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Business Cases, Budgets and Bear Markets

ITIL v3 presents a definition of value that may improve our ability to judge the impact on IT Service quality of certain common cost-cutting measures.

ITIL v3 defines the value of a service in terms of Utility (functional requirements) and Warranty (non-functional or supplemental or Quality of Service requirements).  Warranty is expressed in terms of the security, capacity, availability (normal operational circumstances), and continuity (involving the implementation of recovery plans).

The two underlying drivers for determining the appropriate level of Warranty are the Business Case for building the service and the Service Level Agreement for actual delivery of the service.

The point of Utility is to ensure that the business can make use of the functionality provided by the IT Service to drive desired business outcomes.  The point of Warranty is to ensure the delivery of service within certain bounds of variability.  In other words:

  • High Utility and low Warranty means the service is fit for purpose but is not reliable
  • High Warranty and low Utility means the service is very reliable but of little value in driving business outcomes

ITIL v3 also draws the distinction between resources within IT (infrastructure components, documentation, information, people, etc.) and the capability the organization has to make use of those resources, efficiently and effectively, for optimal service delivery.  Capabilities include the processes, functions, and the people acting in specific roles, all making use of resources to deliver services.

One disconnect I see time and time again when enterprises take cost-cutting measures, is a broad reduction in training activities, as sort of a policy – in other words, a horizontal impact on capability (people acting in specific roles).  [Full disclosure: I manage HP Education’s ITIL, PM and BA curriculums in the US.]

To what extent does such a decision impact Warranty – the variability in the quality of the services being delivered?  Would it not be better to approach a cost-cutting decision from a portfolio point of view, reducing capability for lower-priority services?  Should not cost-cutting measures be related back to Business Cases and Service Level Agreements? 

Are you and your BA colleagues routinely involved in such broad cost-cutting decisions?