What do companies really want from ITSM?

Over four years ago I posted a question on Quora – a question-and-answer website founded by two former Facebook employees at the height of the social media technology boom. It’s a site that I no longer visit (you might understand why when you get to the third section below), but I still get the odd email update to remind me that it still exists.

The question? Something as simple as:

“What do enterprises really want from IT service management (ITSM)?”

Well I say that it’s a simple question, in reality it’s a pretty difficult question to answer, or at least to get a consistent answer on. I provide exhibits A, B, and C below.

A. Sensible answers

The “sensible” answers ranged from the IT benefits of ITSM:

  • “Ensure the required level of availability and continuity of services” and other technical facets of improving IT service delivery
  • “Lower help desk costs through self-service” and other cost saving points
  • “Higher quality of service, faster response time, less downtime (real or perceived), open lines of communication to end users – all at lower overall cost to IT”
  • “It’s not enterprises who want ITSM; it’s the IT departments who have a need for ITSM to be able to perform their jobs in an increasingly complex technological environment”

To a laser focus on business-outcomes:

  • “To support the objectives of the business”
  • “ITSM provides a way for the business to better interact with customers, helps the business run better, and increases profitability”

Plus the two that I dive deeper into below.

B. Not-so-helpful answers

And then, as with any public arena available to people to write or cut-and-paste information, there were the regurgitated strings of management buzzwords that are often unintelligible on the first, second, and even third reading.

I know it’s wrong to point at things that were offered up by way of helping others, but do statements like this really help anyone:

  • “Enterprises really want that ITSM to deliver the services and values with respect to hardware, software, suppliers and processes so as to drive the business performance” and “ITSM offers an innovative platform that is cloud-based and highly flexible for mobile with an intuitive, beautiful, people-centric user experience that makes your whole organization more productive”
  • “ITSM is really a process-based exercise intended to line up the delivery into technologies services (IT services) along with needs from the business, emphasizing advantages to clients”
  • “Enterprises want out-of-the-box solutions to be taken during the process break down, based on ITIL approach”?

I personally think not.

C. The more “considered” responses

There were thankfully answers that make you pause to think for a moment. There were more than two, but I really like the following pair.

David Moskowitz, an IT consultant and mentor, offered up an interesting retort to other posts:

“I don’t think most (IT) organizations really know or understand what ITSM is or represents. If they did, the focus would be on customer outcomes and value, not anything measured or reported in technical-related language.”

David continued to add a layer of detail as follows:

  • “So the IT folks talk about availability and the business-side doesn’t care; the business side is interested in productivity and business process
  • IT folks talk about service desk costs, or incident response times, or problem analysis and the business doesn’t care. The business is interested in the impact IT has on productivity
  • IT (if it was really ITSM-focused) would be able to quantify the value IT provides to the business. How many IT organizations can actually do that?
  • What the business wants is for IT to support seamless interaction with customers, make it easier to get work done, provide a competitive differentiator, support business outcomes, and provide more business value. I don’t think most IT folks really grok that idea”

Later Charles T. Betz, an IT architect, strategist and advisor, offered up:

“I can define IT in terms of the history of computing (Babbage, Lovelace, Turing, et al), but I find it difficult to distinguish between IT Management and ITSM. With that said, in general, enterprises need two things from IT:

  • They need IT to qualify them to compete (or operate) in information-rich environments.
  • They need IT to elevate their performance above competitors’ (or other relevant benchmarks), to the extent that enterprise performance is based on excellence in managing information.

It’s an interesting point from Charles. A point that makes one think that we might be doing ITSM a disservice by differentiating it from IT-provision and management as a whole. I bet some of you were suddenly reminded of the “IT silo” mentality that we speak of much too often.

“It depends on who is asking the question”

This was said, or referred to, a few times, but does it really depend? Do we need to dumb down an answer or to answer in the context of IT versus a business context?

I personally think not, in terms of dumbing ITSM down – to quote Albert Einstein:

“If you can’t explain it simply, you don’t understand it well enough”

And having a different answer for an IT versus a business audience? The fact that we would try to do this is probably why we have so many different answers related to, and most-likely confusion over, what ITSM really means to enterprises.

Surely we just need something simple and applicable to all audiences? I’m not going to spend hours perfecting a definition but I’m happy to throw out the line that ITSM is:

“Improving business performance through better IT delivery”

Which I’d like to think also answers the question: “What do enterprises really want from IT service management (ITSM)?” And yes, I could have added in words and phrases such as value, business outcomes, IT services, customer-centricity, lower costs, IT services and service management, and fit-for-purpose technology – but does either a business or IT audience really need to know this in a high-level explanation? I would personally argue not.

So what do you think?

This was originally posted on the Freshservice ITSM and customer service blog site.

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Index for my ServiceNow ITSM Blogs

Improving IT Operations 

The Future of IT, ITSM, Service Desk, and ITIL

Thinking Differently And The Need For IT Change

Enterprise Service Management

 Custom Apps

ServiceNow

Social Media

My Forrester Blog Index – The End Of A Blog Roll

As I have posted my last blog to my Forrester blogroll I thought I would update my index of last August …

To view the blogs in chronoloical order please go to: http://blogs.forrester.com/blog/28357

ITSM – ITIL, COBIT etc.

Practical ITSM Advice: Defining Availability For An IT Service

People In IT Love Stats But They Probably Won’t Love These

The Capita ITIL JV Wasn’t “Big News,” So What IS Important To Real-World IT Service Delivery?

So Capita Gets ITIL But Will People Finally “Get” ITIL?

ITSM Goodness: How To Up Your IT Service Management Game In 7 Steps

ITSM And The itSMF In Norway – Different In So Many Ways?

IT Service Management In 2013 – How Far Have We Come Since 2009?

Man Alive, It’s COBIT 5: How Are You Governing And Managing Enterprise IT?

The Cult Of ITIL: It Has More Followers Than You Think

ITSM, ITIL, And Enabling Tools In The Middle East

It’s Time To Realize That “ITIL Is Not The Only Fruit”

ITIL Adoption: 5 Steps That Can Help With Success

“We Need To Talk About ITIL”

ITIL Global Adoption Rates, Well At Least A Good Indication Of Where It Is At

ITIL: What Constitutes Success?

Top 20 (OK, 50) ITIL Adoption Mistakes

The Applicability Of ITIL Outside Of IT

What Next For ITIL?

2011: An ITIL Versioning Odyssey

Getting Started With ITIL – The 30-Minute Version

ITSM – Tools and Vendors

ITSM Tools: Is What You Pay Linked To Value?

The Importance Of Customer “Choice” In ITSM Tool Selection – “Hybrid ITSM”?

12 Tips For Moving From An On-Premises To SaaS ITSM Tool (From A Customer)

The Forrester SaaS ITSM Tool Market Overview: Who Is Where With What

Automation: Is It The Only Way For IT To Really “Do More With Less”?

“BMC You Later” — BMC Pushes The ITSM Tool Envelope With MyIT

More ITSM Tool Bells And Whistles, And Where The Real Focus Of Vendor Attention Should Be

50 Shards Of ITIL – The Bane And Pain Of ITSM Tool Selection

SaaS for ITSM: Getting Past The Hype

ITSM Tool Verification: A Good Or Bad Thing?

ServiceNow Finally Goes Public: Which Way Now?

BMC To Acquire Numara Software: A Few Thoughts From Your Favorite ITSM Analyst

Why Is Buying An ITSM Tool Like Buying A Car?

How Do You Value ITSM Tool Verification Or Certification Schemes?

ServiceNow Knowledge11: ITSM And Social Learning For Us All

Newsflash For The ITSM Community: “SaaS” Is A Red Herring

Sharing The ITSM And ITAM Goodness Of CA World: 20+ Presentations To Download

Are You Happy With Your ITSM Tool?

ITSM – People

Squeezing The Value Out Of ITIL, Or Any Other IT, Training

How Gremlins And Vanilla Ice Can Help Us Deliver Better IT Services

How Not To Make Friends And Influence People: A Personal Story Of Customer Experience At Its Worst . . . And What IT Can Learn

Staffing For IT Service Delivery Success: Think Employee, Think Customer, Then Repeat

Prepare Your People For The Future Of IT Service Delivery

A Killer Disease? IT’s Unhealthy Obsession With Itself

ITSM And ITIL Thinking – Brawn, Brains, Or Heart?

The ABC Of ICT – The Top 10 People Success Factors For ITSM

The ABC Of ICT – The Top 10 People Issues

ITSM – Service Catalog Getting A Service Catalog: So Much More Than Buying A Tool!

ITSM – Strategy & Futures (Cloud, BYOD, Mobility, Social, Automation)

IT? How about I&T?

ITSM in 2013 and Beyond: The Webinar Link And Audience Poll Results

The Top 10 IT Service Management Challenges For 2013 — But What Did You Achieve In 2012?

What’s Your ITSM Strategy (If You Actually Have One)?

ITSM In 2012: In The Words Of Marvin Gaye, “What’s Going On?”

ITSM AND Automation: Now That’s A Double Whammy Of Business-Enabling Goodness

Defining IT Service Management – Or Is That “Service Management”?

Enabling Customer Mobility: Why Current Mobile Device Management Thinking Is Flawed 

Social IT Support: Didn’t We Do This In The 1990s?

Are You Sleepwalking Through Twitter?

My 2011 Blog Of Blogs: Hopefully The “Important” ITSM, ITIL, People, ITAM, SAM, ITFM, Etc. Stuff

Top 10 ITSM Challenges For 2012: More Emphasis On The “Service” And The “Management”

Have You Considered BI for ITSM?

Social? Cloud? What About Mobile?

ITSM – Service Desk

Is Your IT Service Desk Customer Experience Up To Scratch?

What’s The Real Cost Of Poor IT Support And Shoddy Customer Service?

12 Pieces Of Advice For IT Service Desks – From A Customer!

Paging The IT Organization: You Need To Support The People Not The Technology

IT Support: IT Failure Impacts Business People and Business Performance. Comprendez?

How Not To Deal With IT Service Failure

What’s The Problem With Problem Management?

Benchmarking The IT Service Desk – Where Do You Stand?

Where Is All The Incident Classification Best Practice?

ITSM – Metrics

IT Service Management Benchmarks – For You By You

Is Customer Experience Important To Internal IT Organizations? With Free Statistics!

“We Do A Great Job In IT, Our Metrics Dashboard Is A Sea Of Green.” Really?

Where IT Metrics Go Wrong: 13 Issues To Avoid

Why Is IT Operations Like Pizza Delivery?

ITSM Metrics: Advice And 10 Top Tips

ITSM – Back2ITSM

Giving Back To The ITSM Community: We Move, If Slowly, But With Purpose

From The Coal Face: Real World ITSM And ITIL Adoption Sound Bites

ITSM Practitioner Health Check: The ITSM Community Strikes Back

Giving Back To The IT Service Management Community

Support ITSM Tool Vendors That Support The ITSM Community

ITAM

Software Asset Management in 2013: State Of SAM Survey Results

The Rise, Fall, And Rise Of Software Asset Management: It’s More Than Just A “Good Thing To Do”

Cover Your Assets; Use IT Asset Life-Cycle Management To Control IT Costs

Software Asset Management Part Deux – “Try Harder”

ITFM

Warning: Your Journey To “Demonstrating IT-Delivered Value” Passes Through The Quaint Little Town Of “Understanding IT Costs”

Five Steps To Improve Your IT Financial Management Maturity

“Run IT As A Business?” Do You Really Know What This Means?

IT Value, Like Beauty, Is In The Eye Of The Beholder

DevOps Will It Be “DevOps” Or “DevOid” For I&O Professionals?

Supplier Management

5 Tips For Getting Ready For Service Integration

A Late New Year’s Resolution: Be Nice To A Supplier And See What Happens

Understanding IT Costs

The following is an extract from the 2009 OVUM Butler Group Managing Costs in IT Strategy Report …

CATALYST

In-house IT functions are increasingly tasked to both justify their expenditure on ‘keeping the lights on’ activities and demonstrate the value they provide to the organisation.

SUMMARY

Business-as-usual costs are not inconsiderable, usually some three times the value of an organisation’s project-based IT spend, and hence IT functions must ensure that they understand how IT costs are driven and how changes in IT utilisation can affect both unit and total IT costs. The corporate focus on IT value and costs is often driven by the enterprise-wide mandate to ‘do more with less’ and by growing demands for compliance and governance-led transparency. Consequently, IT organisations need to understand, and closely control, the activities that drive IT costs and factors of demand and supply. It is only through the implementation of formal cost management activities that IT functions can deliver cost-effective IT service provision and maximise visibility into related cost structures.

  • IT organisations should leverage enterprise finance expertise to adopt a corporately accepted IT cost measurement.
  • IT and the business must agree the key IT cost metrics for both ongoing performance management and the assessment of service improvement opportunities.
  • An IT function should utilise benchmarking techniques to establish relative cost efficiency and identify opportunities for cost improvement.
  • IT managers need to understand their IT Financial Management processes’ relationships with, and importance to, other IT Service Management processes.

ANALYSIS

IT organisations should leverage enterprise finance expertise to adopt a corporately accepted IT cost measurement.

With IT expenditure having increased along with the corporate utilisation of, and dependency on, technology, there is now a requirement for more formal management control, methodologies, and particularly measurement of costs within the IT function. When faced with questions such as ‘what percentage of the IT budget is spent on operations and maintenance?’, or ‘what percentage of IT initiatives contribute directly to organisational goals?’, IT management must now be able to provide accurate answers in which they, senior executives, and stakeholders can have confidence.

The primary barrier to IT cost awareness is a lack of tools and methods for measuring IT costs and value, and presenting them from an organisational perspective. An IT management environment usually has plenty of tools for managing technology assets, methods for managing IT delivery, and frameworks to address IT and enterprise architecture, but very few that are capable of uniting the technology, enterprise, and financial aspects of IT. As a consequence IT often continues to be treated as a cost centre, rather than as a business unit, within many organisations.

To identify the costs of IT service provision, an IT organisation needs to create a framework within which all known costs can be recorded and allocated to specific IT services, customers, locations, or other activities. Only in building their IT ‘cost model’ is an IT function truly able to understand the costs incurred and how the costs are driven, and provide a robust foundation for IT chargeback. In creating a corporate IT cost model, IT should use enterprise finance expertise to systematically work up a logical overview of the IT costs incurred and associate these costs with the business’s chosen basis for cost allocation, e.g., by customer.

The cost identification process starts with the categorisation of relevant costs into cost types such as hardware costs, software costs, people costs, accommodation costs, external service costs, and transfer costs. Where external service costs are expenditure such as the procurement of an outsourced service, and transfer costs those that represent goods and services provided by other parts of the organisation. It is important not to miss the latter type of cost as they are both a ‘real’ cost to the organisation and part of the cost of providing the service. Cost types may also be broken down further, into cost elements, if more detail is required to apportion charges (particularly for service-based cost models).

The most common IT cost model, costs-by-customer, requires that these costs are then attributed to the customer that causes them (alternatively, a costs-by-service cost model attributes costs to the services that cause them). These will be direct costs, those clearly attributable to a single customer, and indirect costs, those incurred on behalf of two or more customers that need to be apportioned to multiple customers in an equitable manner. There is also a need to classify costs as either operational or capital expenditure – the distinction required to calculate the annual cost of a capital item as it depreciates over time.

 

IT and the business must agree the key IT cost metrics for both ongoing performance management and the assessment of service improvement opportunities.

As with any business function, there is a danger that a corporate entity that sets its own performance metrics in isolation, fails to deliver meaningful management information that can subsequently be used to add value to the business. Hence, IT functions need to create their cost-based metrics in conjunction with the business – ensuring that they are relevant and easily measurable; that there is a sufficient number, and type, to cover the breadth of IT service delivery; and that there is scope to improve on base-lined performance to deliver real cost and efficiency improvements.

There is no golden set of IT cost metrics – each organisation will have different strategic drivers, different goals, and different opinions on the metrics required for IT to demonstrate cost efficiency. There are, however, benefits to choosing metrics that can be compared across organisations and against industry standards. Such metrics, trended over time, will help identify both the achievement of efficient performance and opportunities for service (and cost) improvement.

Example cost- and efficiency-related metrics include:

  • IT costs as a percentage of total business operating costs.
  • The average IT cost per employee (or per user if numbers are radically different).
  • The cost of providing generic IT services, such as e-mail accounts, per user.
  • Per-seat application costs, by type.
  • PC and laptop Total Cost of Ownership (TCO).
  • Service Desk costs per user.
  • The average cost per incident handled by the Service Desk.
  • The percentage of incidents dealt with by first-line (Service Desk) operatives.
  • Service Level Management resource costs per IT service, by Service Level Agreement (SLA) type.
  • Percentage reduction in software costs through improved asset control.
  • Change Management resource costs per change, by change type.
  • The average time to diagnose and resolve (or provide a workaround for) problems.
  • Infrastructure utilisation percentages.
  • Percentage reduction in lost business productivity caused by capacity-related incidents.
  • Number, and consequential costs, of major incidents.

An IT function should utilise benchmarking techniques to establish relative cost efficiency and identify opportunities for cost improvement.

Technology plays a pivotal role in the running and evolution of most organisations, with IT systems now an integral part of the business environment. In the past, IT functions were just tasked with providing the required volumes of particular technologies and technology-based services. However, as IT costs have increased, businesses have demanded that the IT services provided by in-house, or outsourced, IT organisations demonstrate both efficient delivery and value for money. Many organisations now use benchmarking as one of their preferred methods of ensuring that the best possible value is being achieved from IT expenditure.

Benchmarking is the comparison of an organisation’s performance against standards of performance set in the enterprise’s sector, and other divisions in the same organisation, or by accepted leaders in the particular area being benchmarked. This is achieved by using standard measurements to compare performance with that of other organisations or industry benchmarks. Benchmarking activity can identify problem areas within the IT function, discover gaps in performance, or find where performance is below that of an organisation’s peers. Whilst it is important to identify areas for improvement, it is also valuable to learn how the better performing enterprises achieve improved effectiveness.

Benchmarking can provide a number of benefits. Most notably it can be a catalyst for improved organisational performance and deliverable quality. By identifying gaps in operational effectiveness, as compared with peers or leaders, more innovative ways of working can be enabled. Benchmarking can also lead to a marked improvement in the organisation’s ability to collect and analyse IT performance data as, before comparisons can be made, a good understanding of an organisation’s internal operation is required. If employed correctly, benchmarking can also lead to better collaboration between both internal personnel and other stakeholders.

At the end of 2008, a survey on ‘Business Improvement and Benchmarking’, conducted on behalf of the Global Benchmarking Network, reported a continued rise in benchmarking adoption. The 450 respondents, from over 40 countries, chose Informal Benchmarking as their third most used improvement tool (after Customer Surveys and SWOT Analysis). Additionally, the tools most likely to increase in popularity over the next three years were cited as Performance Benchmarking, Informal Benchmarking, SWOT Analysis, and Best Practice Benchmarking – with over 60% of organisations not currently using these tools likely to use them.

From an IT Service Management (ITSM) best practice perspective, IT Infrastructure Library (ITIL) v3 espouses the benefits of benchmarking within its portfolio of Continual Service Improvement activities. ITIL’s Service Portfolio Management process also recognises that, by understanding the cost structures applied in the provisioning of a service, an organisation is able to benchmark that service cost against other providers. Or IT financial information, together with service demand and internal capability information, can be used to support decisions as to whether a certain service should be provisioned internally or not. Finally, for IT organisations wishing to benchmark their service management capabilities against a formal standard, ISO/IEC 20000 provides such a formal framework for both audit and certification.

IT managers need to understand their IT Financial Management processes’ relationships with, and importance to, other IT Service Management processes.

IT Financial Management interacts with most ITSM processes but has particular dependencies upon, and responsibilities to: Service Level Management, Capacity Management, and Configuration Management.

Within Service Level Management, the Service Level Agreement (SLA) details both customer expectations and IT function obligations for the relevant IT Service(s). During the creation of the SLA, the potential costs incurred to deliver against customer requirements play a pivotal role in determining the eventual (agreed) parameters of service delivery. In an IT organisation with mature Financial Management processes, the Service Level Manager will liaise with IT Finance to understand the costs of meeting existing and new business requirements and how charging policies (if in place) can affect customer and user behaviour.

By utilising this information, the Service Level Manager is able to create an SLA that best fits both customer and corporate needs – matching service levels to affordability, and supply to demand with the corporately desired level of efficiency. It is worth noting, however, that whilst finance-enabled Service Level Management allows for greater customer variation to service levels (and the associated benefits) it also places greater demands on IT budgeting, accounting, and charging.

Capacity Management is charged with planning and controlling the IT capacity requirements of an organisation. Cost information is a vital input to this process and without it Capacity Managers are unable to accurately estimate the costs of desired capacity or availability for a given system or IT service – and changes in capacity requirements inevitably lead to changes in costs. Capacity information also influences costs. Unit costs may increase because capacity has to be increased for greater levels of resilience or unit costs may fall as a result of improved infrastructure utilisation, of purchasing newer (better value) technology, of economies of scale, or of increased purchasing power.

Configuration Management is the process of providing a logical model of the IT infrastructure by identifying, controlling, maintaining, and verifying the versions of all configuration items. The configuration information, stored within the Configuration Management Database (CMDB), is used in the majority of IT decision-making processes; this includes financial details derived from the budgeting, accounting, and charging processes. Conversely, given that the aim of IT Financial Management is the effective stewardship of IT assets and resources, it is imperative that information from Configuration Management, and in particular from the CMDB, is readily available to IT Finance.

Republished from http://www.ovum.com