Nodak Insurance [NASDAQ: NODK]

Is there a core principle of IT that informs how we can think about it in the business context? I believe that once IT is secure, sustainable and compliant, its fundamental functions are very straightforward: adding business value and reducing business waste.

IT Adds Value to Business Operations

Process Automation: IT adds value to business operations by automating business processes to enable getting more done on a per-unit basis, whether measuring in people, dollars, or any other cost metric. Automation is key to IT being a force multiplier, but the process that is automated must be effective. Automating bad processes only makes the bad happen more quickly.

Decision Support: IT adds value by providing tools and a data framework to make better business decisions. This is achieved through providing comprehensive reporting across the enterprise, orchestrating access to well-defined data sources and keeping the data current and secure. People &

Data Connectivity: IT connects the facets of the business ecosystem via Enterprise Architectural concepts: People, Systems, Processes and Data. IT enables the coordinated use of the Internet, productivity suites (email, word processing, spreadsheets, presentation tools, meeting & collaboration tools, etc.), document management and workflow systems, databases and repositories and other enterprise systems designed to support collaboration inside and outside the business.

IT Reduces Waste in Business Operations

“IT reduces waste through process repeatability, error reduction and rework elimination.”

Processes Repeatability: IT reduces waste in business operations by ensuring repeatable activities are successfully completed. Ideally, these activities will require minimal human intervention, avoid non-value-added steps, be compliant and be aligned with organizational values. The IT framework should provide well-designed and thoughtful processes that ensure unnecessary work is avoided and resources are efficiently focused on value-added activities.

 IT reduces waste through process repeatability, error reduction and rework elimination. 

Error Reduction: Errors in work activities result in poorer quality and lower productivity, and the effect can compound. IT provides tools to manage this by performing consistently accurate calculations, ensuring good spelling and grammar, monitoring and error-checking work product, validating forecasts versus historical expectations and improving the accuracy of the work. IT systems are only as good as their design, execution and the data supporting them, but through refinement and feedback they can evolve into effective tools in eliminating human error.

Rework Elimination. iIT reduces waste by reducing re-work due to loss of data or access to business services. Redundant backups, disaster recovery processes and business continuity preparedness are core IT deliverables and when properly implemented can prevent virtually all lost time and effort of recovery when there is a data or infrastructure loss. IT reduces business waste through process repeatability, error reduction and rework elimination.

IT Needs Governance and Controllership

“IT oversight must include defining the desired outcome, determining how to measure it and identifying the organizational and cultural drivers that define the business.”

IT processes must adapt to changing business conditions. The guidance of that adaption, as well as ensuring there is minimal drift away from the target process, requires governance and controllership oversight. At a minimum, this oversight must include: defining the desired outcome, determining how to measure it and identifying the organizational and cultural drivers that define the business.

Controls Definition: We must define what sort of measures provide meaningful insight into what is important to the business, such as system performance, process outcomes, user activities and data quality. These metrics can change over time, but everyone should agree on how we keep score. The use of these controls must then spread throughout the organization in the form of dashboards, performance metrics and communications to stakeholders.

Outcome Measurement: It is essential to set standards for evaluating the outcome of our activities. The business must have a clear vision of not only what constitutes success, but what indicates a course correction is needed. IT should be at the heart of pulling this information together consistently and comprehensively throughout the organization.

Context and Values Recognition: Organizations have a personality, a corporate culture that distinguishes them from others. This can be a positive or negative differentiator and injects itself into how the business operates and what it values as success. The way a company thinks about itself, its customers, its mission and values will influence what measures and controls are important. This self-definition guides how it will react to stress and change and ultimately what sort of value it will provide as a business.

Conclusion

IT execution can be incredibly complex, but the core deliverables are conceptually simple. Adding value and reducing waste are achievable and sustainable with a thorough understanding of the purpose of the business, the fundamental tools that are available and the well-defined controls, measures and context within which to govern.