Determining optimal IT service levels is fundamentally an economic decision that balances business needs against the cost of service delivery. A cost-benefit analysis is the primary method for this, as it systematically evaluates the value (benefit) a specific service level provides to the business versus the resources and financial investment (cost) required to achieve and maintain it. Higher service levels (e.g., 99.999% uptime) are progressively more expensive. The "optimal" level is the point where the business value derived justifies the expenditure, ensuring that IT resources are aligned with enterprise objectives and not over-provisioned at an unjustifiable cost.

A. Internal rate of return: This is a specific capital budgeting metric to evaluate the profitability of an investment, not the primary framework for setting ongoing operational service levels.

B. Recovery time objective (RTO): RTO is a critical component of a service level agreement (SLA) related to business continuity, but it does not encompass all aspects needed to determine the overall optimal service level.

D. Resource utilization analysis: This analysis measures operational efficiency. While it informs the cost side of the equation, it does not determine the required service level from a business value perspective.

1. ISACA

CGEIT Review Manual

8th Edition (2020). Domain 2: IT Resources Optimization

Task Statement 2.4: "Ensure that IT services and service levels are defined

managed and monitored." The manual emphasizes that service levels must be based on business requirements and that a cost-benefit analysis is essential to ensure the cost of providing a service does not exceed the value it delivers to the business.

2. ISACA

COBIT 2019 Framework: Governance and Management Objectives (2018). Management Objective APO09: Managed Service Agreements. Practice APO09.01

"Identify IT services and service level options

" involves defining a service catalog and establishing service levels based on business requirements

capabilities

and a cost-benefit analysis for different service level options. This directly links the determination of service levels to a cost-benefit trade-off.