The Value of IT

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The Value of IT Business Alignment

• Rebecca Wettemann
• Vice President
• Nucleus Research

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THE VALUE OF IT/BUSINESS ALIGNMENTA closer
look at business service management
September 2007

• Rebecca Wettemann
• Vice President
• rwettemann_at_nucleusresearch.com

Nucleus Research www.NucleusResearch.com
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About Nucleus

• A technology advisory firm delivering
  investigative analysis and advice.
• 1000 published ROI case studies
• 4.7M ROI tools distributed
• Research centers in Boston, Paris, and London
• The only firm registered with the National
  Association of State Boards of AccountancyRegistr
  ation 108024

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Agenda

• The IT/business alignment challenge
• Business service management trends
• 5 steps to better BSM
• Examples
• Conclusion

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IT versus line of business?
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On a scale of 1 to 5, how effective is your
IT/business alignment?
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The challenge

• IT and Business have evolved but not completely
  aligned.

Best and worst-case scenarios Binary bits and bytes
Why is this hanging? 99.99 isnt bad
When can I have it? Limited resources
Me me ME! SLAs ensure consistency for the average user
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Trends in BSM the business view

• I installed my own wireless network at home
• Given the pace of technology evolution, things
  should work
• IT should understand what the business needs
  and deliver

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Trends in BSM the IT view

• Im given fewer resources and more challenges
• Given the pace of technology change, its hard
  just to keep up
• The business should have a more realistic view of
  what IT can deliver

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Nearly 60 percent of companies are not
consistently measuring the value their IT
projects deliver.
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SOA alone is not the answer

• Companies are adopting SOA to drive
• Business process improvement (45)
• Portals (32)
• Master data management (27.4)
• Partner integration (24.5)
• But
• Fewer than 4 in 10 developers use SOA.
• SOA impacts only 27 percent of projects.

Without management, SOA is just an integration
project.
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Business service management

• BSM links the availability and performance status
  of IT infrastructure components to
  business-oriented IT services that enable
  business processes.

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The old answer

• Measure and benchmark every SLA, KPI, data point,
  and throughput to show systems work (most of the
  time).

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The better answer

• Measure what makes sense, that is, what impacts
  the bottom line.
• Revenues
• Margins
• Profits
• Identify opportunities to increase each factor
• Revenues
• Margins
• Profits

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Understanding Benefits
Cost cutter
Compliance
Turnaround
Believability
Growth
Sustaining
1st Order
2nd Order
3rd Order
4th Order
Most direct
Most Indirect
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Understanding Benefits
Cost cutter
Compliance
Turnaround
Believability
Growth
Sustaining
1st Order
2nd Order
3rd Order
4th Order
Most direct
Most Indirect
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Five steps to better BSM
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Step 1. Focus

• Identify key areas that drive changes in revenues
  and margins.
• Prioritize areas from greatest to least impact.
• Strategy Five key factors
• Technology
• business-focused reporting
• real user experience monitoring

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Factor 1 - Breadth

• Does it impact a lot of people, or only a few?

• The greater the breadth of the application, the
  higher the potential return.

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Factor 2 - Repeatability

• Will the application be used frequently or
  infrequently?

• The greater the repeatability of the application,
  the higher the potential return.

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Factor 3 - Cost

• Is this a costly or relatively inexpensive task?

• The greater the cost of the task, or the greater
  the benefit, the higher the potential return.

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Factor 4 - Collaboration
Does this task involve collaboration among
groups?
The greater the collaboration component of the
task, the higher the potential return.
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Factor 5 - Knowledge
Will this task involve management of key
information?
The greater the use of knowledge management the
higher the potential return.
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Step 2. Put feet to fire

• Link SLAs for specific applications to specific
  people
• Strategy
• Map expertise to org chart
• Technology
• Root cause analysis
• Automated delegation

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Step 3. Make small adjustments immediate

• Define the range of variability that is
  acceptable to the business.
• Enable IT to make small adjustments immediately
  before they become issues.
• Strategy
• Delegate monitoring responsibility
• Technology
• Dashboards, analytics, and data mining

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Step 4. Evolve toward predicting instead of just
correcting

• Broaden the conversation about how to improve IT
  service delivery.
• Strategy
• Huddle regularly! Use 5 factors to structure
  the discussion.
• Technology
• Real-time and historical analysis, service desk
  metrics

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Step 5. Keep going!

• Make the business case for greater IT business
  alignment.
• Strategy
• Get the CFO involved and use a standard structure
  for articulating bottom-line improvements.
• Technology
• End user experience monitoring, feedback loops
  back to the business case.

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Summary

• IT business alignment takes both strategy and
  technology.
• Small adjustments when needed are more effective
  than big bang course changes.
• With a strong foundation and some structure, IT
  can articulate the value it delivers.
• The goal is to be proactive in identifying
  problems, presenting alternatives, and presenting
  opportunities.
• Business service management is an ongoing process.

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Resources

• Nucleus Research Web site
• www.NucleusResearch.com
• Nucleus Research knowledge center
• Tutorial
• B20 ROI Quick Reference Guide
• A11 Managing Payback and Risk
• A10 Maximizing ROI
• A21 The Strengths and Weaknesses of TCO
• A4 Human Factors Impact Application Value

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