Not a Perfect IT World

In unpredictable times the corporate urge to take risks dissipates and the need to cut costs becomes an imperative. Mountainous expenditure on IT in the past has left many executives sceptical in the face of disappointing returns from IT investments. Their cynicism makes accountability and credibility the new imperatives for CIOs under intense pressure to cost-justify each new technology investment, according to Gartner vice president John Roberts.

"We haven't done everything perfect, let's not kid ourselves," Roberts says. "We haven't had reliable processes. We have tended to over-promise and under-deliver, so a high number of IT projects end up over budget and late, not delivering the promised functionality. It's by no means a perfect story that we have to tell. But I think in today's world of real cynicism, what we're suggesting is that IS organisations need to stand up for themselves and say: 'Hang about, we are delivering value.'"

Roberts says IT is simply not getting the credit it deserves in many organisations, with existing IT systems too often taken for granted. When Commonwealth Bank of Australia CEO David Murray delivered a broadside to the IT industry at the World Congress on IT in February 2002, accusing it of over-promising and under-delivering, IT could easily have made an argument that it has delivered plenty and that organisations give too little recognition to its contribution, Roberts says.

Gartner is encouraging its clients to have that dialogue with business unit managers because CIOs and other senior IT managers must know how their chief stakeholders regard IT's contribution. For as businesses refine their "Show me the ROI" mantra to perfection, IT organisations are under more pressure than ever to prove IT value in a climate where far too many managers still have no idea what IT is actually costing them.

"So many questions are swirling around the world of IT today relating to the 'real value of IT'," writes Gartner analyst Audrey Apfel. ". . . Our clients are saying: 'I know what I paid, but what did I get?', 'I see what I am being asked to pay, but how do I know I will get the value projected in the business case?', and 'I thought the business case I built was complete and credible, but the business executives didn't see the value.' "

Gartner says the concept of value has become a key consideration for management as IT becomes more inherently entwined with the business, with the question of IT value now replacing measurements of the cost and efficiency of IT as the major issue. It is a tricky area to get right. "Why do enterprises spend so much on IT?" asks Roberts. "This is a question that few business or IT managers seem to be able to answer. IT costs are often shrugged off as part of the cost of doing business - a necessary overhead. The only serious questioning comes up when the next IT project is submitted for approval, and every manager knows the challenges of creating what looks like a reasonable business case."

Roberts says to help make that case many leading Australian organisations are showing keen interest in adopting the Information Technology Infrastructure Library (ITIL), a set of rules for delivering IT services more efficiently by improving management processes across IT departments. Developed in 1992 and maintained by the UK's Office of Government Commerce, ITIL originally served as a mandated set of standards for IT service providers to the British government but was swiftly adopted into their internal IT departments by organisations aware of its many advantages.

ITIL is already in widespread use in Europe and starting to receive keen attention in the US and Australia. Roberts says it can be a good starting point to help organisations move from a pure cost equation to the value proposition.

"One of the early pieces on this credibility curve is that you've got to have standard and reliable and reproducible internal processes," Roberts says. "So one aspect of it is just improving the consistency of service delivery, but moving up, you also need to develop more of a service provider relationship in terms of having service level agreements with your clients so they understand what you're delivering. And the standard processes are not a bad way to start in terms of helping that process," he says.