Despite advances in data centre technology, management, and automation, there is still a lack of visibility into the business drivers that influence infrastructure costs.
It is estimated that around 65 percent of those costs relate to management activities rather than to physical assets, and a large proportion of that time is incurred through manual effort in bridging the gap between business operations, IT applications and systems, and the underlying infrastructure that supports them.
When a bank’s ATM network is running slowly, or a call centre is struggling to handle customer enquiries, the lack of visibility makes it extremely difficult to drill-down to the root causes, either to rectify immediate problems, or to plan for future avoidance.
From a business perspective, there is little or no linkage between the level of activity in this type of process and the IT costs that are incurred as a result.
Even for organisations that have introduced chargeback or show-back schemes, the relationship between the charges raised and the business activity undertaken can be obscured, often averaged out by a mechanism that is more closely aligned to IT rather than to business metrics.
It is unsurprising, therefore, that most organisations feel they have little opportunity to influence IT costs by adjusting business demand.
In times of growth, this is less of an issue. Provided that the IT function can “keep up” and support the business engine, the business is prepared to fund the scaling up of IT services from that growth.
In a downturn, however, the weaknesses of this structure are exposed because it is much more difficult to scale those same IT services downward.
A service-based approach to IT delivery is a step forward in cost visibility from an IT perspective but does not yet make the link to business activity.
Therefore, it is still difficult to influence business demand for IT services. In planning new or enhanced services, it is important that all elements of cost are taken into account.
This is more significant if a chargeback mechanism is to be put in place, where inaccurate costings will either result in under-recovery, or will necessitate adjusting the service charge, and risking a loss of confidence among consumers.
The next level of maturity is the progression from an IT service model to a business service management (BSM) approach - this has a powerful impact on both efficiency and flexibility, but is in many ways a challenging step to take.
BSM requires the creation of a service model that establishes the links between business processes, IT services, and the infrastructure assets that support them, and on which the costing can be based.
Ultimately, these business-oriented services should become entirely dynamic, in such a way that a business customer can not only subscribe to a service on demand, but can also undertake self-service provisioning, including adjusting service levels to suit the business need.
One of the key goals of BSM is to relate service costs directly to business metrics, so that an organisation could look at measures such as the cost of its general ledger service per month-end close, the cost of the payroll service per employee, or the cost of the help-desk service per 100 customers.
This approach enables genuine control because it firmly establishes the link between business demand and IT supply - it is also the starting point to enable the dynamic provision of new capabilities on a flexible and scalable platform.
By Tim Jennings - Research Analyst, Ovum
