Today’s Tuesday Reading is by Dr. David Sweetman, MOR Associates Program Leader and Consultant. David may be reached at [email protected] or via LinkedIn.
Spring cleaning. Wanting to open up some space in my house, I went through the junk drawer. It felt good to get rid of those extra pens and knick-knacks that had accumulated. Then I went to the pile of outdoor toys that the kids had outgrown. In the same amount of time it took me to sort the junk drawer, I opened up significantly more space in the garage.
The junk drawer and garage provide an analogy to help us consider where we invest in our organizations. What will be a sweeping success in creating value? In my spring clean-up, opening up space was what I valued, and the time in the garage was far more effective in accomplishing that.
In last week’s Tuesday Reading, we asserted “the leader’s role is to position the organization to be successful in a constantly evolving environment.” Of the five strategies we shared, over half of us said it was most compelling to explore what you can stop and start, or how to simplify in some way. This is the topic we’ll be exploring today: clarifying value and ROI.
Clarifying value
What is the primary goal of our teams? Creating value for our institutions. What is value? That which supports the missions of our institutions. How do we maximize our ability to create value? Through effectiveness, delivering what is needed to support the mission, and efficiency, doing so with as few resources as possible, While this is true at all times, it is especially pronounced in times of uncertainty and increased resource constraints. A tool that can help us determine this value is calculating the return on investment.
Return on Investment (ROI)
I realize for some, this term can cause us to cringe when it feels used devoid of value to the mission. However, the whole point of ROI is about clarifying the value to the mission. It is an important tool for our toolbox. ROI is about balance: how much it costs, and what we get for the cost. We want to keep ROI high. Ideally, investing a smaller amount that returns a larger value.
For example, early in my career in IT infrastructure, I renegotiated one of the highest-priced pieces of software in our portfolio. The software provided critical functionality, but we only needed one piece of it and were paying for an entire suite. Renegotiating was an investment of time, yielding hundreds of thousands per year in savings. This was a strong ROI when compared to investing similar time in less costly software.
Use data to drive decisions
As in the example above, start with where your teams spend the most time and resources. Understand the financial data in your area to know the biggest expenses. This is often staff time. Another approach: looking across the portfolio of services your teams provide, what are the most under-utilized services on that list? If you don’t know, how can you figure that out? Look for relatively high investment of resources and relatively low usage. These may be candidates for retirement. Or, perhaps they are candidates for starting advertising of the benefits and enrolling more users to increase the benefits to the institution. To increase ROI, we can increase the value and/or decrease the cost. We need the data to do this.
Effort and value are disproportionately related
In addition to considering services holistically to start and stop, think about the level of service offered. The Pareto Principle is a good guide: 20% of our effort and resource investment tends to produce 80% of our results. The remaining 80% of effort produces only the final 20% of our results, with diminishing returns. Where are we holding ourselves to a 100% solution when our users would be satisfied with 90%? Not pursuing that final 10% of benefit reclaims far more than 10% of our cost.
Know and meet the needs
This discussion of the Pareto Principle assumes we have a clear understanding of users’ needs. This is often not the case. We often make assumptions about what users want. While we’re often right in our assumptions, we also tend to assume extra functionality that isn’t needed, or underestimate other key needs, or we gathered usage requirements in the past (in some cases decades ago) that have since changed. What are some areas where we might benefit from a better understanding of true needs so we can get better at clarifying value and ROI?
Systematize
Repeatable processes, approaches, and automation applied across the IT portfolio can make us significantly more efficient. Back to the junk drawer analogy: while the ROI may not be there to sort the one junk drawer, what if you developed automated processes that could be applied to hundreds of junk drawers across the portfolio and result in significant aggregate value?
Some specific ideas
The thoughts above are designed to help us think strategically about what to start and what to stop. Those choices are based on many factors, most of which are common across higher education, but some of which are unique to your institution. Based on our work with MOR cohorts across the country, here are some specific ideas that you can consider for your institution:
Stop
- Any project without immediate value.
- Services where value has not been assessed.
- Large projects, chunk them into small pieces and pursue the pieces with the most value.
- Buying duplicative applications and services.
- Trying to use technology to solve process problems. Focus on the process to solve process problems.
- Over-investing in services not core to the mission or that have a weak ROI.
Start
- Leveraging usage and other metrics in decision-making, including when to stop a service.
- Refining prioritization processes and sticking with them.
- Identifying the “just right” level of investment in services and doing that.
- Implementing off-the-shelf services when customization doesn’t provide ROI.
- Learning from users who are most-efficient with our systems and use that to provide efficiency training or tips to those who aren’t.
- Explore opportunities for greater collaboration within and across organizations.
Conclusion
While we’re thinking about what to start and stop, sometimes we don’t need either. Sometimes we need to maintain services that provide great value at a reasonable price. As you use data to look at the house that is your organization and consider what to start and what to stop, focus more on clarifying value and ROI. Use the three lenses to consider this from strategic, political, and cultural perspectives and to leverage service, process, or other focus to best enhance value. Have sweeping success by looking to those larger items in the garage rather than the small nick-knacks in the junk drawer.
Thinking about what you can stop and start as an organization, which is your biggest need at this time?
Last week, we asked which action is most compelling to you at this time.
- 33% said consider what you can stop, and what you should start
- 24% said simplify, automate, and innovate
- 18% said integrate informational technology
- 15% said workforce planning
- 10% said leverage AI
This week we explored ways to approach starting, stopping, and simplifying with our service portfolios. In a future week, we will next look to integrating information technology. If you have further ideas or suggestions on these topics, please reply. It would be great to hear from you and if there are enough responses, we will share them in a future week for the benefit of the community.