How to Assign Value to an IT Service
On the one extreme, there are e-business websites where the service is the business and there is a one-to-one link between the IT service and revenue. On the other extreme, you might look at provisioning remote workstations with Microsoft Office for end-user productivity. But in between is a whole kaleidoscope of complexity with Web 2.0, SOA, supply chains, and extensions of IT services into managing business infrastructures (such as manufacturing lines and transit systems).
How do you even begin this discussion? Who do you invite to the conversation? ITIL and other initiatives do a pretty good job providing effective departure points for similar conversations within IT. Service Strategy in ITIL v3 begins to tackle this largely uncharted arena as a part of its larger vision for service lifecycle management. It suggests evaluating your market space and competitive landscape, while linking IT services to financial planning as strategic financial assets. Without pretending to be an ITIL expert in service strategy, I can recommend it as one framework with which to get started.
But for now Id like to provide recommendations drawn from my own common sense observations including research and consulting interactions with IT and service provider clients. So, to begin, I would suggest starting with the most low-hanging fruit, and build from my last column It is Time to Think Beyond IT. What opportunities does your vertical suggest in terms of IT services? And where might you extend your capabilities to provide unique value? A few examples might be:
- Instrumentation, asset management and monitoring tools for managing manufacturing lines, power grids, transportation systems, or retail-outlets in terms of inventory/sales interaction. Some businesses even track staffing-to-inventory ratios electronically so that peak requirements for staffing can be anticipated in a more granular and proactive manner.
- Healthcare is a vertical with huge possibilities for growth in IT services for everything from minimizing back-office faxing of records to sharing diagnostic information among specialists in different areas.
- Financial services have long been an innovator in delivering services and analyzing financial markets through computing. One could argue that in some cases the level of automation has gone too far, precipitating a built-in computer-driven reflex for panic or euphoria that in non-normative times (e.g., the present) can contribute mightily to the problem at hand. But intelligent (vs. lazy) use of good technology is never more in need than in a financial sector in search of a new footing with improved transparency, visibility and longer term reliability.
- Telecommunications has of course always been an information technology―driven vertical, but most applications have been siloed and mostly infrastructure oriented with the exception of billing and accounting for paid services. The ability to manage more effectively as a business across silos, and leverage more detailed market and customer information in conjunction with operational management and capacity planning, is still an area ripe for significant growth.
Moreover, as telecommunications providers become more interested in strategic relationships with enterprise clients, a shared partnership in applications management will become one of the dividers that separate innovator winners from commodity losers. And this of course spins back into the larger questions being raised here about business alignment and value.
From these and other consulting and research discussions, Id like to propose the following checklist of sample questions to ask yourself in trying to assign value-to-cost relationships relevant to your services and the services you provide to others:
- To what degree are you already a (de-facto) service provider with a defined list of services supporting a defined list of constituencies? These can include internal customers, business partners, and external customers/consumers.
- Who are the business owners for these applications/services? Who are the IT owners for these applications?
- Where are low-hanging business metrics (e.g., revenue, products produced, dire situations as in medical, social care, military, business staffing, etc.) most evident?
- How can you assign business vs. technical value around softer services involving productivity, communication, or information access? (Here the answer is dialog with your customer community both in terms of individual users and their executive leadership. But dont expect any one person to know the answer before hand. Target what you believe to be the most important of these softer applications and expect a process of discovery. Dont assign arbitrary or simply convenient metrics just to get this out of the wayyoull be living with these metrics for a long time and your organization will be measured by them.)
- To what degree are these delivered services dependent on services provided by other service providers in the general sense? These could range from hosted data centers, to telecommunications providers, to systems integrators with (broad or narrow) on premise responsibilities, to MSPs, etc. How can you engage your service providers better in your requirements for optimizing value-to-cost in key services? How can you achieve visibility and accountability into these interdependencies? Which service providers are willing to proactively share in that conversation? Usually, I see a mix of willing, willing if nudged, dragged kicking and screaming and impervious". Feel free to use this ranking and see where it leads you and your service provider friends.
- Ditto all of the above (more or less) for business partners who are interactive in your IT ecosystem and with whom you may share critical data, or provide access to geographically, technically or business/customer-related information that you all, as a broader ecosystem, depend upon.
- Prioritize, prioritize, and prioritize. Start with a focused approach on what you believe to be your most critical business services and begin this journey from there. You almost invariably will learn things that cause you to re-prioritize, which is all part of the benefit. (This, by the way, is very much a 2009/10 and beyond opportunity, as I believe its now safe to say that optimization-to-value has become an imperative rather than a nice-to-have.)
If the phrase aligning IT with the business has become an onerous cliché, its because both IT and the business have evolved to become so non-generic that the phrase is now little more than a vapid equation. And if the BS in BSM (business service management) suggests more colloquial roots, its because the monolithic idea of BSM quickly disintegrates before these varied realities. I havent done any more than scratch the surface with this list of questions and examples, but I hope Ive gotten at least some of your creative energy going around this challenge. And, as always, I look forward to hearing your thoughts and perspectives, as well.