Business Value Analysis of IT Services

Business value evaluation of IT services is critical for an enterprise to develop an IT project portfolio aligned with its business operations. To lessen the dependency on subjective assumptions on how IT capabilities benefit the implementation of business strategies and operations, this paper proposes a business value modeling approach based on value driver trees which hierarchically model causal relationships from IT capability and performance to operational metrics, business metrics, and finally to business strategic metrics. This paper also presents an asset-based modeling framework and an analysis methodology which helps apply the business value analysis to various IT services. Besides depending on subject matter experts´ experience and opinion, the methodology also proposes to apply a regression model to historical data of business metrics to discover and refine quantitative relationships among metrics. A case study is presented to illustrate how the proposed value-modeling and the regression method help in real-world business value analyses of IT services.