Proactive IT management: eliminating mean time to surprise

Proactive IT Management:

Eliminating Mean Time to Surprise

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Proactive IT Management: Eliminating Mean Time to SurpriseStratecast Whitepaper

TABLE OF CONTENTS

Executive Summary 4

Proactive IT Management 5

Business Level Management of IT Resources 7

Proactive BT: Why Now? 8

Business Benefits of Proactive Management 9

Finance 9

Telecommunications 10

Supply Chain Management 10

Healthcare 10

About BEZ Systems: Viewing IT Through a Business Lens 11

The Last Word 12

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EXECUTIVE SUMMARY

Recent years have seen significant increases in business performance and cost savings in many industries,enabled by increased automation and a focus on information management in several departments. Forexample, businesses manage customers more effectively through CRM systems, automated HR systemssupport better allocation of human assets, manufacturing automation streamlines production, and supplychain management lowers inventory costs through just-in-time asset management. Sometimes thesefunctions are unified under an Enterprise Resource Planning – or ERP – system, which provides anenterprise-wide view of multiple processes.

Although IT departments support all of these functions, surprisingly the management of the ITdepartment itself has escaped this kind of systematic approach. Ensuring that IT resources likedatabase servers, application servers, and web servers are deployed in such a way that supports businessneeds is a process that is often managed manually and reactively, with paper reports and human inspection.

As competition in many industries increases, IT functionality becomes more complex, and internal ITfaces competition from external vendors, such as those providing software as a service (SaaS), we haveseen a change in the situation. Today, IT is becoming more externally focused and more accountablefor supporting business needs. IT departments often operate as independent P&L units, contractingwith the rest of the business to provide specific services. These contracts may cover elements like systemuptime and throughput, but can also relate to the degree to which IT supports specific business functions.Indeed, some have gone so far as to say that the name “IT” is now out of date and that, instead,the business focused nature of IT means that it should now be called “BT” – or BusinessTechnology.1

Two competencies are emerging as key to supporting IT departments in their ability to meet businessneeds in a disciplined way. These are 1) the ability to view IT data through a business lens –“connecting the dots” by mapping sometimes massive amounts of IT performance data to its impact onspecific business needs, and 2) the ability to predict future business needs and to appropriatelyevaluate and deploy IT resources to meet those needs – effectively achieving “just in time” – andthereby most cost-effective – deployment decisions. In addition, combining IT management into asystematic strategic system, or proactive BT platform, avoids the management inefficiencies that comefrom independent, stovepiped implementations of these systems.

Business problems that could have been solved by proactive business technology solutions are inthe news every day. For instance, Citigroup recently announced a major IT restructuring, part of whichwas an initiative to make better use of IT personnel.2 JetBlue’s customer fiasco in early 2007 could havebeen avoided with better visibility to future IT needs.3 A discount airline, which had outperformed itspeers on the strength of its customer service, jetBlue found itself in disarray when a snow storm hit theNorth East of the USA. Over 1000 flights in five days were cancelled. The problem was the reactiveapproach that jetBlue had taken; its communication systems were not scaled up in proportion to itsgrowth. At crunch time, the airline was unable to reassign its crew to rescheduled flights. jetBlue lost the

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1. See George Colony’s article at http://h71028.www7.hp.com/ERC/cache/49205-0-0-0-121.aspx?bodycontentparams=470597-0-0-0-121&ERL=true, and HP’s rebranding around BT, at http://h71028.www7.hp.com/enterprise/cache/483408-0-0-0-121.html.

2. See http://www.informationweek.com/management/showArticle.jhtml;jsessionid=I0BMDD1W04AQ0QSNDLRSKHSCJUNN2JVN?articleID=199000256

3. See http://www.nytimes.com/2007/02/19/business/19jetblue.html?ex=1329541200&en=a9dbe269ede6bf58&ei=5088&partner=rssnyt&emc=rss

goodwill of its customers when it was unable to provide data on the status of flights after the breakdownof services. A proactive approach could have predicted the impact of a snowstorm and could have savedthe cost of lost earnings and the more significant damage to the airline’s reputation.

Often, these problems are viewed as the natural outcome of “realignment” efforts between IT andbusiness. However, there is nothing inevitable about such a huge customer impact. A company that can,instead, systematically measure and manage IT assets in terms of the service that it provides tothe business can, indeed, anticipate – and therefore avoid or mitigate – these kinds of issues.

This white paper describes how proactive BT solutions address these problems. We focus on the two corecompetencies mentioned above, and how they can be combined into a platform that combines multiplebusiness management functions, allowing IT departments to cost-effectively improve their ability to meetinternal customer expectations.

These kinds of improvements to IT service management can drive important business benefits, includingcost reduction (through initiatives like hardware consolidation or because only the needed hardware isdeployed, instead of over-provisioned), better resource allocation, disaster recovery, the ability to chargeother departments based on service level provided, and reliability. Most important, however, is thatproactive business technology tools allow IT to systematically manage its ability to support thebusiness. IT activities like workload measurement and prediction, hardware consolidation orcapacity management are only important to the extent that they support these needs.

Here, we describe how proactive management technologies, including business-level workload analysis,predictive analytics, problem isolation (related to root cause analysis), and risk analysis using what-if tools,can allow IT to better serve its internal business customers. We conclude with a profile of vendor BEZSystems, whose software platform supports goals 1) and 2) above. BEZ has historically applied itssolutions to the database workload management problem, but is today expanding its scope to the widerproactive business technology space.

PROACTIVE IT MANAGEMENT

To compete effectively, businesses need to predict the future, and to take actions based on thosepredictions that allow them to better serve their customers. A telecommunications operator needs topredict – and prevent – a call drop. . . a health care provider needs to predict – and prevent – long waitingtimes for patients. . .a bank needs to predict – and prevent – a computer outage.

This need to predict the future is particularly important in areas of the business that are complex,rapidly changing, and mission-critical. One such area is the IT department, where a complexarray of software and hardware resources must be managed to support database, network, andapplication needs (see Figure 1).

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Figure 1: Forces Driving Increased IT Automation

Source: Stratecast

Many businesses operate reactively: they fix problems as they occur instead of anticipating them,or – at best – consider contingency planning (setting up processes and systems so that they canthe react quickly in the case of a problem) to be adequate. This approach is costly, inefficient, anddamages the reputation of IT with the business. Reactive processes decrease a company’s resiliency,including reducing its ability to recover from disasters. In contrast, an IT department that proactivelymanages service delivery will be more effective in maintaining service level agreements with internalclients and, hence, in supporting its parent company’s competitive position in the external market. Forexample, predicting in advance that a particular workload – say finance queries from the Dallas office -will grow to the point that IT cannot continue to meet business needs with the current configurationmeans that IT can evaluate alternatives for tuning the application and database, or if need be, purchaseadditional capacity at the right time.

The bottom line: for many businesses, IT stakes are higher and more complex than in the past; where onceIT tires could be changed by the side of the road, today IT departments must shift perspectives. Changingan airplane tire in-flight is no longer an option.

IT predictive capabilities can be viewed along two dimensions. First, IT and the business must be able toreason about external events that change the nature of the way that systems are used. For example,the business may ask to understand the impact of its request for IT systems to support hundreds orthousands of new users in a future month. IT needs to understand how this increase will affect servicedelivery in context with the other workloads requiring services. No action may be required. Alternatively,IT needs to take steps to decrease demand by efficiency and/or increase capacity and/or better balanceresources by shifting demand. Other externally imposed changes might be a change to hardwareinfrastructure (number of CPUs or disk speed) or changes to the application mix (e.g. supporting a newaccounts receivable process).

Second, even in the absence of such externally imposed changes, IT must be able to extrapolatefuture needs from internal, current IT usage patterns and supporting infrastructure. For example,

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if the number of sales queries in Melbourne is currently increasing at 10% per month, then IT needs toplan appropriately to meet this need. It has a number of “knobs” available, including improvements todatabase indexes, SQL statement tuning, workload balancing across servers, or re-prioritizing workloads.

In both cases, the results must be viewed through a business lens: IT must understand its future ability tomeet service delivery goals, along with any remedial action to ensure that goals are adequately met. Aproactive prediction capability supplies the time and data required to make the best decision tosupport uninterrupted service. Predictions of this nature can also help IT to market its servicecapabilities to the rest of the business.

BUSINESS LEVEL MANAGEMENT OF IT RESOURCES

In addition, many IT processes are drowning in data – performance, query load, workload, configuration,and other data sets are only useful when they are intelligible to the business. Data is becoming increasinglycomplex: it is difficult to analyze and manage effectively in response to more and more rapidly changingbusiness requirements. For this reason, an effective service delivery tool must go beyond data to provideinformation – or business intelligence for IT. In particular, it is important that any proactive BT toolcan filter the vast amount of fine-grained performance data managed by most IT departments intoworkloads – also called management zones – that make sense to the business.

A workload might be organized by a group (e.g.. manufacturing), geography (e.g.. Dallas), applications(e.g.. sales order application), or other categories with business relevance, as well as any combination ofthese. Workloads need to be defined by each company at the granularity and grouping appropriate to itsbusiness. Individuals may also require different views (definitions of workloads) to suit their managementneeds. When data is presented in such categories, the business has the intelligence to understand thestrategic impact of current allocations of resources. A proactive BT tool must sift through largeamounts of data, aggregate it into meaningful workloads that ref lect the business, trackperformance of these workloads over time, and predict future needs.

For example, if a business can predict in advance when a database server will become overloaded, and cantune database configuration parameters, adjust disk speed, add a new server, or complete other steps thatwill result in just the right amount of capacity increase (instead of simply adding enough servers to coverany uncertainty), then it can achieve cost savings and avoid missing service level goals, thereby allowing itto provide better service to internal business customers. The same ability to predict capacity and to planfor future needs applies to network, application, web server, and storage planning as well.

A side benefit of this business level view of IT data is that it facilitates better communication withbusiness stakeholders. Instead of speaking in technical terms like database query counts or server load,IT and business users converse in a business-level language, such as a discussion about IT’s ability tosupport 50,000 new users of an enterprise application.

The need for proactive management of IT operations can be illustrated with an example of a typicalscenario in the banking industry. A bank’s IT operations might support a software application that is usedin several of its offices that aredispersed around the country. The bank is committed to accommodatingany query that may originate from any of its offices. As demand grows, the bank has the choice to:

• Craft contingency plans which are triggered when things go awry. This could happen when the volume of queries from its Dallas office overwhelms the server in about three months.

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• Predict when things will go wrong and take action before it happens. It could provide for additional servers or streamline its workload so that existing servers can serve the growing demand in the Dallas office, avoiding the problem that would otherwise occur down the line.

PROACTIVE BT: WHY NOW?

Predicting IT resource’s ability to fulfill future business needs as described above is very difficult to doand, until recently, the costs of storing and processing enough historical data intelligently enoughto accurately predict the IT department’s ability to meet future service delivery needs reliably hasnot been possible. Over the last few years, however, proactive technologies have reached a tippingpoint in several industries, as these costs have decreased, analytics and BI technologies have matured,and as businesses are facing increased competitive pressures that mean they must be more proactive inserving their customers’ needs.

In addition, as other parts of the business have become more automated (like the above examples aroundCRM, manufacturing, and supply chain management), the bottleneck – and hence the automationfocus – has shifted to IT. Today, IT is experiencing a number of problems, including the fact that thedemand for IT resources outstrips the supply due to rapid growth; there are heterogeneous, complexnetworks that must be managed; enterprises with extended, multi-geography locations lead to increasedrisks; and real-time applications have raised the bar for reliability.

Proactive software tools fall in several categories. Predictive analytics can match expected IT needs(such as number of database queries) against planned IT provisioning (such as a database serverexpansion) to determine if the future system will meet service level needs. Risk assessment with what-if analysis can uncover potential problems caused by business disruptions. Problem Isolation can help topinpoint problems in complex systems.

Once a future problem is predicted, a proactive IT system can suggest a number of options. Measuresrecommended might include tuning SQL queries to ease database load, or balancing the load acrossservers or by spreading it across additional times of day. Another set of approaches is to add capacity oroptimize existing capacity. Approaches here include:

• Increasing efficiency by changing application parameters • Database indexing• Adjusting disk speeds • Reprioritizing workloads

Proactive tools fall within a larger framework of proactive technologies. Business intelligence tools,4 arealso applicable in this realm. The software engineering community has also recognized the importance ofbuilding networks that can ensure reliability.5 Reliable networks are crucial for sustaining marketleadership in many industries.6

Despite the significant promise of proactive technologies, implementing a solution can appear verychallenging for a typical company. This complexity has impeded widespread adoption of proactive BTsolutions to date. Building systems that gather the right data, update it as the business changes, and then

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4. “Competing on Analytics: The New Science of Winning”, by Thomas H Davenport and Jeanne G Harris, Harvard Business School Press, 2007.

analyze it to make predictions requires specialized expertise that is unlikely to be found in-house.Fortunately, there are a number of vendors offering to help, some with many years of experience.

BUSINESS BENEFITS OF PROACTIVE MANAGEMENT

As the costs of storing data and processing it have declined and volumes have grown, the need to extractthe intelligence from data has increased, and the opportunity to do so cost effectively has improved.

The need for business intelligence and proactive management has grown for the following reasons:• The emergence of heterogeneous and complex networks that need more management • The demand for IT often exceeds its supply.• Real-time applications have raised the bar for reliability.• Risks are higher in extended, multi-geography enterprises.• Supply chain-related complexities have increased.

In addition, some benefits related to people include:• Improvement of the reputation of IT in the eyes of business• Morale is boosted when people are not bogged down in firefighting.• Productivity is increased when technology outages are reduced.

In addition, business benefits include:• Improved quality of service as adverse effects of an unusual event is contained. • Gain a competitive edge by virtue of agility; the ability to anticipate events affords faster

responses. • Efficient capacity planning; optimization reduces investment levels

FINANCE

We now turn to a number of industries that are using proactive BT technologies to solve problems drivenby increasing IT complexity.

In the financial services industry, for example, the costs of system interruptions in banking services areenormous, ranging from $60,000 to $250,000 per minute7 and, according to one study, the average lossfrom each event is $1.5 million. “Brownouts” can also inflict significant losses, like the abandonment ofa shopping cart when systems are slow.

Proactive management of IT operations is implicitly mandated by regulatory agencies. Basel II calls onfinancial institutions to predict operational risks and to reveal any potential material loss, along with itssource. To ensure business continuity for financial institutions, federal agencies require them to:

• Consider contingencies and change management aspects as part of IT service level agreements.• Identify threat scenarios, including technology issues, which could be the cause of business

disruptions. • Assess risk and business impact from a potential adverse event.

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5. “Sustaining Operational Resiliency: A Process Improvement Approach to Security Management”, Richard A Caralli, April 2006, Software Engineering Institute, Carnegie Mellon University. Technical Note, CMU/SEI-2006-TN-009

6. “Evaluating IT Reliability: Prerequisite to CIO Success”, CIO2CIO Perspectives, http://www.cio.com/sponsors/cio_relwhtppr.pdf. 7. “Network Resiliency”, IBM, May 2002.

A proactive BT approach is absolutely essential for a financial services firm to reach the above goals.

TELECOMMUNICATIONS

In the past, a typical telecommunications operator owned its full supply chain: the network, back officeequipment, software, and customer premises equipment. This model is changing radically today.Operators that deliver content services to consumers like video or ringtones must contract with a contentconsolidator company that, in turn, contracts with artists who produce content. At the other end of thesupply chain, operators deliver content and communications over a global network consisting of theinterconnected systems of many other telecommunications companies. Furthermore, a new kind of telcohas emerged, called a Virtual Network Operator, or VNO. A VNO owns the customer, not the networkequipment, and contracts with equipment owners to deliver the service. In the United States, DisneyMobile and Virgin Mobile are probably the best known VNOs.

The IT systems from all of the companies in this telecommunications supply chain must communicatewith each other, and do so reliably. Thus, the effect of any outage is no longer limited to being withinone company, but cascades through all the partners involved in delivering a telecommunications service,with implications for contractual obligations, reputation with customers, cost, and revenue. For thisreason, the pressure on IT to deliver reliable services, and therefore the need for proactive BT technology,is increasing considerably today.

SUPPLY CHAIN MANAGEMENT

Telecommunications is only one of many industries where supply chain complexity is increasing. Thepattern in telecom plays out in other industries too, including manufacturing, defense, and health care. Assupply chains become more complex, involve greater numbers of other companies, and cross moregeographic boundaries, most companies expect increased risks in managing them effectively. Theestimated damage of a typical supply chain event to shareholder value is an average of 33-40%.8

Real-time intelligence to track probable risks in the supply chain is the least costly way to mitigate the costof disruptions.

HEALTHCARE

In the health care sector, it is common to assemble a variety of resources, such as radiologicalinformation, lab tests, beds, equipment, nurses, and patient data, before care can be provided. The delaysin bringing together these resources are a major source of inefficiency in the sector. At the same time, atmany facilities, patients have to wait in long queues before health care providers attend to them. For thisreason, health care providers are targeting shorter wait times to not only increase customer satisfaction,but also to enable hospitals to use resources efficiently.

Increasingly, the health care sector tracks its resources by using RFID/RTLS tags. Patients are also taggedas they enter the hospital and a recording is made of their time spent during registration, diagnosis andtreatment. Dashboards provide real-time data on the utilization of all hospital resources in the vicinity, aswell as inflows and outflows of patients. This data can be used to make course corrections and improvethe utilization of health care facilities.

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8. “The Effect of Supply Chain Disruptions on Long-term Shareholder Value, Profitability and Share Price Volatility”, by Kevin Hendricks and Vinod R Singhal, Abderdeen and Associates. June 2005.

This increased automation of hospital care, with the goal of improving patient satisfaction and reducingcosts, is driving significantly increased focus on IT within hospitals, and therefore driving proactive BTneeds. In particular, proactive provisioning, as well as root cause analysis of system bottlenecks, areneeded to succeed in this environment.

ABOUT BEZ SYSTEMS: VIEWING IT THROUGH A BUSINESS LENS

Boston-based BEZ Systems (www.bez.com) provides software tools and services that apply advancedanalytics and modeling technology to IT performance issues. Analytics aggregate current and historicalperformance data into meaningful business workloads. BEZ modeling provides IT management withhistorical, current, and over-the-horizon views of workload service levels. In BEZ terminology, workloadsare logical groupings that represent a body of work that is important to the business; they often providea Line of Business (LOB) view, not just a technology view that business managers find difficult tounderstand and manage. As described above, workload analysis results provide IT decision-makers withthe time and information to make informed business decisions, deploy resources better, and ensure thatservice delivery to business workloads is isolated from the chaotic effects of constant change.

BEZ says that these software innovations allow IT managers to move their organizations from reactive toproactive; from defense to offense; and from reacting to problems to driving the service that businessesneeds to compete and grow.

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© 2007 Stratecast

Dr. Lorien PrattGlobal Director, Stratecast Infrastructure and OSSStratecast, a Division of Frost & Sullivan

[email protected]

CONTACT US For more information, visit www.stratecast.com, dial 877-463-7678, or email [email protected].

About StratecastStratecast directly assists clients in achieving their objectives by providing critical, objective andaccurate strategic insight, in a variety of forms, via an access-and-industry-expertise-basedstrategic intelligence solution. Stratecast provides communications industry insight superior to amanagement consultancy, yet priced like a market research firm. Stratecast’s product line includes:Monthly Analysis Services [Convergence Strategies & Network Architectures (CSNA), OSSCompetitive Strategies (OSSCS), Network Professional Services Strategies (NPSS), ConsumerMarket Strategies (CMS), and Business Market Strategies (BMS)]. Weekly Analysis Service[Stratecast Perspectives and Insight for Executives (SPIE)], Standalone Research, and BusinessStrategy Consulting.

Stratecast Partners The Last Word

Businesses in many industries are increasingly dependent on automation and on IT as a strategic asset to support many functions. IT change is outpacing current systems, which can be highly manual, full of data that is difficult to manage, and reactive.

For these reasons, IT departments are being held increasingly accountable for providing services to the business, often with specific contractual agreements to support particular business functions. IT capabilities like capacity management or server

consolidation are only important to the degree that they support business needs.

Proactive BT is the discipline by which IT departments systematically manage important processes to drive business value. Predictive capability is crucial when business needs are more complex and when they change more rapidly. The inter-dependency between IT systems in multiple departments, both within and between companies, means that failure at any one point can very quickly have a cascading effect throughout the system.

Predicting the future is nothing new to businesses, it is just new to the IT department. For instance, finance departments predict cash flow, sales departments use forecasts and pipelines, and manufacturing uses a bill of materials. In contrast, IT departments have historically tended to wait for systems to break, and to trigger contingency plans at that point.

IT is moving from a cost center to playing a strategic role for many companies. This means that IT is less bound from a budget point of view, and in many situations now has a mandate to invest in directions that will improve the business overall. Stratecast

predicts that investment in a strategic BT platform will for this reason become

increasingly more important over the next 12-24 months.

Key proactive BT capabilities include the ability to measure IT data in terms of the business problems that it addresses, the ability to predict future needs, and an IT-wide platform that addresses these issues for multiple systems. Together, these capabilities

allow an IT department to be better aligned with the needs of the business. This can result in measurable benefits, like lower personnel costs, lower equipment costs, and better communication between IT and internal customers.

In this paper, we have described the need for proactive BT systems, along with a brief description of BEZ, Inc., which offers a software solution in this space.

Businesses can and must do better. They should be able to anticipate an adverse

event and respond before it happens, so as to maintain the very high service

quality required in today’s competitive environment.

Proactive IT management: eliminating mean time to surprise

Technology

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