1. 1
The Business of IT
A Practical Guide to Measuring
the Value of IT Services

2. www.emtecinc.com
Table of Contents
TABLE OF CONTENTS................................................................................... 2
Executive Summary....................................................................... 3
THE PRESSURE TO UNDERSTAND IT VALUE ................................... 4
STARTING WITH THE END IN MIND................................................... 5
VBM: The Path to success........................................................... 6
IT value Chain................................................................................. 7
IT SERVICE PORTFOLIO..................................................................... 8
IT VALUE REALIZATION...................................................................... 8
VBM: SOLUTIONS AT WORK.............................................................. 9
VBM: GETTING STARTED................................................................... 10
conclusion..................................................................................... 11
resource links.............................................................................. 11
BIO...................................................................................................... 12
ABOUT US.......................................................................................... 12

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Executive Summary
In today’s highly volatile economic environment and rapidly changing landscape
of IT best practices, IT leaders are struggling to balance many different competing
priorities with ever-shrinking budgets. Throughout all of this change, many have
failed to document and communicate the value of IT in terms that the business can
understand and appreciate. As a result, some IT leaders are asking themselves:
• Where can I really afford to cut spending while still minimizing risk?
• Where should I redeploy my resources to minimize the impact of change?
• How do I get the organization to really understand the business of IT?
But those IT leaders who have insight into how their services align with the business
strategy are much better equipped to make informed decisions about everything
from tactical resource planning and budget allocation to the implementation of
new services and best practices. Realizing, quantifying and communicating the
value that IT delivers becomes a common business practice instead of a reactive
conversation when budgets need tightening. Being able to more accurately manage
and predict the performance, costs and risks associated with IT services against
the business demands gives these IT leaders a unique sense of confidence in what
they are delivering is what the business needs to meet its objectives.
These leaders have one thing in common: They follow a new way of thinking called
Value Based Management (VBM) from Emtec, a leading provider of IT services,
solutions and expertise. Through the implementation of VBM, some of the world’s
most innovative IT organizations have been able to transform their IT departments
into valuable business services teams that are viewed as integral to the
success of the business.
The purpose of this paper is to help IT leaders not only answer the tough questions
they are asking themselves, but also answer the questions being asked of them by
business leaders and board members. The paper includes a detailed description of
VBM and provides examples of how some organizations have benefited from this
pragmatic approach to creating, documenting and managing the business value of
IT.

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THE PRESSURE TO UNDERSTAND IT VALUE
Over the past several decades, the definition of IT has grown exponentially,
causing the lines between business and IT to blur in dramatic fashion. In the late
1990’s, the threat of the Y2K shutdown resulted in record IT spending by almost
every company and government agency. But as the threat passed, the pressure
heated up to demonstrate a return on the massive investments made, resulting
in the emergence of several industry best practices and programs, such as ITIL,
COBIT,VAL-IT, IT Savvy and others. In more recent years, many organizations have
chosen to outsource their IT services, putting even more pressure on the industry to
better measure and manage the value of IT.
As the adoption of these best practices has grown, so has the confusion around
where to start implementing them and how to quantify the business value that they
create. Companies are finding that without a solid understanding of the foundation
on which the IT function itself is built, they have no real basis for understanding how
to invest wisely in the implementation of best practices. The result is often wasted
time, money and effort and very little tangible, measurable impact.
That’s why Emtec, leverages a pragmatic approach, called Value Based
Management (VBM) to help its clients define the true value of IT services.
Typically designed to start with a distinct IT service and expand to other relevant
offerings, VBM first helps organizations separate which services IT delivers from
how IT maintains and supports those services. This in turn, helps them make better
business decisions about the deployment of IT resources, services and dollars in
order to meet the business goals in the most cost-effective manner.

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STARTING WITH THE END IN MIND
It is often said that in order to be successful, one must first picture the end-game.
Ideally, as an organization matures and gains a better understanding of the value
they deliver to their customers, they inherently become more educated and
aware of the demands that will be placed on them. This makes IT services more
predictable, more cost-efficient and ultimately more valuable to the customer. In this
case, IT’s customer is the business.
At Emtec, this end state is embodied within four simple operating practices.
Organizations who operate within this end-state are first, demand-aware and
demand-managed. This means that the IT leaders have the insight and foresight
to better understand trends that impact the demand placed on their organizations.
Often this is accomplished by looking at the actual demand over time and the
related events surrounding those fluctuations.
In order to draw meaningful information from the demands that are placed
upon IT, the organization itself must create a portfolio of services that addresses
the demands. Being service focused is the second tenant of a successful IT
organization. By operating within a service oriented framework, IT creates a
business-focused abstraction of the technology infrastructure that comprises each
service. This abstraction allows for meaningful relationships between business
consumers and the IT supplier to occur.
The final pieces of the puzzle are to be cost aware and managed and resource
aware and managed. This directly translates into knowing the cost and resources
associated with each service within the IT organization. An understanding of the
cost of ownership and delivery of the service must be captured and quantified. With
this fundamental understanding of the end game clearly articulated, IT leaders are
uniquely positioned to forecast and respond to the rapidly changing demands of the
businesses they support.
Business Needs/Demands
Services Focused
Demand Aware & Managed
Infrastructure Technology
Cost Aware
& Managed
Resource Aware
& Managed

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VBM: the path to success
A concept called Value Based Management of IT begins to emerge as organizations
look to build a path for the end state. As the inventors of this concept, Emtec
established VBM as a means to pragmatically relate IT functions to IT services and
assign a corresponding business value to each service to enable the measurement
and management of IT services. The result? Empowered IT and business leaders
who are able to make better decisions based on quantifiable data instead of
intuition and traditional IT-centric metrics. For IT service providers, VBM provides a
common language and framework on which to measure, track and communicate
with clients for greater alignment with the goals of the partnership.
VBM is built on a value model that addresses three fundamental aspects of IT:
• IT Value Chain: How does IT design and deliver services?
• IT Service Portfolio: What services does IT offer?
• IT Value Realization: How does IT leverage this information to
innovate?
These components work in concert to identify deficiencies in value and focus
improvement initiatives on maximizing the value of IT to the organization. From this
information, improvement initiatives can be linked to one or more specific services
and the associated value metric, including performance, costs or risks, to which
the improvement is being made. VBM provides effective management of initiatives
by helping organizations quantifiably understand the expected improvement and
measured result of each initiative, thus leading to more defined and managed IT
budget allocation.

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IT Value Chain
The first key component of VBM is the IT Value Chain, which encompasses how
functions, processes and skill sets work cooperatively to deliver services to the
business. The IT Value Chain implemented under Emtec’s VBM approach also
contains pre-built definitions of each element within the Chain. It represents how
the IT functions, processes, groups and governing practices work cooperatively
to design, deliver and maintain services and associated service targets to the
business. It provides clear and direct metrics that can be used to help determine
the performance, cost and risk of IT services.
VBM’s unique IT Value Chain combines components from both ITIL and COBIT best
practices in a grid format that makes it easy to assess each process. Instead of
simply assessing the maturity of a service, VBM helps the organization understand
which services need to be improved and which services need limited attention or
investment. The IT Value Chain consists of three primary elements:
Business Service Alignment
This group of functions works cooperatively to
understand the service requirements of both IT and
the business. They provide strategy and planning
assistance to business executives, while offering IT
guidance and recommendations to further the ability
of the business to achieve its goals and objectives.
This set of functions is responsible for analyzing the
viability of requests for new services and changes to
existing services against the existing IT capabilities
and resources. They also oversee the implementation
and transition of the service or change to the Service
Operation and Delivery function.
Service Operations & Delivery
This set of functions ensures that the IT service
portfolio is delivered, managed and maintained. The
primary interface of the business is through this set of
functions, specifically through the consumption and
use of existing services and accessing the IT support
desk for request fulfillment. These functions include
the technology groups and specialists who maintain
the systems, as well as interfaces with external
service providers, vendors and suppliers.
Operating Practices & Governance
These processes and functions do not typically
provide direct value to the business. However they
do ensure the quality, effectiveness and efficiency of the IT organization across all
processes and functions. As such, they are very important in the IT value chain if an
organization is to produce consistent quality and business value.

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IT Service Portfolio
VBM is predicated on having a clearly articulated IT Service Portfolio, or description
of all of the IT services provided. To help organizations quickly build and quantify
their IT Service Portfolio, Emtec delivers a services library that contains 75-80
percent of the typical services that most IT organizations provide. IT services should
be categorized into corporate IT services (services required by the organization
to function, communicate and consume other services), infrastructure IT services
(services that enable other services and provide value to the IT group itself), and
business IT services (services that directly support the business strategy and goals).
Once all of the services are identified and categorized, a value is placed on each
service using a formula called the Service Value Quotation. In addition to the typical
performance and cost metrics, this formula accommodates a third dimension –
value – by calculating the complexities of each service and the dependencies the
business has on each service. IT leaders then have a better understanding of which
services matter the most to the business, and ultimately, which services carry the
most value.
When combined with service requirements and needs, an assessment of the gaps
in the delivery of services can lead to targeted and effective improvement initiatives.
An IT organization can quickly assess if the services being delivered are meeting the
expectations of the consumers.
IT VALUE REALIZATION
Once an organization has identified which IT services it will deliver and how the
services will be delivered, the building blocks are in place to better understand and
articulate the opportunity for improvement and innovation. Value Realization is at the
heart of what every IT organization strives to accomplish – tangible, business value
that can be easily understood, appreciated and predicted by the IT team and the
customers they serve.
At this stage, a foundation for continuous improvement is established, as the
organization is better equipped to look forward and be more predictive. IT and
business leaders are aligned, and therefore have more common ground on which
to communicate and innovate together. There is greater transparency into the return
on the IT investments made to date, which helps with prioritization during changing
times. There is a comfortable balance between service performance, cost and the
associated risks that help the entire organization meet its strategic goals.

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VBM: SOLUTIONS AT WORK
Cutting Costs without Cutting Value
A large corporation needed to streamline its operations, and all departments
were asked to produce a plan that would cut costs by 10 percent in the coming
year. With no time to spare, the IT department needed to quickly gain a better
understanding of the performance, risk and costs of its primary services in order
to make intelligent recommendations on where to cut while minimizing risk. They
chose VBM because of its pre-configured IT Service Portfolio and IT Value Chain
that helped jump start efforts to construct a business-oriented evaluation of their
current services. As a result, the organization was able to reduce investments in
some services that were being “over-served,” which helped them reach the targeted
10 percent cost reduction without reducing headcount.
Managing Resources to Meet Business Demand
During contract renewal negotiations, an IT service provider was looking for a better
way to predict and plan for the business demand one of its customers would be
placing on its resources in the coming year. The goal was to manage the account
in a more cost-efficient and profitable manner. Because the client had already
implemented VBM, the service provider was able to analyze trends and patterns
by looking at historical performance metrics from VBM’s IT Value Chain. Once they
were able to understand each service’s track record of performance and cost,
they were able to more effectively align their costs with their client’s expectations,
resulting in a contract renewal and a more productive partnership for both
organizations.
Measuring Continuous Service Improvement
A mid-size IT organization had made significant investments in its IT infrastructure in
the previous year. They needed a way to document and report on the incremental
value that these investments were delivering to the business. VBM helped them
measure and demonstrate how these investments increased the availability of the
billing and reporting IT service during key fiscal periods, which directly resulted in an
eight percent decrease in delays associated with billing. By improving the availability
of these services, IT was able to help the accounts receivable team better manage
corporate billing and reporting.

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VBM: GETTING STARTED
Although Emtec typically works with organizations to assess and improve complete
IT Service Portfolios, the company typically recommends that its clients start by
implementing VBM with a particular IT service or set of services by following a four-
step process. These steps include:
Understanding and Assessment
It is important to first understand and document the business drivers and goals
that are placed upon the IT organization. Assessing the availability of metrics
and financial data to support the alignment of IT strategy and programs to the
associated business goals is also discussed at this stage.
Documenting the Structure
Next, a structured model, which includes things like performance expectations
(targets) and financial data (budgets), is designed to demonstrate the value of IT
services and functions.
Gathering the Data
Whenever possible, departments should use readily available sources such as IT
systems, process outputs, project control documentation to collect data, and allow
industry averages and standards to fill-in where no data is available or accessible.
Assess the Value
The final step is to populate the IT Value Chain with the gathered data. The output
will identity areas that are performing significantly outside of the document baseline
goals and objectives and make these your starting point.

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Conclusion
Organizations that have implemented some form of value based management are
better positioned to weather the dramatic changes occurring across the IT industry.
In this high-pressure, low-budget, mission critical environment, leaders must be
armed with tangible information that helps them communicate the impact of change
and the value of services at a moment’s notice.
The intent of VBM is to help IT leaders gain and maintain the necessary insight into
the business of IT in a pragmatic, concrete manner that will result in better decision-
making capabilities and an improved image of IT as a strategic partner within the
organization. More specifically, those who have implemented VBM are benefiting
from:
• More detailed understanding of which services IT performs through a
comprehensive IT Service Portfolio
• More clearly documented total cost of ownership and return on IT investment
• Improved ability to plan for fluctuating business demand on IT services
• Better alignment of resources, including time, people and hard dollars, with
business strategies
• More informed organization about how IT can help increase the value of the
business
Resource Links
Emtec Links:
• Emtec Blog
• Emtec Event Archive
• Emtec Whitepapers
• Emtec Website

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BIO
Tim Stratton
Managing Director Global ITSM Services
Mr. Stratton is a seasoned professional Consultant, having worked in the field of
IT Service Management (ITSM) for the past 15 years. He has been employed by
several prominent consulting organizations in Canada and helped clients throughout
North America define their IT Service Management programs. He currently holds the
position as Managing Director of Emtec’s Global ITSM Services, where his abilities
with client relationships and Project Management are a winning combination. Mr.
Stratton’s Computer Science Engineering and Technology diploma, IT Infrastructure
Library (ITIL) Certification, certified Remedy™ trainer and Six Sigma Training, has
allowed him to successfully contribute to many client-based strategic objectives for
improvements in IT infrastructure Service Management. His depth of experience
allows Mr. Stratton the ability to exploit current technology, anticipate future
demands, and provide clients with effective solutions.
About Us
Emtec, Inc.
Emtec is a provider of technology-empowered business solutions for world-class
organizations. Our local offices, highly-skilled associates, and global delivery
capabilities ensure the accessibility and scale to align your technology solutions with
your business needs. Our collective focus is to continue to build clients for life: long-
term enterprise relationships that deliver rapid, meaningful, and lasting business
value.
Our mission is to help our clients improve IT systems and processes – to transform
IT into an investment that returns true value to their respective organizations.
For more information visit: www.emtecinc.com.