ITIL Training - Part 5

8/13/2019 ITIL Training - Part 5

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IT Infrastructure Library (ITIL)Part 5Service Level ManagementIT FinancialCONNECTING BUSINESS &TECHNOLOGY

11/25/20131


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C O N N E C T I N G B U S I N E S S & T E C H N O L O G Y

Agenda

Service Delivery Model

Service Level management

IT Financial Management

2


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Service delivery process model


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Agenda




4

The process of defining, agreeing, documenting and

managing the levels of customer IT service, that are required

and cost justified.


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SLMOverview

What is an SLA ?

A written agreement between anIT Service provider and the ITCustomer(s), defining the keyservice targets andresponsibilities of both parties

Goal

The goal for SLM is to maintain and improve IT Service quality, through aconstant cycle of agreeing, monitoring and reporting upon IT Serviceachievements and instigation of actions to eradicate poor service - in line withbusiness or Cost justification.

Scope

All IT services

And Contacts with Suppliers

Operationnal Level Agreements


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Service Level Management - process

Define

Services:Internal

& external

Service

Level

Requirements

Establishrequirements

Service

Spec sheets

Service

Quality

Plan

Contractnegotiations

Service-

catalogue

Service

Level

Agreements

Operational

Level

Agreements

Underpinning

contracts

Monitor:Service

Levels

Service

Level

Achievements

Report/evaluate

Service

Improvement

Program


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Service Level Management - Benefits

Benefits IT Services are designed to meet Service Level Requirements

improved relationships with satisfied Customers

both parties to the agreement have a clearer view of roles and responsibilities

there are specific targets to aim for and against which service quality can bemeasured, monitored and reported

IT effort is focused on those areas that the business thinks are key

IT and Customers have a clear and consistent expectation of the level of servicerequired (i.e. everyone understands and agrees what constitutes a Priority OneIncident, and everyone has a consistent understanding of what response and fix timesare associated with something called 'Priority One')

service monitoring allows weak areas to be identified, so that remedial action can betaken (if there is a justifiable business case), thus improving future service quality

service monitoring also shows where Customer or User actions are causing the faultand so identify where working efficiency and/or training can be improved

SLM underpins supplier management (and vice versa) -


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SLM : implementing the process (1)

Produce a service catalogue

A service is one or more IT systems wich enable a business process Define a hierarchy

Separate services seen by the customer (business service) and services not seen bythe customer (infrastructure, system, network application services)

A service could be defined as a CI (Configuration Item)

Customer Service Accounts Sales Marketing Legal Production Retail Warehous

e

Transport Design

Payroll SystemAccounts System

Invoicing

Customer D/Base

Sales D/Base

Stock Control

Legal System

Factory Production

Suppliers D/Base

Ordering

Logistics

Postal Addresses

CAD/CAM

Intranet

Internet

Routemaster

Office Suite

E-mail


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Expectation Management

Satisfactin = ExpectationPerception SLA are just documents and themselves doesnt improve the quality level

Support of business managers to to manager excessive or unrealisticdemands (costs)

SLA Structure

Service based : mailing service

Customer based : finance department

Multi-levels SLA : coprporate level + customer level + service level

Establish Service Level Requirements and Draft SLA

Iteractive process based on a first outline draft (as a starting point)

Negociate requirements vs charging

Wording of SLAs Clear and concise without ambiguity


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Seek agreement With customer representatives

Care about the current issues. Establish long term requirements.

Start with a pilot SLA if no previous experience

Identify customer requirements at all levels (cost, responsivenss,availability)

Consult IT provider representatives to be sure that targets arerealistic and achievable

Take into account suppliers contractual implications

Establish monitoring capabilities All targets in the SLA must be monitored and measured.

Monitoring must match the customer perception Links to the service desk


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Review underpinning contracts and operationnallevel agreements Contracts with external suppliers are mandatory

Establish simple agreement with internal groups

Contracts with external suppliers are

mandatory

OLAs need to be simple but must includeequivalent targets than SLA (responsetime, open hours)


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Define reporting and review procedures SLA reporting mechanisms must be defined and agreed with the customers

Frequency and format must be agreed

Define period to review SLAs (annually for example)

Publicise the existence of SLAs

Service Desk

Support groups

Suppliers

Customers

=> Extract key targets


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SLM : ongoing process (1)

Monitoring and reporting

Launch monitoring when SLA is agreed Produce Service achievement reports (with exception reports if SLA

is broken)

Example of

SLAM chart

(front report)


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SLM : ongoing process (2)

Service review meetings Periodic review meeting with customer representatives to

analyse the last period

Preview any issues for the coming period

Actions must be minuted

Service Improvement Program

To resolve issues impacting service quality In relation with problem management and availability management

Driven by service review meetings

Maintenance of SLAs, contracts and OLAs

Keep up to date

To be reviewed annualy

Align to business needs and strategy

Verify services and targets


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SLM : SLA contents (1)

Introduction parties to the agreement

title and brief description of the agreement

signatories

dates: start, end, review

scope of the agreement; what is covered and what is excluded

responsibilities of both the Service Provider and the Customer

a description of the Services covered.Service hours

the hours that each service is normally required (e.g. 24x7, Monday to Friday08:00 - 18:00)

arrangement for requesting service extensions, including required notice periods(e.g. request must be made to the Service Desk by 12 noon for an eveningextension, by 12 noon on Thursday for a week-end extension)

special Hours (e.g. public holidays) service calendar.


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Availability

Availability targets within agreed hours, normally expressed as percentages -measurement period and method must be stipulated. This may be expressed forthe overall service, underpinning services and critical components or all three.However, it is difficult to relate such simplistic percentage Availability figures toservice quality, or to Customer business activities. It is therefore often better to tryto measure service UnAvailability in terms of the Customer's inability to carry outits business activities. For example, 'sales are immediately affected by a failure of

IT to provide an adequate POS support service'. This strong link between the ITService and the Customer's Business processes is a sign of maturity in both theSLM and the Availability Management processes.

Reliability

usually expressed as the number of service breaks, or the Mean Time BetweenFailures (MTBF) or Mean Time Between System Incidents (MTBSI).


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Support support hours (where these are not the same as Service hours)

arrangement for requesting support extensions, including required notice periods

special hours (e.g. public holidays)

target time to respond, either physically or by other method (e.g. telephonecontact, e-mail), to Incidents

target time to resolve Incidents, within each Incident Priority - targets varies

depending upon Incident priorities.Throughput

Indication of likely traffic volumes and throughput activity (e.g. the number oftransactions to be processed, number of concurrent Users, amount of data to betransmitted over the network). This is important so that performance issues which havebeen caused by excessive throughput outside the terms of the agreement may beidentified.

Transaction response times target times for average, or maximum workstation response times (sometimes expressed as a

percentile - e.g. 95% within 2 seconds).


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Batch turnaround times times for delivery of input and the time and place for delivery of output.

Change targets for approving, handling and implementing RFCs, usually based upon the Category or

Urgency/priority of the Change.

IT Service Continuity and Security a brief mention of IT Service Continuity Plans and how to invoke them, and coverage of any

security issues, particularly any responsibilities of the Customer (e.g. back-up of free-standing PCs,password Changes)

details of any diminished or amended service targets should a disaster situation occur (if noseparate SLA exists for such a situation).

Charging details of the charging formula and periods (if charges are being made). If the SLA covers an

Ouitsourcing relationship, charges should be detailed in an Annex as they are often covered bycommercial in confidence provisions.


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Service reporting and reviewing

the content, frequency and distribution of service reports, and thefrequency of service review meetings.

Performance incentives/penalties

Details of any agreement regarding financial incentives or penaltiesbased upon performance against service levels. These are more likely to

be included if the services are being provided by a third-partyorganisation. It should be noted that penalty clauses can create their owndifficulties. They can prove a barrier to partnership if unfairly invoked on atechnicality and can also make service provider staff unwilling to admit tomistakes for fear of penalties being imposed. This can, unless usedproperly, be a barrier to effective Problemsolving.


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SLM : Key Performance Indicators and metrics

What number or percentage of Services are covered by SLAs?Are Underpinning contracts and OLAs in place for all SLAs and for whatpercentage?

Are SLAs being monitored and are regular reports being produced?

Are review meetings being held on time and correctly minuted?

What number or percentage of Services targets are being met and whatis the number and severity of service breaches?

Are service level achievements improving ?

Are Customer perception statistics improving?

Are IT costs decreasing for services with stable (acceptable but not

improving) service level achievements?

A d


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Agenda




21


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Introduction (1)

Introduce formal finacial Management for IT Services, becauseIT costs grow faster than other costs :

Increases in Users numbers

New technologies, more complex

New needs

Three main processes

Budgeting (predicted costs)

IT accounting (costs of resources usage)

Charging (costs back to Business Unit)


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Introduction (2)

Relationship with other IT Service Management processes Service Level Management: SLA = customers expectations and IT

services obligations

Capacity Management: estimate the costs of the desired capacity andavailability of the system

Configuration Management: asset informations

Business vs IT


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Financial Management - process

Business IT

Requirements

IT Operational plan

(Budgeting)

Cost analysis

(Accounting)

Charges

(Charging)

Costing models

Charging policies

Feedback of proposed charges to business (Report)

Service Level Management Financial Management


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Financial Management - Financial model

Purchase

And

depreciation

Lease

Licences/

maintenance

Salaries

Training

Expenses

(travel,

meals ..)

Housing

cost

Charges from

departments

Management/

administration

Equipment

Cost

(HW/SW)

Product

cost

Product A

Product B

Product C

Product D

Product E

=Organisation

cost

Overhead

Rates

Revenue

=Invoice/

charging

Number of

sales

BM 5-3-2002

Budgeting/cost accounting Products/charging

+


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Budgeting (1)

Budgeting process has a key influence on strategic and tactical plans

Periodic (e.g. annual) round of negotiations between the business departments andthe IT organisation covering expenditure plans and agreed investment programmes

Example

Budget Item Capital Purchase

Cost

Annual

Maintenance

Spend

ThisYear

Budget

NextYear

Notes Annualised

Cost

Hardware

UNIX Server Yes 80,000 8,000 8,000 8,000 No changes 34,667

NT Server Yes 10,000 1,000 1,000 1,000 No changes 4,333

ORACLE No 7,000 7,000 8,400

Marketing and Sales appl. No 3,000 3,000 3,600

MS Windows (50-User) No 2,500 2,500 3,000 Staff increase


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Budgeting (2)

Estimating the cost of budget items Arbitrage

Expenditure trends

Depreciation

Estimating the cost of workload dependent budget items

Workload estimations

Targets

Forecasts


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IT Accounting (1)

Business Perspective

Charge for IT services or not ?

Different organisations

Accounting Centre (costing inputs)

Recovery Centre (costing outputs / services)

Profit Centre (separate business entity) Sufficient autonomy

Outsourcing

Risk : the Customerbecoming aware that the IT organisation is 'making a profit' fromthem

Building the cost models

To calculate the costs of IT Service provision, it is necessary to design aframework in which all known costs can be recorded and allocated to specificCustomers, activities or other Category. This is called a Cost Model


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IT Accounting (2)

Costs types

hardware costs

software costs

people costs

accommodation costs

External Service costs

Transfer costs

Direct or indirect costs

Major type Cost Elements

Hardware Central processing units, LANS, disk storage, peripherals,

wide area network, PCs, portables, local servers

Software Operating systems, scheduling tools, applications,

databases, personal productivity tools, monitoring tools,

analysis packages

People Payroll costs, benefit cars, re-location costs, expenses,

overtime, consultancy

Accommodation Offices, storage, secure areas, utilities

External Service Security services, Disaster Recovery services,

Outsourcingservices, HR overhead

Transfer Internal charges from other cost centres within the

organisation


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IT Accounting (3)

Cost Model


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IT Accounting (4)

Classification of Cost Elements

Capital computer equipment

building and plant

software packages

Operational staff costs

maintenance of computer hardware and software

consultancy services, rental fees for equipment software licence fees

accommodation costs

administration expenditures

electricity, water, gas, rates

disaster recovery

Consumables

Direct or Indirect

Cost Centre

Fixed or variable


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IT Accounting (5)

Depreciation

pre-determined, as in the case of a lease

dependent on its physical deterioration through use or passage of time

reduced by economic or technological obsolescence

Apportioning the IT Services costsCapit

al

Annual

Cost

Direct Apportionment

Method

Customer

Marketing and Sales Manufacturing Finance

Hardware

UNIX Server Yes 34,667 No 50/50 split 17,333 17,333

NT Server Yes 4,333 Yes 4,333

Netware Server Yes 1,300 No Infrastructure

PCs (50) Yes 26,000 No By PC 5,200 19,240 1,560

Routers (5) Yes 1,300 No Infrastructure

LANCabling Yes 17,333 No Infrastructure

Software

General

Ledgers

No 20,000 Yes 20,000

ORACLE No 7,000 Yes 7,000


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IT Accounting (6)

Calculating the Cost-by-service


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IT Accounting (7)

Calculating the costs of Cost Units

PC, Operator hour

Changes affecting costs

Disks

Investment appraisal being clear about objectives

thinking about different ways of meeting them

estimating and presenting the costs and benefits of each potentially worthwhileoption

ROI(Return on Investment )= average increase in profits(average takenover an agreed number of years) / Investment


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IT Accounting (8)

Total Cost of Ownership

The Gartner Group pioneered a method of calculating the costs of a product orservice with the title of 'Total Cost of Ownership' (TCO).

The most widely known example was that for Personal Computers. In an erawhere the price of a PC on a desk had fallen to $2,000, Gartner demonstratedthat the 5-year cost of a PC, when taking into account purchasing overheads,upgrades, maintenance, a proportion of support staff and Service Desk costs,disposal etc. was closer to $35,000

Budgeting, IT Accounting and Charging cycles

Budgeting IT Accounting Charging

Planning (annual) Agree overall

expenditures

Establish standard Unit costs

for each IT resource

Establish pricing policy

Publish price list

Operational

(monthly)

Take actions to manage

budget exceptions or

changed costs

Monitor expenditure by cost-

centre

Compile and issue bills


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Charging (1)

Goals

forcing the business divisions to control their own Users' demands reducing overall costs and highlighting areas of service provision which are

not Cost effective

allowing the organisation to match service to justifiable business need,through direct funding

Chargeable items Chargeable Items should be understandable and controllable by the

Customer

Relate to the organisation's business

Variable costs and charges

estimate of the likely charges and possible upper and lower limits variable costs do not decrease with decreasing usage


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Charging (2)

Pricing

the determination of a pricing objective understanding the true (not perceived) demand for the service

accurate determination of Direct and Indirect costs

the level of control of the internal market

understanding the services available externally if Customers have a choice

legal, regulatory and tax issues

Internal market Tied customers / Untied customers

Differential charging

For example, during peak daytime

Pricing flexibility

Billing

Bills Charging information is passed to Customers to make them aware ofthe cost of the resources used by their business

to manage cash flow => Billing cycle


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Agenda


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Agenda

Annexes

39

( )


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Acronyms (1)

AMDB : Availability Management Database

AST: Agreed Service Time

ATM: Auto Teller MachineBCM: Business Continuity Management

BIA: Business Impact Analysis

BRM: Business Relationship Management

CAB: Change Advisory Board

CDB: Capacity Database

CFIA: Component Failure Impact Analysis

CI: Configuration Item

CIA: Confidentiality, Integrity and Availability

CMDB : Configuration Management Database

CSBC : Computer Services Business Code

CSS : Customer Satisfaction SurveyDT : Down Time

EFQM : European Foundation for Quality Management

EUA : End User Availability

A (2)


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Acronyms (2)

EUDT : End User Down Time

EUPT : End User Processing Time

FTA : Fault Tree AnalysisICT : Information and Communication Technology(ies)

ISP : Internet Service Provider

ITAMM : IT Availability Metrics Model

ITIL: Information Technology Infrastructure Library

ITSC : IT Service Continuity

ITSCM : IT Service Continuity Management

ItSMF : IT Service Management Forum

IVR : Interactive Voice Response

KPI : Key Performance Indicator

LAN : Local Area Network

MBNQA : Malcolm Baldrige National Quality AwardMIM : Major Incident Management

MTBF : Mean Time Between Failures

MTBSI : Mean Time Between System Incidents

A (3)


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Acronyms (3)

MTTR : Mean Time To Repair

OGC : Office of Governnment Commerce

OLA : Operational Level AgreementOLTP : On-line Transaction Processing

PAD : Package Assembly/Disassembly device

PKI : Public Key Infrastructure

PRINCE : Projects IN Controlled Environments

QA : Quality Assurance

RAG : Red-Amber-Green

RAID : Redundant Array of Inexpensive Disks

RFC : Request For Charge

ROCE : Return On Capital Employed

ROI : Return On Investment

RWO : Real World ObjectSIP : Service Improvement Programme

A (4)


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Acronyms (4)

SLA : Service Level Agreement

SLAM :SLA Monitoring

SLM : Service Level ManagementSLR : Service Level Requirement

SMO : Service Maintenance Objectives

SOA : System Outage Analysis

SPOF : Single Point of Failure

TCO : Total Cost of Ownership

TOP : Technical Observation Post

TOR : Terms Of Reference

TQM : Total Quality Management

UPS : Uninterruptible Power Supply

VBF : Vital Business Function

VSI : Virtual Storage InterruptWAN : Wide Area Network

C t t


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Author

Date

FurtherInformation

Contact

ContactDevoteam Jean-Marc ChevereauPhone +33 1 41 48 48 48 / +33 6 64 48 96 99

Email [email protected]

Country France

www.devoteam.com

Algeria

AustriaBelgium

Czech Republic

Denmark

France

Germany

Italy

Jordan

Luxembourg

Morocco

Netherlands

Norway

Poland

RussiaSaudi Arabia

Spain

Sweden

Switzerland

Tunisia

Turkey

United Arab Emirates

United Kingdom

Devoteam GroupThis document is not to be copied or reproduced in any way without Devoteam express permission.Copies of this document must be accompanied by title, date and this copyright notice.

Jean-Marc Chevereau

Janvier 2010
http://www.devoteam.com/http://www.devoteam.com/

ITIL Training - Part 5

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