IBMGlobalServicesTheITValueModel:Winningthebusiness“battle”withtherightIT“nails”TheHorseshoeNail“Forthewantofanailtheshoewaslost,Forthewantofashoethehorsewaslost,Forthewantofahorsetheriderwaslost,Forthewantofariderthebattlewaslost,Forthewantofabattlethekingdomwaslost—Andallforthewantofahorseshoenail.”IntroductionTheabove,paraphrasingtheaphorismfromBenFranklin,illustratestheimplicitconnectionbetweenabattleandits“infrastructure.”Butlikethehorseshoenailonthebattlefield,itcanbedifficulttoalignthevalueofasingleinformationtechnology(IT)investmentwiththebusinessatlarge.Afterall,howdoyoudeterminewhich“nail”isattachedtothehorseshoethatcouldhavehelpedwinthebattle?TofullyexploiteachandeveryelementoftheITinfrastructure(thehorseshoenails),itiscriticaltomapthosecomponentstomission-criticalbusinessinitiatives(thebattle-winninghorses)and,inturn,long-termbusinesssuccess(thewar).Morethanever,abetterunderstandingofthevaluedeliveredbyanyoneIT“nail”iscriticaltoinformingandguidingITinvestmentsandinitiatives.TheITValueModel23ThisisanewwaytoviewandmanagetheITinfrastruc-ture.Untilrecently,ITinvestmentdecisionshavebeena“topsdown”managementissue.WhileorganizationsviewedITasanecessaryresourceinhelpingtoachieveandsustaincompetitiveadvantageinaglobalanddynamicmarketplace,itwasalsoviewedasanobvioustargetforcostefficiencyimprovements—throughserverconsolidationorassetmanagement,forexample.������������������������������������������������������������������������������������������������������������������������������������������������������������Now,withtheIBMITValueModel,itispossibletoestablishbusiness/ITlinkageandaccumulateaccurateandspecificdataabouttheintrinsicvalueITbringstospecificbusinessactivitiesandcomponentsaswellastoanorganization,or“kingdom,”overall.Thistypeofvalue-informeddecisionmakingcanhelpexecutivesbettercontaincosts,targetinvestments,accelerateandoptimizeROI(withoutnegativelyaffectingbusinessresults),anddriveprofitability.TheITValueModel23Missioncritical:ThestateoftheITinfrastructureToday’sexecutivesareaccustomedtousinginformationtechnologytoenhancecapabilitiesandsupportspecificbusinessinitiatives—fromsupplychainmanagementtoe-commerceandcustomerrelationshipmanagement.Consequently,overtime,organizationshaveincreasedtheirrelianceonservers,networks,applications,e-mailsolutions,datacenters,andstoragesystems.Similarly,thepeopleandprocessesassociatedwithacompany’sITorganizationhavebecomemission-criticalresources.GlobaleconomicpressuresanduncertaintyhaveplacedadditionalstressontheITinfrastructure.AsCIOsandCTOsstruggletodomorewithless,manyorganizationshavelaunchedoptimizationinitiativesaimedatevaluating,rationalizingandstreamliningtheirITenvironment.Theseeffortshavefocusedonmakingtheinfrastructuremoremanageable,adaptive,productiveandcost-effective.Now,withcostsmoreundercontrolandtheeconomicoutlookbrightening,executivesareplacingmoreemphasisonthestrategicbusinessvalueITcanprovide.Arecentsurveyoftheworld’stopcorporateCEOsrevealsthatforalargemajority,revenuegrowthisnowtheirtoppriority.1Thisresearch,basedoninterviewswithhundredsofexecutivesfromacrossgeographiesandindustries,offersvaluableinsightintocorporatetrends,includingtheemphasisontop-lineimprovements.Whilemanycompanieshavemadeimprovementsincostcontrol,thereremainsagapwhenitcomestocon-nectingspecificITinvestmentstostrategicbusinessgainsorbenefits.Theanswermaylieinimplementingaholistic,value-basedapproachtooptimizetheentireITenvironment.Bydoingthis,companiescancontinuetoreducecostsandcomplexitieswhileestablishingadirectrelationshipbetweenITservicesorelements(thehorseshoenails)andbusinesssuccessor‘‘wins.”“Weareoverthecrisisandnowwe’reinanewcycleofgrowingthebusiness.”—MediaexecutiveintheUK2TheITValueModel45�����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������TheITValueModel45Servingthekingdom:OptimizingITforvalueValue-drivenoptimizationinitiativescancontributesignificantlytooperationalexcellenceandsetthestageforevolvingtoadvancedcapabilitiessuchasITagilityandondemand—characterizedbyfocused,variable,resilientandresponsivesystemsandprocesses.Whileenterprises(andsometimesevenindividualbusinessunits)candifferintheirspecificITrequire-mentsandoptimizationstrategies,mostcouldcharacterizetheirstrategyforusingITaccordingtothefollowing“providerprofiles”:Commodity—Thebusinessdriverisexpensecontrol;thecorporateviewofITisasaprovideroftechnicalcapabilities;ITinvestmentdecisionsareproject-based.Utility—Businessdriversarebusinessunitmeasure-ments;thecorporateviewofITisintermsoforganiza-tionalefficiencies;ITinvestmentdecision