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IT Costs, Value and Role of ITIL

Nov 21, 2006

George Spafford

Excessive cost cutting causes death spirals when there aren’t sufficient resources to even maintain productivity and the firm begins to slide backward. IT must be sufficiently resourced to enable the functional areas of the firm to attain their objectives while also helping to mitigate risks.

To achieve this, IT must undertake projects that enable the business and then deliver those services to the business in a reliable manner over time such that the functional areas can maximize their utilization of the services designed based on their requirements. Granted this can not happen regardless of cost but, the point is, that cost, value and associated risks must be properly managed and communicated.

One of the problems in the past has been that IT people tried to develop financial models without understanding what management was looking for (not to mention limited accounting knowledge or support). As a result, senior management would look at a given analysis and immediately question the report’s credibility by challenging the logic employed.

It shouldn’t have come as a surprise the business person would have a very different perspective than IT. How many 40 page IT reports to management have wound up unread in the trash because what senior management needed wasn’t understood by the group creating the report? Let me assure you that we have wasted a lot of paper over the years!

My call to arms would be for groups to leverage their ITFM teams to not only perform their traditional role but to also help IT work with the business and develop valuation models that management can relate to and agree with. These financial specialists must help us evolve from a focus on costs to one of value.

Perhaps just importantly, we need the ITFM specialists to help IT to learn how to speak in the language of the business—dollars and cents. Furthermore, we need to leverage their skills to make business decisions and ask ourselves hard questions that we answer before others ask.