Translating IT's Business Impact to Business Executives

Cutter Consortium Senior Consultants Bob Benson, Tom Bugnitz and Bill Walton assert that "The IT organization has been incapable of communicating IT's business impact to business executives. That is, other than IT's cost, the IT organization has not credibly communicated the impact and value of what they do to the business executives who pay the bills."

"To establish IT's business impact requires expressing what IT accomplishes in business terms, as viewed by business executives. This means describing what IT does with business basics such as return on investment, business process improvement, flexibility and responsiveness to business requirements, competitive differentiation, and so forth. This positions IT, in the minds of business executives, like a business service provider, not like a technology supplier."

Benson, Bugnitz, and Walton suggest four related IT initiatives to effectively communicate IT's business impact. These four initiatives set the foundation for expressing what IT does in business terms. They are:

1. Express 100% of IT's costs in service-to-business terms. This is in the following five service portfolios:

   1. Application services -- the business support provided

   2. Infrastructure services -- the technical support provided (e.g., e-mail)

   3. User services -- the business user support provided (e.g., help desks)

   4. Management services -- the internal organizational support provided (e.g., budgeting)

   5. Project services -- delivering new business capability

2. Assess the performance of each service portfolio in business terms. This means business/strategic alignment, service-level and quality, responsiveness and functionality, and technical and business risk. The result of the assessment is to define the business impact of each of the services.

3. Budget IT in service-to-business terms, in the five service portfolios. This means establishing the IT budget not in traditional GL terms (salaries, HW/SW, etc.,) but in the cost of providing each of the basic IT services. (Of course, the CFO may require budgets in traditional forms, but this is a straightforward conversion.)

4. Charge out IT to business units in service-to-business terms. This means establishing the chargeout (as perceived by the business) not in resource-utilization terms, but rather in terms of the use of each of the services. Note that these services are those experienced by the business units, not those as viewed by the IT delivery organization. In other words, the ITIL Service Catalogs may be useful in building up the costs -- but are probably not the ways the business units perceive the services.

This four-part approach achieves the objective of effectively communicating IT's impact to business because the costs and impacts of IT are expressed in business, not IT terms.

Benson, Bugnitz, and Walton conclude, "CIOs can successfully address business executives' demand for more impact and less cost -- because the conversation is about what the business units actually receive, in terms of service, and exactly what those services cost. This is the foundation for determining how to proceed."

To schedule an interview with Cutter Consortium Senior Consultants Bob Benson, Tom Bugnitz or Bill Walton, contact Media Relations at press@cutter.com.

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