How to Assign Value to an IT Service - Page 1

May 26, 2009

Dennis Drogseth

IT organizations have come a long way from the days when they declared victory because of an SLA around frame relay throughput. Or have they? While many SLAs, OLAs, and other contractual agreements have indeed become more application-oriented and are moving from raw availability to performance and even more complex user experience criteria, meaningfully assigning business-value to an IT service remains elusive at best.

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.

"Common Sense"

But for now I’d 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.
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Tags: IT management, IT Leadership, value, EMA, IT performance,

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