A Quantitative Approach to IT Investment Allocation to Improve Business Results

This paper proposes using financial loss functions to estimate the impact that IT Service Level Agreements (SLAs) have on business process performance. For that, an organizing framework based on Balanced Scorecard concepts is first presented to tie those functions to strategic business processes; and then, the impact of service levels on business performance is estimated using quantitative techniques from management science. The result is a quantitative approach for SLA objective setting and investment allocation to improve business results. The approach serves as decision support for investment policies within an ITIL Financial Management for IT Services context. Application to the case of a drugstore chain showed that the approach is instrumental in analyzing complex IT servicebusiness process interdependency scenarios. The approach helped the chain's executives identify and recommend which IT services should receive investments.