Executive Summary .....................................................................................................................................................................................................2 Competitive Enterprises Require An Efficient IT .........................................................................................................................................3 The Major Challenge To IT Efficiency ................................................................................................................................................................

7 Real-Time Dashboards Are The Key To IT Efficiency ............................................................................................................................. 12 Key Recommendations ........................................................................................................................................................................................... 16 Appendix A: Methodology ..................................................................................................................................................................................... 17 Appendix B: Demographics .................................................................................................................................................................................. 17 Appendix C: Endnotes ............................................................................................................................................................................................. 20

2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to www.forrester.com. [1-CQNTD8, 1-GXTR1G]

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The complexity of IT infrastructures and services is the root cause of the difficulties many IT organizations experience in managing the performance of critical business services. Using a technology-component-centric approach in a complex environment leads to a lack of understanding and cooperation between component teams, a misunderstanding of business criticality, and delays in identifying the root cause of performance issues. These are the biggest obstacles that preclude IT from achieving its efficiency goal. As 2010 and 2011 corporate objectives are clearly oriented toward a reduction of operational costs and an improvement in business productivity, the lack of IT efficiency becomes an impediment to corporate goals. This is due to an inability to share meaningful technical and business information between teams that are too specialized to have a global view of business services and of all the technologies involved. In conducting in-depth surveys with 154 IT decision-makers in North America and the UK, Forrester found that enterprises achieved better IT efficiency and better support for corporate goals by providing integrated, realtime, and accurate information through the implementation of customizable, real-time dashboards. According to the IT executives who implemented this type of dashboard, they were able to improve IT efficiency, increase end user satisfaction with business services, and reduce outages, thus improving business users productivity.

Forresters study yielded the following key findings: Reducing operational costs is a high-priority objective for enterprises. As IT is a key component of the business operation, it must become more efficient to support the corporate goals in a relatively unstable economic climate. The lack of real-time information impacts ITs efficiency. As different technology teams must cooperate to resolve problems in the shortest possible time, the lack of a common view of IT services and the infrastructures health leads to longer delays and a large consumption of IT resources. This decreased efficiency compromises ITs ability to support the corporate goals. The consequences of difficulties in resolving business service issues are felt not only on IT efficiency, but also on business productivity and overall revenue. Real-time executive dashboards help alleviate these issues. Implementing real-time dashboards provides IT and business teams with common, accurate, and timely information. This promotes cooperation between teams, faster problem resolution, and a more efficient IT overall one that can then participate fully in reaching the corporate goals.

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Technology capacity and speed are growing at exponential rates, and the unit cost of technology has been decreasing exponentially in the meantime. This has had consequences for software growth and the creation of increasingly elaborate and complex business services. A myriad of applications and business services have now quickly become part of the business fabric of the enterprise, and the complexity of these new applications has often proved a challenge for IT organizations. This omnipresence of IT in business activities results in the evolution of the role of IT from a business support organization to a business service provider. This role change has several implications, among which the more significant are: 1) the accent on the quality of services provided to the business groups, and 2) the cost of these services, which are now an integral part of the business bottom line. The Forrester survey shows that corporate objectives for 2010 and 2011 are: Lowering the company operational costs. Competition for markets and clients is more intense in a slowly recovering economy than ever before. IT improves business processes and consequently business productivity. But these improvements cannot be obtained at any cost, and IT operational costs need to be contained to deliver the full benefits of business process improvements. Acquiring or retaining customers. The quality of service offered, whether through online, Web-based transactions or in interactions with employees using business services has to be such that they do not impact customer satisfaction and, in fact, act as competitive differentiators in acquiring new customers. Constantly improved quality of service is the key to keeping a business alive. Improving the quality of products and business processes. In a fast-moving environment, being competitive means that the quality of service should be constantly improved and that IT provides the necessary agility to sustain process improvements. Figure 1 confirms that these different enterprise imperatives are actually well supported by a majority of companies. Even more, our data shows that companies that support these top corporate goals very or extremely well have a better annual revenue performance. Of those respondents who said they support acquiring and retaining customers extremely well or very well, 76% earn more than $5 billion USD in total annual revenue, while only 57% of respondents who support this goal well earn the same in annual revenue. Improving quality of products and/or processes follows the same trend. Of the respondents who support this goal extremely well or very well, 72% earn more than $5 billion USD in total annual revenue, while only 60% of those who support this goal well earn more than $5 billion USD in total annual revenue.

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How well does your organization currently support each of the following corporate goals?

Extremely well
Lowering the company operating costs Acquiring and retaining customers Improving quality of products and/or processes Driving innovative new market offerings or business practices Improving business workforce productivity Re-engineering core business processes

Very well
31% 25% 22% 19% 18% 14% 36% 35% 47% 36% 38% 49% 31% 46%

Well
18% 27% 23%

29%

The obvious consequence of this emphasis on cost reduction and increased service quality is, of course, a call for a more efficient IT. As shown in Figure 2, a vast majority of IT decision-makers see efficiency as their top objective.

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Which of the following initiatives are likely to be your IT organizations major business- or corporate-related themes in 2010? Please select up to three and rank.
1 Improving the overall efficiency of IT 2 3

48%

16%

12%

Increasing IT capacity/resources to drive business innovations Improving the measurement of ITs impact on business performance Increasing the scope of ITs centralized or shared services Defining a strategy for risk and compliance Improving IT development and management processes

16%

18%

14%

10%

11%

14%

8%

17%

19%

6%

9%

8%

6%

22%

19%

Marketing the IT department 1% 8% within the company 2%

The dependency on business services provided by IT has dire consequences when the service is interrupted or its performance quality deteriorates. The company incurs three types of costs in these situations: Business productivity decreases. Employee hours are lost because it is often impossible to continue working without business services. In many cases, employees will have to catch up on overtime, which compounds the productivity loss. IT resources are wasted. Many IT employees will have to shift from their normal duties to resolve the business service issues. Often, this will cast a blow to IT personnel costs. Business revenue is lost. If the business service has a direct impact on revenue, as in online commerce, the business revenue lost will not be recoverable. This is confirmed by the answers to the Forrester survey question in Figure 3. While firms see the decrease in workforce productivity as the main loss incurred, the importance of these different factors depends on the enterprise activity, and the respective ranking of losses will vary as a result.

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If you were to experience critical application performance issues, what do you believe are the business consequences?

High costs due to loss of business workforce productivity High IT costs and resources to repair issues and problems High costs due to irrecoverable loss of business

43%

27%

25%

Other

3%

Dont know

2%

Complexity of business services and supporting critical applications seems to be the major challenge facing IT organizations. This complexity comes from two major problems inherent to technology: The layers of accumulated diversity. IT projects related to architectures or applications and business services are discrete events. They are based on the technology available at the time and conclude with that same technology. As IT technology progress is a quasi continuum, projects are actually technologically obsolete by the time they enter production. Then the next-generation projects will use the next available technology, which leaves IT organizations with many different platforms, each with its specific management constraints and each requiring specific skills. Advances in middleware let us combine these platforms into composite applications, which add another layer of complexity. The rate of technology progress. The relationship between technology and IT business services is that of an autocatalytic process. New advances in technology tend to lower the cost/value ratio of business services and lead to their adoption by enterprises. The revenue from technology thus sold fuels more technology progress, and the cycle repeats itself. In general, this would not be an issue except that the rate of technology advances is exponential, which leads to a corresponding exponential growth in desired

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business services. The second element of complexity is thus the rate at which new services have to be developed and deployed. The consequence is an exponential growth in software size over the past few years and a considerable increase in multi-tiered business services, which combine several applications located on different platforms.1 Business service complexity is thus a major issue for IT organizations aiming for a more efficient IT, as shown in Figure 4.

What level of impact does increased complexity of your infrastructure and business services have on the following? Significant impact Maintaining service quality 27% A lot of impact 45% Impact 23%

Containing global IT costs

25%

40%

26%

Containing personnel costs Limiting the budget for application improvements Increasing downtime and brownouts

17%

39%

35%

13%

37%

35%

12%

32%

33%

As business service complexity increases, the distance between business quality-of-service requirements and IT operational capabilities becomes a chasm. From the well-known, mastered, and predictable terminal-to-server model, IT has moved to complex composite applications stitching together different technologies to create more complete and effective services. Each evolution has brought another level of complexity and increased the obsolescence of traditional IT management processes and tools, especially in the area of performance prediction. At the same time, as IT is a key differentiator in business competition, the capability to sustain service quality and IT efficiency becomes a forefront issue. It is no longer enough to capture data and report it

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it is now necessary to integrate and correlate infrastructure and performance information into a format that is conducive to a rapid resolution of business service issues. These issues are themselves becoming more complex, compounded by a new emphasis on additional IT costs such as floor space, power, and cooling. Accurate and upto-date information is not only a necessity for operational teams, it has also become vital for IT decision-makers. Performance problems alone are rapidly becoming a major source of headaches for IT operation managers. Business productivity increases have been pegged on IT and its ubiquitous presence in the enterprise. The emphasis on performance has been reinforced by the direct linkage of poor response times and availability to employee productivity and business losses. Poor performances have grown from a subjective user satisfaction problem into one quantifiable in lost revenue and lost productivity. While everyone is struggling to understand the why of performance issues, the advent of products able to monitor networks, servers, applications, and database performance in real time appears to be the panacea. After the dust has settled, IT operation managers often come to realize that in a complex and tightly coupled application environment, working on technology silos and removing one technology bottleneck at a time is the shortest way to finding another one and that the root cause analysis of performance problems requires a holistic view of IT infrastructures. Since the shotgun approach of throwing hardware at problems may be very short lived in an economic downturn, IT operation management demands evolve from data and event reporting at the component level to integrated, real-time reporting as a support for decision-making, problem identification, and resolution. The absence of real-time, integrated information is considered a major issue by the respondents to Forresters survey, as shown in Figure 5.

In your opinion, would this lack of accurate and real-time information be a major obstacle in reaching your goal of IT efficiency?

Dont know 7% No 18%

Yes 75%

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The lack of integrated, real-time reporting would prevent IT organizations from achieving their efficiency goals in todays complex application environment. The lack of real-time information also impacts the decision-making ability of the IT organization as well as its relationship with the business. For example, the inability to control service levels is a direct consequence of the lack of real-time information, as shown in Figure 6.

On a scale of 1 to 5 where 1 = Completely disagree and 5 = Completely agree, please indicate how strongly you agree with each of the following statements?

Completely agree Without accurate and real-time information we cannot control our service levels

Agree

Somewhat agree

19%

46%

23%

Without accurate and real-time information we cannot manage our IT organization efficiently

18%

42%

29%

Without accurate and real-time information we cannot negotiate effectively with our business partners

12%

41%

29%

The lack of real-time, integrated information has a direct effect on IT efficiency. In complex and tightly coupled systems such as multi-tiered applications, the availability of a single, integrated view of business services critical performance indicators is directly linked to the IT organizations capability to reach a decision and tackle immediate problems. As an example, Figure 7 shows how the number of people involved in resolving performance issues is impacted: 44% of IT decision-makers surveyed say that 10 or more persons are involved in such efforts. This is a direct consequence of each technology management team coming to the table with their own set of data, which of course does not align with their colleagues data sets. Specialized skills are immensely valuable in a complex environment, but they often come at odds with one another. Some kind of arbitrage is needed to

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make these teams more effective in collaborating with one another toward a common goal. IT will eventually become more efficient and reduce the resources used in these difficult situations by being able to share a common, integrated representation of information related to critical business services.

How many people in your IT organization are typically involved in identifying and resolving a performance issue? Dont know 3% One person 1%

10 or more people 44%

Two to five people 31%

Six to nine people 22%

Correlating the results shown in Figure 7 with those in Figure 8 demonstrates that adding resources does not speed up problem resolution. While 50% of respondents resolve 80 to 100% of their performance issues within 24 hours which is certainly not a stellar performance 26% resolve only 60% to 80%, and 24% resolve less, and sometimes far less, than 60% of their issues in 24 hours. The business impact of such service disruption is huge: the cost of employees time lost, IT resources used, and business revenue lost can escalate quickly to very substantial amounts.

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Of the application performance problems reported to your organization, what percentage are you able to satisfactorily diagnose and resolve within 24 hours? 14% 12% 10% 8% Percentage of respondents 6% 4% 2% 0% 5 15 25 33 40 50 65 70 76 85 92 95 98 100 Percentage of application performance problems diagnosed and resolved within 24 hours

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As shown in the previous chapter, the focus of operational management must shift from managing the configuration and health of infrastructure devices to maintaining the service quality required to support the business processes. The heavy dependency of business on IT has reinforced this trend by showing the direct impact of poor infrastructure performances on revenue. In many instances the management of business services still uses a bottom-up approach. The current perspective is often of infrastructure silos, such as network, servers, or databases. The most advanced business users, however, have acknowledged that the tighter integration of business and IT requires a top-down approach, which provides a view that integrates IT operational parameters with business-relevant information such as business services. This opens a new and broader concept on top of traditional, technology-oriented management: the management of IT infrastructure from a business standpoint. The idea is to understand and manage from the perspective of the infrastructures performance impact on the business process rather than from the assumption that a healthy infrastructure implies a healthy business service. This is a significant departure from the typical operation management and signals the beginning of a new wave of solutions that include real-time, integrated, and customized management dashboards. Real-time management dashboards effectively play an important role in this business-oriented view of IT. By integrating management information from many different sources, real-time dashboards provide a panoramic view of business services and of the infrastructure components supporting the delivery of these services. As demonstrated by Forresters survey results, the lack of integrated, real-time information has the following consequences: The inability to control service levels. Because business services are not directly visible in silo-oriented solutions, there is no possibility for IT and business executives to agree on business service levels and consequently to optimize the delivery of business services to make IT more efficient. The inability to resolve issues in time. The difficulties of management teams to come to terms with one anothers information lead to a waste of IT resources and to delays in resolving service quality issues. This directly impacts both business productivity and revenue as well as IT costs. Our conclusion is that IT cannot reach its efficiency goals without the right business service information being available for sharing between business and IT technology teams (see Figure 9).

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What impact would an accurate, real-time, customized dashboard have on the following?

Significant impact/improvement Reducing firefighting in resolving application problems

A lot of impact/improvement

Impact/improvement

25%

42%

26%

Improving service levels and problem remediation

21%

54%

15%

Making IT more efficient

19%

45%

26%

The business workforce productivity through downtime and brownout prevention

17%

38%

32%

Enterprises are increasingly aware of the need for integrated and customizable real-time dashboards. In many IT organizations, the creation of such dashboards is now well under way (see Figure 10).

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Has your organization implemented a customized, real-time executive dashboard?

Don't know 6%

Yes 36% No 58%

Business-oriented IT management and the availability of real-time management dashboards emphasize the integration and the interaction of roles between the business and IT. Typically, activities that were once considered business independent, such as infrastructure monitoring, now have both a strategic and a technical role to play in the enterprise, as they participate in higher-level reporting. This introduces new decision-makers into the IT management process because each decision is now balanced against the broad picture of the IT strategy and no longer solely against IT operational and technical requirements. IT organizations that implemented integrated, real-time dashboards are now in a better position to reach their efficiency objectives and satisfy the enterprise requirements of competitiveness and efficiency (see Figure 11).

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In your opinion, what are the major benefits of an accurate, real-time executive dashboard? Improving IT efficiency Increased user satisfaction Reduced impact on business due to outage reduction Help build a business case for future IT investments Less resources used to firefight performance issues Increased mean time between failures (downtime and brownouts) Other 4% 40% 38% 53% 49% 67% 64%

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In this study, Forrester conducted an online survey of 154 organizations in North America and the United Kingdom to evaluate the importance of real-time executive dashboards. Survey participants included IT decision-makers and IT operation executives. Questions provided to the participants asked about their corporate goals, the role of IT in achieving these goals, the challenges in meeting the resulting IT objectives, and the best solution to overcome these challenges. The study began in March 2010 and was completed in August 2010.

Where is your company headquartered?

Which of the following most closely describes your companys size? Very large: between 5,000 and 19,999 employees 24%

United Kingdom 31%

Canada 1% United States 68%

Global 2000 or over 20,000 employees 76%

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Which of the following most closely describes your job level?

Senior-most IT decision-maker in the company

9%

Executive in IT

23%

Manager or director of IT reporting to an executive in IT

68%

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Which of the following most closely describes your industry? Manufacturing Financial services and insurance Business/professional services Utilities and telecommunications Retail and wholesale Media, entertainment, and leisure Transportation and logistics Public sector (government, etc.) Other 6% 5% 4% 3% 14% 12% 18% 16%

23%

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Which of the following most closely describes your companys total annual revenue ?

$500 million to $999 million USD

3%

$1 billion to $2.49 billion USD

13%

$2.5 billion to $5 billion USD

15%

More than US $5 billion USD

69%

See Watts Humphreys columns: http://www.sei.cmu.edu/library/abstracts/newsletters/wattsnewcompiled.cfm?DCSext.abstractsource=Relate dLinks

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