The business Case for Effective Service Management based on ITIL

THE BUSINESS CASE FOR ITIL SERVICE MANAGEMENT

IT is what drives business today.  In fact in many sectors like telecommunications, banking, finance institutions, insurance companies IT not only drives the business but it is the business.  

The quality of an organization’s IT is reflected in its reputation and brand, and has direct impact upon sales and revenue. The cost of IT is never insignificant – it is essential to get good value from IT investments, but often this value is not realized. For an IT investment to provide benefit, the resulting IT service must be well planned, well designed, well managed and well delivered. That is what the practice of IT service management is about. 

ITIL’s value proposition centers on the IT service provider (internal IT or external supplier) understanding a customer’s business objectives and priorities, and the role that IT services play in enabling these objectives to be met. ITIL adopts a ‘lifecycle’ approach to IT services, focusing on practices for service strategy, service design, service transition, service operation and continual service improvement

 

THE BENEFITS FOR ADOPTING ITIL SERVICE MANAGEMENT

From a business perspective, the adoption of ITIL practices by IT service providers – whether in-house providers or external suppliers – ensures many benefits, including:

• IT services which align better with business priorities and objectives, meaning that the business achieves more in terms of its strategic objectives

• Known and manageable IT costs, ensuring the business better plans its finances

• Increased business productivity, efficiency and effectiveness, because IT services are more reliable and work better for the business users

• Financial savings from improved resource management and reduced rework

• More effective change management, enabling the business to keep pace with change and drive business change to its advantage

• Improved user and customer satisfaction with IT and IT services.

• Improved end-customer perception and brand image.  Real organizations have benefited from ITIL practices in a number of ways – for example:

• A nationwide retail organization made savings in excess of £600,000 per annum by adopting service strategy practices for its financial management.

• An organization identified that most of the cost of delivering IT support came from resolving customer issues. By adopting ITIL approaches to knowledge-based information and self-help, it was able to reduce costs of support by over 75% while at the same time increasing user satisfaction with the service, and improving user productivity.

• A medium-sized IT service organization invested 2.6m Euros in a two-year programme to improve its IT service management. It recouped the investment within the first year, and achieved annual savings of 3.5m Euros mainly through rationalizing unused and under-used resources (people, software licenses, IT hardware etc). It also reduced IT incident resolution times and improved customer satisfaction by over 11%.

 

HOW TO RECOGNIZE POOR IT SERVICE MANAGEMENT

Does your IT really provide what your business needs?  Do your IT projects always deliver what you expected, and 

at the right cost? Is your IT flexible enough to keep pace with business change? 

If you answered ‘no’ to any of these questions, it could be the result of poor IT service management. Table 1 in the appendix will help you recognize when IT service management is being practiced well and when it is in need of improvement – in which case adopting ITIL best practices will help.

 

Common mistakes about building new services is designing and developing IT services that are fit for purpose but not fit for use: 

•  Focusing on system functionality but not the usability of the whole IT service will delay (or even prevent) delivery of business benefits

• Retro-fitting IT service design later is a high-risk strategy which will prove more costly and be fraught with problems. 

A well-designed IT service provides both functionality that is fit for purpose to support business processes, and infrastructure, operations, processes, people and competencies to make it fit for use. The IT service needs to be easily accessible, available when required, performing as expected, with sufficient data and processing capacity, protected and secure from threat, robust and recoverable from failure, maintainable, capable of being enhanced when required, recoverable from disaster, and at an acceptable cost which is under the control of those who pay. The IT service must be capable of being de-commissioned when no longer required without punitive cost. The end product of a development project is an IT service, not merely a functional application system.

Focusing on the one-off project cost but not the ongoing operational service cost:

•  Failure to take account of ongoing costs of ownership when developing a business case will lead to a poor financial decision and a failed return on investment

•  Operational costs will continue beyond the project payback period, so cannot be offset against one-off savings. 

For a well-designed IT service, the annual cost of ownership is fully understood and there is a clear distinction between the one-off project cost and the ongoing cost of ownership. Service design aims to minimize overall cost, not merely the one-off cost. Skimping on one-off development expenditure has a high risk of increasing annual operational costs.

 

 

HOW AND WHERE TO START IMPLEMENTING SERVICE MANAGEMENT

Although any organization can embark on the journey of implementing ITIL service management by hiring a consulting company, we need to understand that almost 60% of the company projects fail because of luck of management support and relentless execution.  Service management is not only a practice that can be implemented by decree.  In order for service management to be successful we need to take into account the three different components that all of them play an important role.

1. People

2. Technology

3. Processes

People are by far the most important aspect to be considered when launching a Service Management initiative.  People need to be engaged, feel important, and understand their role in the overall company strategy and success.  Therefore they have to have strong guidance and be engaged through leadership in order to be fully committed on the success of the initiative.

Technology has be to be selected to support the Service Management framework.  Expensive tools are not always the best solution, and one size does not fit all organizations.  Careful consideration of the budget, costs, targets and overall organization size, clientele and culture have to be considered during the selection of tools to be used.

Processes have to be defined in a pragmatic way.  Building elaborate, multipage long processes with multiple control points just for the sake of creating an elaborate process framework may be totally misleading and create less benefits for the organization than the problem it solves.  Careful consideration of the company culture, maturity, expertise and seniority of the staff will assist on creating processes that are fit for purpose but also fit for use, and can be followed by everyone within the organization.  

 

APPENDIX GOOD AND BAD SERVICE MANAGEMENT

Indicators of poor IT service management

Indicators of good IT service management

Misalignment between IT and the business:

• It is unclear what IT services exist and what business

purposes they serve

• There is no service catalogue

• IT priorities are not in line with business needs and priorities

• Urgent business needs are not responded to in a timely

manner

• IT services seem focused on technology rather than

Business priorities.  This indicates poor service strategy practice.

 

Alignment between IT and the business:

• A close relationship between the IT service provider and business customers at all levels, which feels like a trusted partnership

• A clear service catalogue explaining the services available and what business purposes they serve

• IT services focus on the priorities and needs of the business

• IT staff understand the importance of IT services, the value the business gets from each service and they react to requests, incidents and problems in a way that reflects this value.

 

IT is generally considered poor value for money:

• IT is considered expensive and poor value for money

• IT services cost more on a day-to-day basis than

was expected

• Costs appear to be uncontrolled. This indicates insufficient focus on the ongoing operational

cost during service design and development.

 

IT is generally considered good value for money:

• Both cost and value are understood by stakeholders

• Each IT service’s cost of ownership has been designed and agreed in advance by the business customer that pays for it

• Changes to the cost of ownership are jointly planned and agreed between the service provider and the business customer.

 

Lack of IT service skills involvement during development and transition:

• Projects focus on application development with little

consideration for the end product – the IT service

• IT service management practices and people are not used during design and development

• The developers ‘handover’ the ‘service’ to operational staff in the expectation that it is ready, but the service initially fails to provide benefits

• Additional work or rework is required before the IT service performs correctly. This indicates poor service design and service transition practices.

 

IT service skills involved during development and transition, resulting in a well-designed IT service:

• People with IT service management skills are involved in the design and development of new IT services.

• When the service goes into operation it is ready to operate as a complete IT service

• Any shortfalls in service design and development are picked up during service transition, and the service is not accepted into operation until it is ready

• Developers provide early life support when the service first goes live to ensure that any issues are resolved quickly.

Over-focus on functionality at the expense of usability:

• Unexpected IT service outages are frequent

• When problems occur it takes longer than expected to

recover the situation

• The IT services perform badly and sometimes run out of data or processing capacity, leading to ‘panic’ purchases of hardware and software, often at inflated unexpected cost. This indicates poor design of the IT service.

Focus on both functionality and usability:

• IT services are designed to work in operation, available when required, performing as expected

• Security threats are dealt with quickly and effectively

• Unexpected incidents are resolved effectively, ensuring business users are involved in decisions and always kept informed.

Capacity is monitored and any purchases to increase capacity are planned well in advance and budgeted.

Poor change management:

• Changes happen without users and support services

being informed

• New or changed IT services are fraught with problems, and often lead to unexpected issues with other services

• Operational resources are distracted from day-to-day work by the problems caused by change.  This indicates poor service transition practice

Good change management:

• Clearly communicated release schedules that identify the introduction of new and changed IT services

• The risks and potential impacts of change are discussed with business users before the change takes place

• Changes are agreed, well planned and implemented in a timely fashion with minimal disruption to the business.

Too many incidents and problems:

• There are many failures and IT service disruptions

• IT support staff appear to be always ‘firefighting’ (reacting to problems and failures) and do not have time to make progress in other areas.

• The failures have a disruptive impact on business functions. This indicates poor service operation practice.

 

Incidents and problems under control:

• Failures sometimes occur, but they are resolved effectively and users are kept informed

• A proactive approach is taken to problem solving,

anticipating and preventing problems wherever possible

• Lessons are learnt, problems are rarely repeated.

Users are confident that issues will be resolved before they adversely impact the business

 

  G. Koulogiannis