeting and planning next year's IT services. If planning and budgeting are a struggle, you may want to think about that question.

What's a value proposition? It's what your internal customers "buy" with the budgeted funds you get. For service organizations, it's the combination of service characteristics, relationship, image, and price. (Some IT organizations also publish software to customers or operate subscription websites, and for those, the fifth element of value proposition is product.)

This month, let's consider what you have to offer in the two of those areas - image and service.

Image "What does image have to do with IT?", you may well be asking. Plenty.

A mechanical Rolex can't keep time to the standard of an electronic watch. Yet it's perceived as more valuable than, say, a decent electronic Seiko that's more accurate. So you know that "value" is not all about actual quality. Image matters.

What's the image of your IT department? Are you perceived as a cost center? Have you cultivated that by providing commodity services, making no contribution to the bottom line, with marginal support and an uninspired relationship with the business, all for the lowest price possible?

Or are you perceived as a business partner? Can you (personally) read a P&L statement? Can your business analysts carry on a conversation with your customer community without using any terms having to do with technology? Do you publish the value you've brought to the company, say, in a newsletter?

Image is an important part of a value proposition. Cultivate the right image, partly in matters of communications and style, and partly through the services you offer. You'll be perceived as more valuable, and budgeting will likely be less contentious.

Service What's the value of your service?

Utility services like email are a commodity. You and your IT group bring very little unique value to the company by providing these.

Your biggest value is in making financial improvements to the company, in helping the company run better, and in giving the company competitive advantage.

How? Guide your internal users to more efficient business processes. Select, deploy, and support applications that reduce operating cost, improve efficiency, and grow revenue. Look for ways to apply technology in novel ways to make the company more competitive.

This is perhaps the single most important component of your value proposition, and it certainly will contribute to your image.

Next month, we'll comment on relationship and price, the other two elements of value proposition.

Best Wishes

To all of our friends and colleagues who have supported us, engaged us in stimulating conversations, or taught us something, we thank you. We wish you the best for a Healthy and Happy New Year!