IT organizations delinquent at measuring and communicating the value of the services they deliver are doomed. We need to get better at transparency.
Many line of business units have spent years honing and crafting supply chain techniques, to not only balance supply with customer demand, but also to express, with deep accuracy, the unit cost of goods or services sold. They naturally have that same expectation of IT.
Guess what? Most IT shops have no idea how much it costs to provide services to customers in any way that's meaningful to sophisticated executives. Sure, they'll have a handle on what the staff costs, and they probably can dig up the capital cost of server hardware, but they won't know how much, per user, their email is costing the organization, taking into account things like capital charges for storage, servers, virtualization, email licenses, and staff support. While something like email is a no-brainer for most organizations (it's not a question of whether you should cease hosting email internally and move it to the cloud, it's just a question of how and when), being unable to engage in a thoughtful, fact-based discussion of how internal services compare with external services will raise eyebrows and seriously diminish IT's credibility.
IT transparency isn't just about credibility and survival, of course. It's also about adding value to the organization through the business intelligence of how IT is used. Two executives from IT transparency software providers shared some good stories with me recently. (I'm a curmudgeon about "software will solve all of your problems," but they made some good points worth sharing.)
Yisrael Dancziger, with Digital Fuel, acquired this week by VMware, points out that if you give people information about what they're using, how much it costs, and what the alternatives are, their behavior can change. Case in point, giving customers visibility into what their end user devices cost creates opportunities for savings.) Chris Pick, with Apptio, tells a story of doing an IT services inventory for an IT organization, discovering that users were only accessing data that was a year or less old, but that IT was paying for on-demand, high-availability access for data that was more than three years old.
Point is, information is power, and with that power we can reduce cost or increase agility. But in the same way that we helped the larger organization with supply chain management a decade ago, we need to apply those principles to our own operations.
If you're in that 46% of organizations that do engage in regular reporting, you're on the right track. Your fuse is probably a lot longer than for those who do not. But my guess--and I don't yet have any research on this other than anecdotal--is that the number of organizations that are seriously digging into more significant IT transparency is pretty small. Make no mistake, the need for richer IT transparency is coming. Will you be ready?
Jonathan Feldman is a contributing editor for InformationWeek and director of IT services for a rapidly growing city in North Carolina. Write to him at firstname.lastname@example.org or at @_jfeldman.
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