The Value of IT – Business Alignment

1. The Value of IT – Business Alignment Rebecca Wettemann Vice President Nucleus Research

2. THE VALUE OF IT/BUSINESS ALIGNMENTA closer look at business service management September 2007 Rebecca Wettemann Vice President rwettemann@nucleusresearch.com Nucleus Research www.NucleusResearch.com

3. 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 AccountancyRegistration #108024

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

5. IT versus line of business?

6. On a scale of 1 to 5, how effective is your IT/business alignment?

7. The challenge IT and Business have evolved … but not completely aligned.

8. 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

9. Trends in BSM – the IT view • I’m given fewer resources and more challenges • Given the pace of technology change, it’s hard just to keep up • The business should have a more realistic view of what IT can deliver

10. Nearly 60 percent of companies are not consistently measuring the value their IT projects deliver.

11. 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.

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

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

14. 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

15. Understanding Benefits Cost cutter Compliance Turnaround Believability Growth Sustaining Most direct 1st Order 2nd Order 3rd Order 4th Order Most Indirect

16. Understanding Benefits Cost cutter Compliance Turnaround Believability Growth Sustaining Most direct 1st Order 2nd Order 3rd Order 4th Order Most Indirect

17. Five steps to better BSM

18. 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

19. 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.

20. Factor 2 - Repeatability Will the application be used frequently or infrequently? The greater the repeatability of the application, the higher the potential return.

21. 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.

22. Factor 4 - Collaboration Does this task involve collaboration among groups? The greater the collaboration component of the task, the higher the potential return.

23. Factor 5 - Knowledge Will this task involve management of key information? The greater the use of knowledge managementthe higher the potential return.

24. 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

25. 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

26. 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

27. 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.

28. 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.

29. 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