IT is an integral part of the business, and every IT project is a business effort. The big challenge facing business today is the “Speed of Change,” which is often applying activity-based management concepts to IT services. Essentially, which involves an extremely detailed cost breakdown of the IT Services, to a resource unit level, for example, which is allocated across geographic and business hierarchies then, using cost modeling techniques. Performance is measured at many levels in the hierarchies, by region of the global world, the country, the comparative line of business, business unit, accounts, program, senior VP, junior VP etc.
The mappings are ultimate between immediate, indirect, fixed, and variable costs and revenue, for the purpose of determining the economic value of the IT services and assets, including their value above their costs. The cost breakdown provides insight into where the most money has been spent, which in turn identifies opportunities for important thing improvements. A chargeback can be carried out on a more equitable, actual usage basis, than assuming many people are using the same amount rather.
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The detailed data becomes a bottom from which statistical analysis can be performed to do a lot more accurate financial budgeting projections, based on natural development rates at a fine-grained level and capacity planning is more accurately expected too. Each year for each IT department Collecting and acting on business feedback are the most crucial project. The purpose of cost breakdown is to provide a clear, measurable view of the business’s top IT priorities.
The senior management team should ask every section how much the IT service will probably be worth to them. Each section will need to measure that in ways appropriate with their business function. The things that can be measured from within the IT function are surrogates for real performance indicators. Obviously, the first time that you measure, it is meaningless pretty.
And furthermore, the metrics will be different for different sectors. The controversial point for this cost breakdown is: With today’s complex enterprise architectures it’s becoming more and more difficult to recognize the cost per unit. X, the continuing business becomes a wiser IT buyer. When we spend regularly on debating measuring what IT is doing and practically no time discussing measuring the worthiness produced, then all we accomplish is to perpetuate the disconnect between IT cost versus IT value.
Managing stakeholder expectations is key to the success of IT. So depending on which stakeholder and what the role of the CIO is to your company, metrics can be created that show governance and efficiency of IT. Plus, IT KPIs should be focused on what is highly relevant to the prospective audience with a clear purpose in regards to what is being measured and just why. D: Communicate the business enterprise value of IT. There are in least three target viewers: IT, IT management, and business management. Each has a different concentrate.
For instance, IT shall measure CPU usage, disk usage, program problems. CIOs don’t always value at a fine-detail level. For IT management level (CIO & direct reports), things such as project delivery, How much time we spent on new task delivery vs. OK at a department level. IT should also understand the main KPIs that the business uses to measure their performance.