Study shows severe financial impact caused by IT/business disconnect
ConvergenceAsia staff
28/06/2008

A study commissioned by software company Compuware and conducted by Forrester Consulting has found that while 81 per cent of organisations have adopted formal service level agreements (SLAs), they only meet these agreements 74 per cent of the time on average.

Many companies also report that poor application performance results in increased costs and lost revenue. In the study, Forrester Consulting concludes that the primary reason for missing SLAs is that the business unit has expectations out of the reach of IT.

A key reason given for this mismatch in expectations is the use of service level metrics that are IT-centric and are not compatible with business objectives. The Forrester study found that 41 per cent of respondents agreed that their insight into service levels is basic, and that they don't provide SLA information to executives on a regular basis. In addition, 40 per cent of those surveyed agreed that their service level reporting lacks information that their executives have requested.

"By relying solely on technology-focused metrics, IT is missing an opportunity to engage in effective dialogue with the business to move toward proactive service management," said Steve Tack, Vice President, ITSM, Compuware.

According to Jean-Pierre Garbani, Vice President and Principal Analyst with Forrester Research, "The ultimate judge of IT and business alignment is the end user: If alignment is viewed as conformity to user expectations in terms of availability, performance, usability, and accuracy, then monitoring end user performance is the only way IT knows that it is meeting these expectations."

When asked about the cost of poor application performance, 57 per cent of respondents in the commissioned study stated increased costs to the business as a result; 48 per cent reported that poor performance resulted in lost revenue. This demonstrates a clear understanding of the potentially dramatic financial impact resulting from poorly managed IT service.

Other reasons given for financial impact to the business included negative impacts to external customer satisfaction (48 per cent) slows or stops in production (42 per cent) and a negative impact on sales performance.

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