Volvo It Running It As A Bus 235742

Volvo IT: Running IT as a Business
FOUNDATIONAL Refreshed: 3 November 2016 | Published: 25 June 2012 ID: G00235742
Analyst(s): Michael Smith
Volvo Group recognized the strategic value of IT more than 10 years ago.
Since then, it has evolved how to apply IT to business needs through four
levels of maturity, and has just entered a fifth level.
FOUNDATIONAL DOCUMENT
This research is reviewed periodically for accuracy. Last reviewed on 3 November 2016.
Key Findings
■ The ratio of enterprise IT spending is 30% capital expenditure and 70% operating expenditure
across all industries over the past 10 years. Business cases communicate the value of IT capital
expenditure, but common practices for communicating the value of IT operating expenditure do
not exist.
■ Challenges to IT operating expenses are highly correlated with the level of understanding that
business executives have regarding what drives these expenses and how they benefit the
business.
■ IT capital expenditures affect IT operating expenses postimplementation. These effects should
be included in the business cases used in the IT capital budgeting process.
■ Care is needed to prevent non-IT professionals from being too prescriptive regarding how IT
services get delivered. Without this care, the IT service portfolio remains a technical service
catalog, suboptimizing the value to the enterprise.
Recommendations
■ Define, validate and adjust your IT business service portfolio with your business clients. They
must have the final say on what (not how) services are delivered.
■ Keep service definitions and cost methods simple. The CEO and CFO are in the best position to
keep things simple by setting the rules for determining the break-even point between the costs
of more detailed information and the benefits of desired behaviors.
This research note is restricted to the personal use of A01687579@itesm.mx.

■ Support from senior management is necessary to clearly define the roles of IT (how IT services
are delivered) and the rest of the business (what IT services are needed).
Table of Contents
Analysis.................................................................................................................................................. 2
Case Study: Volvo IT........................................................................................................................ 6
Volvo IT 1.0 (1998 to 1999).........................................................................................................6
Volvo IT 2.0 (2000 to 2005).........................................................................................................7
Volvo IT 3.0 (2006 to 2008).........................................................................................................9
Volvo IT 4.0 (2008 to 2011).......................................................................................................11
Volvo IT 5.0 (2011 through the present).................................................................................... 13
Bottom Line....................................................................................................................................15
Recommended Reading.......................................................................................................................16
List of Figures
Figure 1. Effects of IT on Labor Productivity............................................................................................4

Figure 2. Economies of Scale in IT.......................................................................................................... 5
Figure 3. Volvo IT Supply-Side Organizational Structure in Phase 2.........................................................8
Figure 4. Cost Sheet for an IT Service — Provisioning an Engineering Workstation............................... 10
Figure 5. IT Service Continuum.............................................................................................................11
Figure 6. Volvo IT Supply-Side Organizational Structure in Phase 4.......................................................12
Figure 7. The Integration of IT With the Rest of the Business................................................................ 14
Analysis
Problem Statement: How can CIOs help the enterprises they support to avoid the negative
effects of suboptimized funding of their IT departments?
Our research shows that the relationship between the IT department and the rest of the business is
often suboptimized because IT is viewed as a cost center to be minimized. There are two primary
reasons for this:
■ A lack of time spent on IT issues by senior management. Many business executives allocate
their time to issues based on the impact those issues have on the business. Since most
enterprises spend 2% to 5% of revenue on IT, many executives allocate 2% to 5% of their time
on IT issues.
Page 2 of 17 Gartner, Inc. | G00235742

■ Many IT leaders do a poor job of framing the issues for business executives so they can
understand and take action on them quickly. A trap that many IT leaders fall into is framing IT
issues by describing the technology. Even worse is when IT leaders begin the discussion with
the costs of technology. Business executives prefer to delegate decisions on issues they do not
understand when the business impact of those decisions is perceived to be insignificant.
When the relationship between IT and the rest of the business deteriorates or fails to mature, the
resources allocated to the IT department are reduced. Our research shows that, during tough
economic times, business executives will continue to reduce the IT budget until one of two things
happens:
■ They understand what drives IT expenses and the business benefits these expenses create.
■ The negative effects on the business of reducing the IT budget become obvious.
Most of the negative effects of underfunding the IT department are not obvious until it is too late.
The unobvious effects of underfunding IT are lower labor productivity and lost economies of scale.
Senior management's lack of attention to IT issues negatively affects business performance. Over
the past 10 years, 70% of labor productivity gains have come from IT (see Figure 1). Labor is the
single biggest operating expense in most companies. If IT is not being applied effectively
(underfunded or wasted), then the negative effects on labor productivity frequently go unnoticed
until the enterprise has lost overall cost competitiveness.
Gartner, Inc. | G00235742 Page 3 of 17

Figure 1. Effects of IT on Labor Productivity
2000-2010
(Most Recent Data Available)
www.bls.gov/news.release/prod3.nr0.htm
Productivity: 3.0%
Average Annual
Growth
Rate 2.7%
Labor Composition 0.27%
2.5%
Non-IT Capital 0.65%

2.0%
IT Capital 0.55%
1.5%
Bureau of Labor
Multifactor Productivity — 1.34% statistics estimates that
1.0% 70% of U.S.
productivity growth
comes from IT …
Application of IT
0.5%
… but IT productivity is not the same for all companies.
Source: Gartner (June 2012)
The economies of scale in IT average 2% of revenue across all industries (see Figure 2). When an
enterprise shifts IT spending from the IT department to the rest of the business as a result of
underfunding the IT department, these economies of scale are lost. As Figure 2 shows, 2% of
revenue is approximately 20% of net income for most companies.

Figure 2. Economies of Scale in IT
2012 IT Spend as a Percentage of Revenue
Annual Revenue Annual Revenue

Approximately $250 Approximately $10
Industry Million Billion
Banking 7.3 6.2
Construction & Materials 1.6 1.1
Education 5.6 3.3
National Government 10.8 7.9
State & Local 4.6 1.8

Government Realizing Economies of Scale
Software & Internet 8.4 5.4
Revenue $XXX
Insurance 5.3 2.9
Less cost $XX
Healthcare 3.5 3.3 Net Income 10% Average
Media 5.4 3.2 2.0% of Revenue (5.04 – 3.16)
Yields a 20% Increase in
Pharmaceuticals 3.0 2.6
Net Income (2 / 10 = 0.20)
Professional Services 5.6 3.4
Retail & Wholesale 1.9 0.9
Telecommunications 4.9 3.8
Transportation 3.5 2.3
Utilities 4.2 1.7
Across 15 Industries 5.04 3.16
Source: Gartner IT Key Metrics Data (June 2012)
The unobvious negative effects of suboptimal IT spending (lower labor productivity and reduced
economies of scale) frequently precede the obvious negative effects (that is, outages). However, the
unobvious negative effects are far more significant to overall enterprise value. Alarmingly, the
unobvious damage to enterprise value occurs more frequently as we enter a fourth year of slow
economic growth and continued IT cost cutting.
IT's effects on labor productivity and the size of the economies of scale that exist in IT must be part
of the criteria used by business executives to allocate their time spent on IT issues (that is,
significantly more than the 2% to 5% of revenue spent on IT).
The following case study is a best practice for avoiding the negative effects of suboptimized
spending on IT. It is divided into the five phases of maturity that Volvo IT has been through since

1998. The specific progress toward addressing the problem statement above is given following the
description of each phase. Also given is a summary of how Gartner clients can apply the lessons
learned by Volvo IT following each phase of its maturity.
Case Study: Volvo IT

1
Volvo IT is a wholly owned subsidiary of Volvo Group that, since 1998, has gone through four levels
of maturity in being managed as a business. In 2012, it entered a fifth level. Prior to 1998, the IT
function was fragmented among a diversified group of businesses, each with its own IT department.
There were lots of redundant technologies and processes across Volvo Group. From 1995 to 1998,
Volvo Group seriously considered outsourcing the entire IT function.
In 1997, Leif Johansson joined Volvo Group as CEO. He saw the value in having a strong IT
organization and set a new direction.
Volvo IT 1.0 (1998 to 1999)

Volvo IT was formed and managed as a business. All the decentralized IT organizations were
consolidated into Volvo IT with a goal of achieving 80% commonality of the solutions used across
Volvo Group. IT was set up as a profit center and must cover its costs by defining what it does for
the business units in a way that can be measured and transacted. Volvo IT used the IT service
catalog for this purpose. Defining and positioning the value of ongoing IT services to the people
who consume them creates a fundamentally different relationship between IT and the rest of the
business. It also creates the need for financial decisions to be made, not only for each new project
(IT capital expenses), but also for each ongoing IT service (IT operational expenses) throughout the
year. The cost of IT services must be paid for by the rest of the business, not as a tax, but rather as
a truly discretionary item affecting division profitability and incentive compensation. Therefore, IT
must demonstrate the value of each service and obtain approval from the business before providing
each service. The pricing for each service must be competitive with outside alternatives because
the business units can choose between Volvo IT and outside alternatives under specific guidelines.
Primary among these guidelines is flexibility. The cost of IT services from Volvo IT and outside
alternatives must include the flexibility to change as business needs require throughout the year.
The pricing was set to cover all costs, as well as the modernization and renewal of IT capabilities.
Anything above the aggregated profit limit was returned to Volvo Group.
During this period, Volvo Group divested Volvo Cars to Ford and used the cash to acquire Renault
Trucks, Mack Trucks and other transportation-related companies. So, part of the strategy to allow
Volvo IT to sell services outside Volvo Group was to preserve the economies of scale that Volvo IT
had when Volvo Cars was part of the business.
Progress toward addressing the problem statement made during this phase:
■ Senior management realized the strategic value of a strong IT department.

■ Volvo Group established the roles of IT and the rest of the business. The rest of the business
was responsible for the IT demand side (what IT services are needed). Volvo IT was responsible
for the IT supply side (how IT services are delivered).

How Gartner clients can apply these concepts:
Not every IT department that is currently viewed as a cost center by senior management can count
on having a new CEO join the company and understand the strategic value of the IT department. To
help these clients, Gartner has fact-based research to build the case for a strong IT department.
Labor productivity and the economies of scale are the keys to building this case (see Figure 1 and
Figure 2). Use this research to engage skeptical business executives. Remind them that the cost of
implementing these business concepts is much less than the waste they perceive in IT operating
expenses.
Fundamental to the business concepts Volvo Group established was clarifying the roles of IT and
the rest of the business. Optimizing IT operating expenses cannot occur without clearly defining the
roles of the IT department and the rest of the business in managing these expenses.
Volvo IT 2.0 (2000 to 2005)

Volvo IT became a professional IT services company, and Volvo Cars (then Ford) became its first
really big external customer. A governance, demand and supply (GDS) model was established,
taking the basic concepts that were established in Phase 1 and building out the organizational and
transactional capabilities to implement them. The model instantiated the need for IT to "own" the
supply side — meaning IT must have control over how IT services are delivered, the technologies
that are used and the processes for combining these technologies into IT business services. The
model also instantiated the need for the rest of the business to "own" the demand side — meaning
the rest of the business must have control over what IT services are delivered.
Defining and positioning the value of IT services to the business units that consume them required
new roles in the IT organization. "Account management" was a new IT function with responsibility
for defining and validating IT services with the business units that require them (see Figure 3).

Figure 3. Volvo IT Supply-Side Organizational Structure in Phase 2
Account Management Delivery Units

Manage Customer Relationship Do the Things Right
New application
needed
Line management and/or

competence expert
Proposal Account
Customer manager
Delivery by
Order project
team
Discover and define
opportunities Maintenance by
maintenance
team
Hand over to
maintenance
Source: Volvo IT
Figure 3 shows how the supply IT roles of account management and delivery units work together to
meet customer needs. The account management role needs to understand (and anticipate)
customer needs for existing and new IT services. Account managers must also know the
capabilities of the IT delivery units. The delivery units are similar to traditional IT functions like the
call center, distributed computing, application development, the data center, networking and so on.
Delivery units manage existing services and provide estimates for implementing new IT service
proposals. So, the account management organization was a new competency specifically designed
to help Volvo Group innovate and improve productivity through the use of IT.
A new organizational structure on the demand side was also necessary to ensure that the
economies of scale in IT were exploited. This structure was called the governance department, and
it was formed in Volvo Group under the corporate CIO. The role of the governance department in
this phase was to establish a process for defining and consuming IT services within Volvo Group.
Volvo IT's service offerings should be delivered at competitive prices, but the business units could
request competitive bids from outside providers through the governance department. As mentioned
previously, the cost of IT services from Volvo IT and outside alternatives must include the flexibility
to meet changing business needs as required throughout the year. Part of the governance
department's responsibilities was to ensure that the same level of flexibility offered by Volvo IT was
included in the cost of the outside bids.

During this phase, customer satisfaction surveys were taken and revealed that improvements were
needed. Volvo IT implemented what it called the "carpet bomb process" to improve satisfaction with
IT-enabled business initiatives (projects). The carpet bomb process improved satisfaction by
focusing on the business case development and benefit realization processes. Customer
satisfaction and project success rates improved by spending more time quantifying the benefits,
and by planning and assessing new initiatives before they were approved. The postimplementation
effects of new initiatives on IT service costs were also to be documented as part of the business
case.
During this period, Volvo IT grew its external revenue and decided to create offshore capabilities.
■ Development of the GDS model, which reinforces the roles of IT and the rest of the business
■ Organizational changes (account management and governance) creating new capabilities that
focus on the effectiveness of IT services
To help our clients gain the support of their business executives in implementing the governance
models and organizational changes necessary to develop the capabilities to optimize IT operating
expenses, we offer the following business case.
CEOs and CFOs believe that 20% of IT spending is wasted, according to recent surveys from
auditing firms like PwC. The problem is that, like advertising, they do not know specifically where
the waste is occurring.
Volvo IT spent between 6% and 7% of the IT budget to implement the governance and
organizational changes necessary to provide the checks and balances on the demand and supply
sides of IT operating expenses. These checks and balances eliminated wasted spending on the
demand side that often occurs when IT is a "free" resource; it also eliminated wasted spending on
the supply side when the persistent pressure to provide innovative solutions at competitive prices
does not exist.
Ask your CEO and CFO how much of the IT budget is wasted. If the answer is greater than 7%,
then ask them to read this case study and discuss it with them.
Volvo IT 3.0 (2006 to 2008)

During this period, Volvo IT started to become truly global, with service delivery capabilities in Brazil,
Poland, India and China. It integrated a management consulting company, Fortos, to strengthen the
business process improvement capabilities of its IT service offerings. WirelessCar, a provider of
telematics solutions, was also integrated to give Volvo IT a new source of revenue within the
automotive industry. Costing IT services became a focus during this period. Rules for allocating
shared infrastructure costs needed to be developed. Criteria for these rules center on fairness, the

cost-benefit of data collection and driving the right behavior. The governance department
recognized the trap that many companies fall into when costs are challenged by the business
beyond a practical point. That point is where the cost exceeds the benefits of data collection. The
costs of data collection increase with the number of services defined and the granularity of resource
costs required to deliver them. The benefits are measured by the behavior that changes as a result
of collecting and reporting the data. If there's no change in behavior, then there's no need to collect
the data. Using these criteria, the governance department set the rules for costing IT services with a
bias toward keeping things simple (less costly). The number of services was kept below 100, and
the level of granularity of resource costs for each service was less than 10 (see Figure 4).
Figure 4. Cost Sheet for an IT Service — Provisioning an Engineering Workstation
Assignment Material Quantity Quantity Extended

Code Unit
unit Used Cost
$
$
$
$
$
$
$
Source: Volvo IT
Notice that the cost sheet in Figure 4 is similar to a standard bill of material. This is important
because this structure allows for a standard cost system to be implemented. A standard cost
system is much less costly to implement than an actual cost system because time sheets are not
required. The unit of measure for each service and for each resource consumed by the service
allows the costs of each service to be estimated once each year, thereby reducing the cost of
administering the cost system by an order of magnitude (see "IT Resources Planning: Actual
Costing vs. Standard Costing").
■ Basing the rules for IT costing on the costs and benefits of data collection
■ Lowering the cost of administering the IT cost system by using a standard costing system
Our research shows that the biggest challenges to implementing a chargeback or even showback
system for IT expenses comes from the finance department. The reason is prior experience with
cost systems without rules based on the costs and benefits of data collection. Without rules, these
cost systems can quickly become huge administrative burdens. Signs that the cost system lacks

proper rules include IT service catalogs that look like telephone books, or actual cost systems
requiring IT employees to code their time each day to a dozen or more services that they may be
working on. Common sense rules — for example, defining the granularity of IT costs to the point
where the costs of data collection and reporting equal the benefits of desired behavior. For
guidance on how to implement an effective IT cost system, see the Recommended Reading section
for our research on IT resources planning.
Volvo IT 4.0 (2008 to 2011)

Optimization and proactivity: In 2008, Volvo IT became a truly global service provider. Optimizing
IT service management became an initiative during this phase of its maturation. The goals being
addressed by this initiative were:
■ Growing the maturity level of customer relationships to promote more enterprise value from the
IT services that were defined and delivered
■ Standardizing and simplifying the technologies used to deliver IT services
Volvo IT made a conscious effort to move IT services from the technical to the business side of the
IT service continuum in Figure 5.
Figure 5. IT Service Continuum
Maturity Level
Low High
Technical Business
Source: Gartner (June 2012)
This evolution was driven by the maturity level of the relationships Volvo IT had with its customers.
External customer relationships (non-Volvo Group) are on the lower end of the spectrum, while
internal customer relationships are a bit more mature, relatively speaking.
Focusing on IT service management also revealed a gap in organizational capabilities. To achieve

economies of scale in IT while meeting customer needs, the IT solution units were formed (see
Figure 6). IT solution units work with customer relationships and sales (CR&S — formerly account
management) to leverage IT capabilities across as many business needs as practical.

Figure 6. Volvo IT Supply-Side Organizational Structure in Phase 4
Client Unit (CR&S) Solution Units Delivery Units

Manage Customer Do the Right Thing Do the Things Right
Relationship
New application
needed *
Line management and/or

competence expert
Proposal content and
Proposal Account Proposal delivery commitment
Customer
manager management
Delivery by
Order
project
team
Discover and • Selecting
define solution
Maintenance
opportunities • Make or buy? by
• New or reuse? maintenance
team
• Appoint
chairman Hand over to
maintenance
Solution Units Internal Communication
* This is only an example illustrating how Volvo IT interacts with its customers and meets their needs.
Source: Volvo IT
Solution units define IT services that meet CR&S needs. The solution unit's role is to assess and
evaluate new (and existing) IT service requests, make decisions about whether to repurpose an
existing solution or create a new one, and decide how to source the solution (make or buy).
Obviously, there can be situations in which a particular business need can be addressed by only
one technology or solution provider, but Volvo IT must agree to it. Differences of opinion on issues
like this are resolved by the governance department. The solution units work with the governance
department to determine whether the IT service request (new or updated) will be funded.
Also during this phase, there was a fundamental shift in thinking about IT investments. The business
services offered by Volvo IT are constantly monitored. When new business services or updates to
existing business services are requested, a business case must show the implementation and
postimplementation costs. This shifts the focus on value creation from projects (the focal point of
most enterprises) to services, because the need for projects (change) comes from service requests.
This fundamental shift in thinking aligns IT investments much more closely with how IT spending
actually occurs — 30% capital expenditure and 70% operating expenditure.
In 2011, Leif Johansson left Volvo Group, and Olof Persson became the new CEO.

■ Optimizing IT service management by maturing the relationships between IT and the rest of the
business improved productivity in the business and the economies of scale from IT.
■ Shifting the focus of IT value creation from projects to services aligned IT investments with what
was driving overall IT spending.
Gartner has extensive research on best practices in IT service management (see Recommended
Reading). Explore this research and discuss the shift in thinking from projects to services in how
value is created from IT investments.
Volvo IT 5.0 (2011 through the present)

Shaping another future: Volvo Group has begun a major transformation to relax some of the
formality around the supplier/customer relationships among business functions while preserving the
responsibility for value contribution among these functions. This is helping IT service management
because it was easier to find common needs with less formality. In general, the transformation is
designed to reduce complexity and promote collaboration. Relaxing the formality around the
customer/supplier relationship is much different from never understanding it in the first place.
Relaxing the transactional formality without losing the productivity and economies-of-scale benefits
to enterprise value was only possible because awareness of these benefits was embedded in the
business culture of Volvo Group from Phase 1 through Phase 4.
The role of the CIO merges into the business of Volvo Group through the creation of a new role:
global head of business processes (see Figure 7).

Figure 7. The Integration of IT With the Rest of the Business
CEO
Corporate
Process Process & IT
Members of
& IT
Council Owner
Corporate Corporate
S&M S&M S&M Solution Process
GTT GTO Governance Governance
(Americas) (EMEA) (APAC)
Process
Framework
Com/Group Owner
P&IT P&IT P&IT P&IT P&IT
Members of
Portfolio Portfolio Portfolio Portfolio

Committee Committee Committee Committee Owner
Process Process Process Process Process

Committee Committee Committee Committee Committee
Member of
Corporate Process and IT Line Organization Process Steering Portfolio Steering
Source: Volvo IT

Figure 7 shows the relationship that the corporate process and IT team has with the business units.
An analogy for this is that the corporate process and IT team owns the "railway," while the business
units own the "trains."
■ Recognizes that the IT business services must evolve from technical to business services to
achieve optimal value from IT expenses.
■ New corporate process role is created to fuse IT with the rest of the business. The focus of this
new role shifts from technology utilization (supply-side IT) to business process optimization.
The fifth phase of Volvo IT's maturity is what Gartner calls the value-optimizing IT delivery model
(see "Financial and Performance Management in the Value-Optimizing IT Delivery Model"). This
model is the highest level of maturity in the IT service management hierarchy. The financial
management focus expands beyond accounting and day-to-day operational activities to future
opportunities and threats brought on by technology-driven change. The enterprise value creation
competencies in this delivery model merge IT with business skills because of the recognition that
competitive advantage through innovation comes from technology-driven change.
Bottom Line
The following are the key concepts to determine the right level of IT operational spending:
1. Define, validate and adjust your IT business service portfolio (no more than 15 services) with
your business clients, because they must have final say on what (not how) services are
delivered.
2. Develop the standard cost for each IT business service using a bill-of-materials construct (the
Gartner ITBudget tool can help).
3. Benchmark IT business service costs at the bill-of-materials (component) level, and roll them up
to an aggregated market price for each IT business service.
4. Charge for all IT business services. If internal costs are higher than external alternatives, then
outsource, but make sure to compare costs fairly.
5. Business people are not stupid and will only consume the IT services they need, up to the point
where costs equal benefits. This is the right level of IT operational spending.
The problem statement — "How can CIOs help the enterprises they support to avoid the negative
effects of suboptimized funding of their IT departments?" — is addressed by managing IT like a
business. CEOs and CFOs will accept this answer because it is measurable, auditable and
monetized.

Recommended Reading
Some documents may not be available as part of your current Gartner subscription.
"How to Link IT Metrics to Business Value"
"ITSM Fundamentals: How to Create an IT Service Portfolio"
"ITSM Fundamentals: How to Construct an IT Service Catalog"
"Running IT Like a Business 2.0: The Service-Optimizing IT Delivery Model"
"IT Resources Planning: Using Business Concepts to Manage IT Resources and Costs"
"IT Resources Planning: Actual Costing vs. Standard Costing"
"Financial and Performance Management in the Value-Optimizing IT Delivery Model"
Evidence
1Volvo Group is headquartered in Torslanda, Sweden, with nearly $45 billion in annual revenue. In
2011, it was one of the world's largest suppliers of commercial transport solutions, with products
such as trucks, buses, construction equipment, drive systems for marine and industrial applications,
and aircraft engine components. Volvo Group has customers in more than 180 countries worldwide,
mainly in Europe, Asia and North America. The company has about 100,000 employees and
production facilities in 19 countries.
Volvo IT is a wholly owned subsidiary of Volvo Group, with more than 40 years of experience in
supplying IT solutions to Volvo Group. Today, Volvo IT is a global company, with approximately
8,000 employees in more than 35 locations worldwide delivering reliable IT solutions to customers
across multiple industries.
More on This Topic

This is part of an in-depth collection of research. See the collection:
■ Mature Your IT Financial Management Capabilities

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Volvo IT: Running IT as a Business

FOUNDATIONAL Refreshed: 3 November 2016 | Published: 25 June 2012 ID: G00235742

Analyst(s): Michael Smith

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Figure 1. Effects of IT on Labor Productivity............................................................................................4

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Non-IT Capital 0.65%

… but IT productivity is not the same for all companies.

Source: Gartner (June 2012)

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2012 IT Spend as a Percentage of Revenue

Annual Revenue Annual Revenue

Banking 7.3 6.2

Construction & Materials 1.6 1.1

Education 5.6 3.3

National Government 10.8 7.9

State & Local 4.6 1.8

Retail & Wholesale 1.9 0.9

Telecommunications 4.9 3.8

Transportation 3.5 2.3

Utilities 4.2 1.7

Across 15 Industries 5.04 3.16

Source: Gartner IT Key Metrics Data (June 2012)

Gartner, Inc. | G00235742 Page 5 of 17

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Case Study: Volvo IT

Volvo IT 1.0 (1998 to 1999)

■ Senior management realized the strategic value of a strong IT department.

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Volvo IT 2.0 (2000 to 2005)

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Account Management Delivery Units

Line management and/or

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How Gartner clients can apply these concepts:

Volvo IT 3.0 (2006 to 2008)

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Figure 4. Cost Sheet for an IT Service — Provisioning an Engineering Workstation

Assignment Material Quantity Quantity Extended

How Gartner clients can apply these concepts:

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Volvo IT 4.0 (2008 to 2011)

Figure 5. IT Service Continuum

Source: Gartner (June 2012)

Focusing on IT service management also revealed a gap in organizational capabilities. To achieve

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Client Unit (CR&S) Solution Units Delivery Units

Line management and/or

Solution Units Internal Communication

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How Gartner clients can apply these concepts:

Volvo IT 5.0 (2011 through the present)