Friday, 27 June 2008

Severe Financial Impact Caused by IT-Biz Disconnect

A new report commissioned by Compuware has revealed the primary reason that organisations miss service level agreements (SLAs) is that the business unit has expectations out of the reach of IT.

The study which was conducted by Forrester Consulting found while 81 % of organizations have adopted formal service level agreements (SLAs), they only meet these agreements 74 % of the time on average.

Many companies also report that poor application performance results in increased costs and lost revenue.

A key reason given for this mismatch in expectations is the use of service level metrics that are IT-centric and are not compatible with business objectives.

The Forrester study found that 41 % of respondents agreed that their insight into service levels is basic, and that they don't provide SLA information to executives on a regular basis. In addition, 40 % of those surveyed agreed that their service level reporting lacks information that their executives have requested.

"By relying solely on technology-focused metrics, IT is missing an opportunity to engage in effective dialogue with the business to move toward proactive service management," said Steve Tack, Vice President, ITSM, Compuware.

When asked about the cost of poor application performance, 57% of respondents in the commissioned study stated increased costs to the business as a result; 48 % reported that poor performance resulted in lost revenue.

According to Compuware, this demonstrates a clear understanding of the potentially dramatic financial impact resulting from poorly managed IT service. Other reasons given for financial impact to the business includes negative impact to external customer satisfaction (48%) slows or stops in production (42%) and a negative impact on sales performance.

"The ultimate judge of IT and business alignment is the end user: If alignment is viewed as conformity to user expectations in terms of availability, performance, usability, and accuracy, then monitoring end user performance is the only way IT knows that it is meeting these expectations,” said Jean-Pierre Garbani, Vice President and Principal Analyst with Forrester Research.