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Friday, November 04, 2005

The Business Case for SLM

SLM ROI FrameworkThese days everyone has an opinion about aligning IT with the business. If you think I'm exaggerating, just Google that phrase and read a few of the 800+ references you get back. You will quickly see that this subject generates very strong feelings, the trajectory of which depends largely on whether the writer views the world through the prism of IT or the business.

Bob Evans summed up the strength of these feelings very well in the first sentence of his amusing Information Week column, A Trip To The Cafeteria--With The CFO! Contentious issues abound -- squeezing more productivity out of already overworked IT employees, cutting technology spending, the pros and cons of outsourcing, getting the business to understand what it takes to keep up with technological advances, not to mention Sarbox regulations. Or sometimes, just getting the business to settle on a direction, any direction -- N? E? NE? NNE? -- so that IT alignment can begin!

To express opinions hastily on this subject would be like chasing butterflies into a minefield. Fortunately, I can sidestep that minefield. The issue at the core of the debate is the value obtained by a business in return for its investment in IT. And no matter what your opinion about the politics of IT/business alignment, investing in Service Level Management (SLM) is always worthwhile.

SLM is not a passing IT fad to be adopted then discarded like the latest technical buzzword. It is an essential way to maintain and improve the quality and effectiveness of your business. And when your business is online, implementing a systematic SLM program can -- as suggested in the graphic above -- benefit both revenues and costs.

This is not a recent revelation, triggered by the debate about IT and business alignment. In 1998 I wrote an article on Controlling Application Performance: What Every CIO Should Know, which began ...

CIOs face complicated issues of data center infrastructure, a portfolio of widely differing application workloads, and rapidly changing business requirements. Strategically, CIOs need to react quickly to competition. Tactically, they must create common processes across business units to make collection and dissemination of information simpler and to slash the cost of new applications.

Compared with these concerns, application performance lacks glamour. Nevertheless, a systematic program of performance monitoring and tuning almost always produces surprising cost savings for large companies.

CIO sponsorship is vital for such a program to succeed. In the first place, only the CIO can negotiate the transfer of funds between the capital equipment, salary, and software budgets. Second, management prioritization and employee motivation are required to convince lower-level managers and technical professionals of the importance of application performance. The CIO can provide the necessary emphasis.
That article emphasized the cost savings achievable through application tuning, and little has changed since 1998 in that respect. In today's world of e-business, equally important opportunities also exist for system and application tuning efforts to increase revenues, by making an online business more available and more responsive to customers.

CIO sponsorship is still an essential first step to success with SLM, for the same reasons as before. As a CIO seeking to better align IT with the business (whatever that means this week), a proposal to beef up your SLM processes may seem at first to be just another expense to be placed under the cost-cutting microscope. Proponents of SLM programs should welcome such scrutiny. When the applications to be managed are important to the business, opportunities always exist for significant cost savings, revenue increases, or both. I would be willing to bet that the initial investment will more than pay off over time, in applications that help the business by serving customers better.

In fact, I'm convinced that there is always a good business case for SLM, if it's implemented properly. Future posts will consider some of the areas where SLM pays off, and ways of calculating the ROI of SLM investments.


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