IT is what drives business today! The fact is that business profitability and shareholder loyalty is dependent on the high availability, dependability, security and performance of IT services. This fact has made the relative maturity or immaturity of IT management highly visible. This is further complicated by the fact that many businesses outsource the technology to deliver their core business processes to third party vendors such as ASPs, Network Operating and Data Centers, etc. Many companies state that due to the rapidly changing nature of their business, the recent downturn in the economy, and the pressure from competition to become more cost effective while still achieving the same or greater profits and output, they do not have time or resources to apply to process improvement. In fact, this is the time when processes are critical.
During the past decade, the redesign of business functions as processes have become an established strategy for reducing costs, shortening cycle times, and improving quality and customer satisfaction. There is a growing recognition that IT is a key driver of business process improvement, and this has led to a predictable shift in the expectations for the IS organization to emulate the process changes taking place within finance, sales, marketing and manufacturing. In some cases, this has led to the creation of such organizational structures as relationship managers, steering committees and user councils to improve the alignment of Business and IT planning. Another effect of the change was to look at functionally separate IT activities as linked sets that share common information and customers.
CIOs today are interested in allocating costs to the less tangible benefits of service provision or business performance. IT organizations are striving to detect and eliminate problems before, or at the very least when they occur. This is due to the increasing rate of change within organizations that require quick decision-making and less reaction time. The problem with traditional measures, such as revenue or market share, is that they reflect a delayed snapshot of business performance, thus making it too late to avoid a problem once detected. By having a balance between these lagging indicators and other measures that help forecast those early warnings, organizations can begin to manage proactively and more precisely. Additionally, measures such as customer satisfaction, staff training, internal processes and service metrics will be recognized as those leading indicators of whether an organization will achieve its business goals.
Measuring these provides early warnings and a more accurate measure of the internal business or IT contribution. These internal metrics may also be used to measure and manage the operational aspects of the specific internal business or IT function. This helps managers to forecast, diagnose and optimize their operation and the contribution it makes to the business.
Companies are beginning to value return on investment by addressing three key inputs to any project - people, process and technology. They then translate these into quantifiable returns, related to utility of the products and services they offer and the cost of delivering them. Once investments are viewed in this context, it is easier to define expected benefits and subsequently, measure those returns. Another crucial consequence is that this explicitly demands the creation of multi-skilled, cross-functional teams with shared accountability and responsibility for success. No longer can users point fingers at IT and vice versa, because the degree of mutual dependency for success is explicit.
There is a growing body of compelling evidence that supports ITIL implementation for its benefits and value to the business, such as achieving good governance. According to a global survey of C-level executives conducted by KPMG in 2004, only 50% of respondents believed there were risks associated with not aligning IT with the company's overall business goals and less than 20% of organizations used recognized IT governance frameworks such as ITIL effectively. Other ITIL adoption research has consistently revealed a growth in the best practice framework, especially among large enterprises. In a 2004 Gartner survey, the number of respondents who said they applied ITIL in their enterprises increased by 10% over 2003.
With ITIL awareness rapidly gaining momentum in North America, many organizations are considering an action plan for implementation. According to an InformationWeek online poll gauging ITIL adoption among over 450 IT professionals, 57% were either already in the planning phase or were expected to start planning in the next six to 12 months, whereas 30% were actively engaged in ITIL implementation. Based on a survey of more than 500 IT executives, the majority of top 10 management priorities for 2006 are directly related to the benefits of implementing ITIL best practices, including business continuity/risk management; controlling IT costs; improving internal user satisfaction; and ensuring regulatory compliance.
Forrester forecasts ITIL adoption among billion-dollar companies continuing to increase to 40% in 2006, and to 80% by 2008.9 After 2008, ITIL will be set to become the de-facto best practice service delivery standard methodology that every IT department will have to adhere to.