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ITIL v3: Bridging the Gap Between IT and Business

v3 builds on v2, greatly expanding its usefulness and helping CIOs make the leap to business strategist, writes ITSM Watch columnist guest columnists Augusto Perazzo and Glen Willis of PA Consulting.
May 29, 2008

Augusto Perazzo,Glen Willis

Historically, ITIL has been predominantly applied within the operational support (downstream) areas of IT. The focus has been on maintaining existing services at a satisfactory level of quality and on increasing operational efficiencies. In general, to do more with less.

With the vast majority of all IT spending is focused on “keeping the lights on”, IT organizations with an operational focus are struggling to introduce new services in order to keep up with changing business needs. Furthermore, new products and services have been traditionally delegated to project based IT functions such as application development groups, which their own processes and methodologies with very little consideration for operational realities.

So, how do organizations that have established ITIL programs with an operational focus facilitate the creation of new services and ensure greater integration among project based IT functions, IT operations and the ever changing business demands?

They must shift the focus from the pure operational management of deployed services to a more strategic view of the entire service life cycle. ITIL version 3 (v3) comes to the rescue by incorporating a more strategic, innovation focused and integrated view of service management, better aligning the IT service portfolio to the business strategy and providing project teams with an honest and realistic view into the operational realities of an organization's enterprise.

From Business as Usual to Innovation

Most experts believe that approximately 60 to 80 percent of the IT budget is allocated towards operations, spent on managing day-to-day activities. Nonetheless, according to industry surveys the majority of CIOs would prefer to spend much more of their IT budget on innovation. Trends such as sourcing and IT commoditization are the results of companies trying to divert a greater portion of the IT spend from the operational areas to the areas driving innovation and next generation IT solutions.

CIOs would much rather be recognized as a business strategist than as an operational guru. However, the reality is far from such ambitions.

One of the main implicit assumptions in ITIL version 2 (v2) is that the services to be managed were already in place. The question was how to best provide such services to the business. This led most ITIL implementations down the cost reduction path. IT executives saw ITIL as a set of best practices to manage existing services in the most effective and efficient manner.

This is the operational guru view.

There are many success stories on how ITIL guidance has helped organizations reduce spending on IT operations and become more effective at it. Nonetheless, businesses are increasingly demanding for IT to be an enabler of innovation and to focus on more strategic concerns such as creating competitive advantage through the development of new products and services.

Cost reductions while still imperative should not be the primary focus of a well aligned IT organization. Organizations must understand once and for all that there should be no separation between business strategy and IT strategy. In times where the technology infrastructure touches, supports and enables all areas of business, IT is the business and the business is IT. CIO’s must become business strategists.

v3 builds up on the operational excellence concepts of v2 and extends service management towards a more holistic approach. With the life cycle mindset embedded in v3, IT organizations are better equipped to understand the business needs, to have a closer dialogue regarding business strategy and to best support it through the creation, design and implementation of relevant IT services that are in sync with business requirements.

The Service Strategy phase in the v3 life cycle provides such guidance. It encourages IT organizations to understand why a service is needed from a business perspective and how to best align to and pursue IT capabilities that are in par with business needs. It places IT as a core strategic asset, participating and often leading the business towards the innovation path.

A key concept at the Service Strategy phase is the definition of Market Spaces. It recognizes that a service or product must be developed according to a specific need and thus must keep the target customer(s), be it internal or external, in mind at all times. There is no justification for providing a service that is of no or little relevance to its consumers, no matter how efficient you can deliver the service.

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