A Business Case for IT Service Management - BCS … School 2014 MK v4.pdfA Business Case for IT...

Maggie Kneller FBCS CITP

BCS Bristol Branch Spring School 2014: 3rd March 2014

A Business Case for IT Service Management

Benefits & value from good IT Service

Management Avoiding the costs, risks and issues from poor IT

Service Management

A Business Case for ITSM

Introductions

30 Years practitioner experience, across every service lifecycle stage

Application Development and Project Management

Infrastructure and Service Delivery Management

General Management, Sales and Financial Management

IT Strategy and architecture

ITSM professional experience

ITIL examiner since 1995, ITIL and ISO 20K assessor since 2004

Past chair of itSMF UK and interim CEO for itSMF UK and International

Chair of ISEB Service Management Board 2000 - 2003

Contributor to ITIL books at v1, 2 and 3

Author of ‘Essential ITIL’ and ‘Executive Guide to ITIL’

BCS

Trustee and Council Member

Assessor for CITP, CEng and Fellowship

Secretary of Bristol Branch

Topics and Scope

What can go wrong if good service management

principles are not followed?

Why would developers need to understand service

management?

Why do we need a ‘service lifecycle’?

Why is good service

management important?

Common mistakes and what can be

done to avoid them

Why is IT important?

In the UK approx. 1 in 20 people work in IT & telecoms

26.5 million people use IT in their daily jobs

Less than 1% companies worldwide could cope without the Internet

IT represents a large % of total business expenditure

Many business functions totally rely on IT

IT doesn’t just support business, IT powers business

IT is at the heart of industry and fundamental to our lives

Good quality IT

Reputation and brand

Sales and revenue

Why is IT important?

Most organisations depend on IT to help them achieve their vision, strategy and objectives

Organisations use IT to

Transform the way they operate, communicate and do business

Innovate, gain market advantage and differentiate themselves to their customers

Improve productivity and increase sales and growth

Improve business processes and efficiency and make cost savings

Communicate with a global marketplace

Cost versus Value

The cost of IT is never insignificant

It is important to get good value from IT investments

However, the potential business value is not always realised

Where does the business get value and benefit from?

From IT applications / systems in live operation

Not from projects in development

What is an IT service?

From the customer’s perspective

From the service provider’s perspective

What is an IT service?

The main focus for developers

The focus for Service Management

Functionality

Service levels

Network access

Infrastructure components

Support and maintenance

Measures & metrics

Operational processes

Management systems & tools

Ongoing costs

Customer Service

Value to the business relies on the performance of all these things, not just the functionality

Operational architecture

Enhancements & upgrades

Security

IT Service Management

For an IT investment to deliver its potential value, the resulting IT service needs to be:

Well planned,

Well designed,

Well implemented,

Well delivered, and

Well received

This is what the practice of IT Service Management is about

IT Service Management

The professional practice of planning, designing, developing, delivering and optimizing IT services that are both fit for purpose and fit for use - thus ensuring value and return on investment can be maximised

A specialised discipline that includes the methods, processes, activities, functions and roles needed by a service provider to deliver IT services that provide business value for its customers

A growing profession of people, skilled and committed to delivering high-quality IT services that provide measureable value for the businesses that use them

Service Strategy

Service Design

Service Transitio

n

Service Operatio

n

The service lifecycle

Continual Service Improve-

ment

Benefits of good IT Service Management

IT services that align with business priorities and objectives - helping the business achieve their strategic objectives

Known, manageable IT costs - helping the business manage its finances

Reliable services that work when the customers need them - leading to better business efficiency, effectiveness and productivity

Improved resource management and reduced rework within IT - saving the company money

More effective management of change - enabling the business to keep pace with change and drive change to its advantage

Better customer satisfaction with IT - and better end-customer perception and brand image

Poor IT and business alignment

Lack of customer focus

Poor linkage between ‘development’ and ‘operations’

Focus on service utility but not service warranty

Poor cost management

Common Problems

IT and Business Alignment

Monitoring server X

High availability of ‘Stores’ IT service

Stock items can be quickly

located 24 x 7

Critical factory

repairs can be made whenever required

Factory always runs

at high capacity

Product manufacture keeps pace with sales demands

Maximizing sales

returns

IT and Business Alignment

IT must be of value to the business

It must be possible to see a direct or indirect link between the IT and the business processes / priorities / objectives

If any IT component doesn’t have a purpose relevant to the business, then its existence should be questioned

How to recognise Good & Bad practice

Misalignment between IT and the business:

A poor relationship between IT and the business at all levels

It is not clear what services exist and what purpose they serve

IT priorities out of line with business priorities

Urgent business needs not dealt with quickly enough

IT services more technology focused than business focused

This indicates poor service strategy

Alignment between IT and the business:

A close relationship between IT and the business - a trusted partnership

A clear understanding of the services in operation and the pipeline of services in concept or development, all of which serve a valued business purpose

IT services focus on business priorities & needs

IT understand the business value from each service, and responds to requests and incidents in a way that reflects this value

The business is able to judge the value it gets from IT

What we need to Consider

Business relationship management - high level, strategic relationship between IT and the business / customers

Good understanding of the business, business priorities and objectives

Service portfolio management - understanding the Service Catalogue (services in operation) and the Service Pipeline (services in concept or development) and making sure they all have a clear business purpose

Clear (direct or indirect) value chain between all aspects of IT services and the business activities and objectives

Lack of Customer Focus

Actual (measured)

service

Customer’s expectation of

service

EX

PE

CTATIO

N G

AP


Actual (measured)

service


service

Customer’s perception of

servicePERCEPTION GAP

EX

PE

CTATIO

N G

AP


Actual (measured)

service


service



SE

RV

ICE

QU

ALI

TY

EX

PE

CTATIO

N G

AP

Level of dissatisfaction


Actual (measured)

service


service



SE

RV

ICE

QU

ALI

TY

EX

PE

CTATIO

N G

AP

Level of dissatisfaction

Service Levels

SERV

ICE

LEVE

L

SHORT

FALL

Focus of typical service review


Actual (measured)

service


service



Service Levels



Poor customer focus:

Communication between the service provider and customers is difficult

Even though service levels are met the customer isn’t satisfied

IT uses technical jargon when talking to the customers and in SLAs

IT services do not meet the customer expectations

Customers generally have a poor perception of IT services

Good customer focus:

SLAs are written in non-technical language and in terms the customers understand, reflecting business priorities and value

Service providers are concerned with customer expectations and perceptions, as well as service levels

Customers understand what the IT service is supposed to deliver

Customers are generally happy with IT services

Even when things go wrong, the customers are confident that the service provider will deal with it in an effective way


When designing the service and SLAs, focus on what is really important to the customer and test the customer’s understanding of the service levels

Make sure service levels are written from a customer perspective

Maintain an ongoing dialogue with the customer - check their expectations and perceptions regularly

Important to have staff with good ‘soft skills’ involved

Don’t rely solely on agreed service levels because requirements change over time - regularly check whether the customer is happy with the service and what is important to the customer

Linkage between development & operations

Development Operations

BUSINESS NEED

BUILD

REQUIREMENTS

DESIGN

TEST

IMPLEMENT

The end

The Development Process:


Handover to Operations:


BUSINESS NEED

BUILD

REQUIREMENTS

DESIGN

TEST

IMPLEMENT

OPERATIONS

A perfect process ?

DEVELOPMENT



Poor linkage between development and operations: Projects focus on development with little

consideration for the IT service - the end product of development

ITSM people and skills are not used during design and development

The developers hand over the service to operations believing it to be ready but the service initially fails to deliver the required business benefits

Rework is required to make the service work correctly

This indicates issues with service design and transition

Good linkage between development and operations: Projects focus on all aspects of the IT service

People with ITSM skills are involved in the design and development of new services

Any shortfalls in design are picked up during service transition, and the service is not accepted into operation until it is able to deliver benefit and value, and work correctly

Developers provide early life support when the service goes live so that any problems are addressed quickly and effectively

Aspects of IT service, which need to be planned, designed, developed, tested, implemented include:

Service solution

Architectures

Infrastructure components

Measures and metrics

Management information system, tools and techniques

etc……


Developers involved in ELS

BUSINESS NEED

BUILD

REQUIREMENTS

DESIGN

TEST

IMPLEMENT

Service Requirements - utility and warranty

Develop Processes, Measures, SLAs, OLAs…

Service Design - including resourcing, sourcing….

Controlled deployment

Test against Service Requirements / SAC Ensure operational readiness

Business Engagement, business case, sourcing strategy

LIVE OPERATION

Service Management involvement throughout the Development Process

Service management involved throughout the lifecycle, to design, build, test and implement the IT service - developers involved in early life support


Focus on Service Utility but not Service Warranty

Fit for purpose but not fit for use!


BUSINESS NEED

BUILD

REQUIREMENTS

DESIGN

TEST

IMPLEMENT

Do we need to think about service levels yet?

What are service levels?


Service levels below expectations

Operational costs above expectations

Problems with operational service

Project Team disappeared

Operations ‘Responsible’ to sort out the ‘problem’

Likely to result in:

So what happens Next?


Service Improvement Programme


Focus on utility but not warranty:

IT services regularly fail and there are unexpected service disruptions

When problems and failures occur, they take a long time to recover

Capacity issues, and the need for unexpected purchases and costs

Operational costs are generally above expectations

This indicates poor design of the IT service

Focus on both utility and warranty:

IT services are designed to work in operation, available and reliable, performing as expected

Incidents and problems are dealt with quickly and effectively

Unexpected incidents are resolved in such a way that users and customers are involved in decisions and kept informed

Capacity is monitored and any purchases are planned and budgeted


It is a common mistake to design IT services that are fit for purpose but not fit for use

- This will delay (or even prevent) the delivery of business benefits

- Retro-fitting IT service design at a later date is a high-risk strategy, which will be more costly and may even prove impossible

Once in operation, it may well be too late to make significant impact on the cost of ownership of an IT system

Once developed, it may be too late to get the service levels expected at a reasonable cost - and sometimes the required service levels cannot be met at all - meaning business benefits won’t be achieved

Application design severely constrains service level potential and cost of ownership

Service improvement can only do so much, it cannot re-engineer the operational design of a system

Focus on Utility and Warranty

Meaningful debate on service level options and costs BEFORE constrained by application design

Define the service in terms of all its service requirements - warranty requirements as well as utility requirements

Design the service in terms of warranty as well as utility

For significant changes / projects create a service design package (SDP) and service acceptance criteria

Warranty requirements include:

Capacity, Security, Availability, Reliability, Continuity

Hours of Service

Availability

Back-up & Recoverability

Service Continuity

Security

Privacy

Response times and throughputCapacity and GrowthResilience to IncidentsRobustness to Business ChangeNeed for FlexibilityLevel of Data Integrity……etc…….

Poor Cost Management


Poor cost management:

IT is considered expensive and not good value for money

Customers are not happy about costs

IT services cost more than the customer expected

Costs are not well controlled

Flawed business cases that cannot be achieved

This indicates lack of focus on the ongoing operational cost during service design

Good cost management:

Cost and value of IT are both understood by the customer and the service provider

The customer considers IT good value for money

The cost of ownership for IT service has been designed in, and was agreed in advance by the customer who pays for the service

Changes to cost of ownership are planned and agreed by service provider and business customer

Cost

Performance

Functionality

What can we do?

It is a common mistake to focus on one-off project costs but not the ongoing operational costs

Or to focus on the costs associated with utility but not warranty

Consider all costs, including development of the service and all ongoing operational cost

Discuss costs with the customer at an early stage during service design

Costs should be considered alongside functionality and performance (as well as delivery schedule) - plan to achieve a balance that is acceptable to the customer

Operational Cost

Indirect Overhead

Cost(to

apportion)

Discretionary Cost

Mandatory enhancements

Support

Maintenance

Delivery

Developments

Non-mandatory enhancements

infrastructure development

Operational Cost

By App (type)

By Area of Architecture

By owning business area

Understanding costs and cost of ownership

Identify and track the cost of ownership of each IT service

Ensure that internal customers are aware of the costs associated with their IT service(s)

Cost Management

Go Live

Cum. £

Time

KEYCum.CostBenefit

How long to achieve payback?

Live OperationDevelopment

Realistic business cases for IT investments - followed up through the service lifecycle and when the service is operational

Poor Service Transition

Continual Firefighting

Some other Common Problems


Poor transition management:

Changes happen without users and support services being aware

Lots of ‘emergency’ changes

New services and changed services are initially fraught with problems, and may also lead to unexpected issues with other services

Operational staff are distracted from their day-to-day tasks to deal with the problems caused by change

This indicates poor service transition practice

Good transition management:

There are release schedules identifying new and changed services which are clearly communicated

The risks and potential impacts of changes are discussed with stakeholders before the changes take place

Risks and impacts are mitigated where possible and there are fall back plans

The changes are approved, planned and implemented in a way that causes minimal disruption to the business

Service design packages (SDPs) are created for all significant changes


Continual Firefighting:

Too many incidents and problems

Many failures and disruptions to service

Operational staff are continually ‘fire fighting’ and this prevents them doing more proactive tasks

The same problems seem to recur

Failures have a disruptive effect on the business

This indicates poor service operation practice

Incidents and problems are under control:

Although there are sometimes failures, they are resolved effectively and users / customers are kept informed

A proactive approach is taken to problem solving, whereby problems are anticipated and prevented before they occur

Problem reviews take place and lessons are learned, with the result that problems are rarely repeated

Users are confident about the support they get from IT

Service Strategy

Service Design

Service Transitio

n

Service Operatio

n

The service lifecycle

Continual Service Improve-

ment

Service Strategy

Service Design

Service Transition

Service Operation

Benefits and Features - Service Strategy

Focus on the value of IT services from the perspective of the business

A portfolio of IT services that support business strategy and align with business objectives

IT investment decisions result in tangible and quantifiable business value

IT costs are planned, understood, agreed with the business and managed

A strategic approach to service development, so that IT services benefit from industry knowledge and corporate learning

Continual Service

Improve-ment

Service Strategy

Service Design

Service Transition

Service Operation

Benefits and Features - Service Design

IT services are designed to meet business objectives

IT services are designed to be both fit for purpose and fit for use

The Cost of ownership of each service is planned to achieve a return on investment

Functionality, cost and performance are balanced - services are designed so that functionality, cost and performance are acceptable to the customer

Potential risks are considered during service design and mitigated, so the resulting IT service has designed protection from threats

The resulting IT services are more stable and predictable once in operation

Continual Service

Improve-ment

Service Strategy

Service Design

Service Transition

Service Operation

Benefits and Features - Service Transition

IT changes are managed and controlled

Failures and service disruptions resulting from change are reduced

Unexpected impacts to day-to-day operation as a result of change are avoided

Change cycle time is reduced significantly

More change can be achieved, faster, cheaper and with less risk, which potentially drives additional value for the business

The pace of change creates organisational agility

Continual Service

Improve-ment

Service Strategy

Service Design

Service Transition

Service Operation

Benefits and Features - Service Operation

Business customers are able to achieve the expected benefits and get value from their operational IT

IT services operate reliably and securely, avoiding failures and unexpected disruptions

Incidents and problems are dealt with professionally and responsively, addressing root cause as well as symptoms

Customers are kept well informed and users have confidence in the operational IT services they use

Costs are kept under control

Continual Service

Improve-ment

Service Strategy

Service Design

Service Transition

Service Operation

Benefits and Features - CSI

Learning from experience and making improvements

Reviewing IT services regularly to ensure they are still aligned with changing business requirements and priorities

Looking for ways to improve quality, reduce costs, improve effectiveness and efficiency

Taking advantage of technology improvements where appropriate

Creating organisational agility through continual improvement of quality and reliability of critical IT

Continual Service

Improve-ment

A Business Case for ITSM

BENEFITS OF GOOD ITSM

Achieve required service levels at a cost the business is willing to pay

No surprises

Business knows what to expect

No need for rework, retrofit and service improvement after implementation

Good quality service by design

Value of IT and service management recognised by the customer

More manageable IT costs

AVOIDING COSTS RISKS & ISSUES OF POOR ITSM

Unlikely to achieve required service levels

Lower quality of service - robustness, resilience, security, continuity, recoverability, ….

Rework may be needed

Business productivity reduced

Business dissatisfied with service

Unknown ongoing costs, unbudgeted expense, higher cost of ownership

Spiralling costs outweigh benefits, seen as poor value for money

Business suffers as a result

Quick Wins

Send key development staff on ITIL training - focusing on service design and service transition practices

Rotate development staff into front-line operational roles, so they get first-hand experience of the consequences of poor service design and they collect ideas for improving service design practices

Send front-line service management staff to work in user areas so they better understand the impact of poor service operation

If possible send key service management staff to other organisations for a short period, to immerse them in good service culture and practice

Undertake a high-level assessment of ITSM processes to identify which could benefit most from improvement, following the 80:20 rule

Analyse IT costs by service - start to gain control of costs of ownership

THANK YOU

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