Charge businesses to prove value of IT services, say CIOs

Charging business units for IT services and new technologies, such as service oriented architecture (SOA), is creating a greater understanding of the business value of IT investment in companies, according to senior IT professionals.

Charging business units for IT services and new technologies, such as service oriented architecture (SOA), is creating a greater understanding of the business value of IT investment in companies, according to senior IT professionals.

The latest findings from Computer Weekly's CIO Index, which was based on interviews with more than 100 senior IT leaders in May, reveal that 77% believe it is getting easier to demonstrate the business value of IT. This figure has risen from 66% in February this year.

In addition, the number of IT directors systematically measuring the business benefits of IT is increasing. In May, 54% were doing so, up from 42% in November last year.

One way to demonstrate the value of IT to the business is to make internal departments pay for IT services, said Paul Butler, IT services director at Rolls-Royce, who contributed to a Corporate IT Forum seminar on the topic in March.

"By charging back IT, you are trying to highlight to business managers what IT is valuable to them and what is not to make them more aware of the consequences of their own IT consumption in a simple, transparent way," he said.

"Charging back is also about trying to change the perception of IT from being just an overhead or a cost centre, to being perceived as a valuable contributor to the business. If people buy, they are buying because they believe what they purchase has value, otherwise they would not be buying it, and that has an important impact on how IT as a whole is valued."

Valuing IT resources

Andrew Mellors, head of IT business management at defence and aerospace company BAE Systems, also contributed to the Corporate IT Forum seminar. He said that giving business units information about IT costs, such as the support costs for each business PC, can help them value their IT resources.

"It is human nature to treat something with a high value differently to something with a low one. Your pricing mechanism has to reflect this when you are communicating to users the value of their IT services."

Steve Burrows, IT director at laundry equipment firm JLP, said measuring the business benefits of IT provided the ammunition required for IT leaders to show the value of their input to their business colleagues.

The more IT departments strive to measure the value of their work, the more the business would be likely to appreciate the value of it, he said.

"At the same time, it demonstrates to those colleagues that IT is a business-focused function. So to see a correlation between increased measurement of the business benefits provided by IT, and a reduction in the reluctance of other business leaders to perceive real value from IT, is unsurprising."

Business improvement

As packaged software becomes more standardised, businesses are looking to IT to help with a more sophisticated approach to business improvement, he said.

"More and more businesses are turning to their IT functions to assist in business process improvement, particularly with concepts such as SOA. In engaging with IT to achieve the process streamlining and consistency that SOA-type approaches enable, business leaders are seeing more deeply into the meaning of IT and its ability to improve the management of the enterprise," said Burrows.

"As IT professions were increasingly exposed to how the business functioned as well as what it did, they became more involved with the running of the business, rather than just the operation of the underlying business infrastructure."

He added, "As these trends continue, we can expect to see an increasing understanding from both business and IT leaders of their common contributions, and the progressive erosion of the 'them and us' cultures that have for so long characterised the relationship between business and IT."

Computer Weekly's CIO Index bears out that IT departments are investing more in SOA. Full deployments across organisations increased to 4% of those surveyed in May, up from 1% in April. Meanwhile, departmental deployments increased from 14% to 17% over the same period.

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