Published:
March 31 2011, 09:17 AM
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3 Comment(s)
by
Robert Stroud
Do you have a service catalog containing a large number of IT components? If you do, do they have costs of the technology component and does it have the fully loaded costs including operational maintenance and enhancement? Additionally do you have metrics to measure the service in business terms that the business relates to, not simply server availability?
The answer is probably not, or partially at best, and yet you wonder why the business sees little value in the IT Department.
A fundamental challenge in most organizations I visit is the lack of correlation or connection between IT metrics and the business. Technical and process performance of IT services are typically measured in terms of response time, availability, raw costs, incident response times and so on but these IT metrics do not engender or communicate value to the business.
In the past IT has been defined and positioned as a technology provider working from the ground up, writing the applications, testing, promoting to production, enhancing and also running the entire infrastructure to deliver the service. Now each person involved in the delivery of the service is focused on their components and assuring their component but has little focus on the consumed service.
Moving forward, the relevant IT organization must focus on the service delivered to business and the value it offers. It is only when IT is viewed as efficient and valuable in the eyes of the business that value will be perceived. This requires a fundamental transition of the IT focus from a bottom up approach to a top down approach where you work with the business to define the business value metrics up front as part of the solution specification and requirements that are directly linked to critical business performance metrics external to the IT organization.
An example that I often use with IT folks harkens back to the time when I was in banking--the cost of a transaction. A fully loaded branch originated transaction would include a large component of non-IT costs such as premises, branch labor and so on and if you assume that the total cost is $20, the total aggregated IT costs may be $1 per transaction. (This assumes performance, availability, etc.). When the total cost of for an Internet transaction is maybe a total of $2, of which the IT portion is still $1, the business can make a decision to invest in offerings that move transactions from the branch environment and rationalize the branch network if they wish, but, this decision would then be weighed against customer value and expectations. In short the IT investment and then expenditure would be driven by the business strategy.
In summary IT MUST focus on business contribution.