Author: Philippe A. Abdoulaye
You have probably heard that IT should be taken out of IT service management. According to that idea, IT service management concentrates too much on the technical side of things and not enough on the business value to deliver to the organization, trying to implement ITIL in its entirety is unproductive and without minimizing the importance of ITIL and other ITSM frameworks, one should expect the emergence of ‘pure’ service management concentrating more on business value.
Basically, Jamie Titchener who said that in his blog, “Taking IT out of IT Service Management: The Re-emergence of Service Management and Delivering Value”, is right, the excessive focus on technology is the problem with today’s approach for increasing the business value of IT services. Yet, does it justify that IT is set aside any service management effort? Not so sure.
The point here is, businesses will derive very few value from their IT services as long as their business and IT sides do not use a common language, framework and tools to define, plan and deliver expected value. The Business-Oriented IT Service Design Matrix, built upon ITIL 4Ps of Service Design, is a powerful framework businesses should leverage if they really want to get IT services in line with their priorities and expectations.
There is a persistent and confusing rumor that IT contributes little to business value. Let me say it straight, this notion is false. IT through providing software, application systems and infrastructures to support processes, increases operations effectiveness and efficiency. This is a substantial contribution. Can we imagine today’s corporations without technology? How one can explain business frustration?
As a matter of fact, the leading IT brands, supported by the best IT marketing specialists, either by ignorance or by pure opportunism, have been selling businesses the outdated notion that cost savings and productivity gains are competitive advantages. Let’s say it straight, in today’s economy almost all businesses benefit cost savings and productivity gains, consequently they aren’t competitive differentiators, they are not anymore competitive advantages. The business expects from IT, contributions beyond traditional cost savings and productivity gains. In fact the business blames IT for its unclear approach to competitive strategy and questionable perspective of business value creation.
THE NOTION THAT IT BY ITSELF BRINGS IN VALUE IS A MYTH THAT’S SLOWLY BUT SURELY TRIVIALIZING IT
A close look at how some business leaders and IT experts consider the notion of business value shows that the mechanisms underpinning value are ignored. For about two decades, value has been seen from the sole perspective of productivity and cost savings; the mantra is to deliver more with little IT costs. The increasing success of IT outsourcing initiatives and more importantly the increasing demand for cloud-based solutions substantiate that fact.
No one would dispute the fact that delivering more with less is definitely a substantial competitive advantage. However, this perspective stresses the sole cost-effectiveness dimension of value. Other key dimensions, examples, accelerated time-to-market, first-to-market advantages and superior customer experience are unfortunately considered minor factors. The fact of the matter is, these dimensions are value propositions and competitive advantages that help businesses increase their customers’ value and differentiate themselves from their competitors.
To that question asked to a business leader proponent of the cost-effectiveness approach to value, I never got a clear answer: “What value would a business derive from the cost-effectiveness of its core operations if it is unable to compete against its competitors because its services are always delivered late (time-to-market issues) and because of poorly designed online processes that disturb clients (customer experience issue)?”
“Tell them about a problem you have with your processes, they listen with one ear and come back 30 minutes later with the latest sophisticated software, hardware and infrastructure” says Peter B. Head of risk management at an international investment bank. That statement perfectly reflects the business perspective about IT leaders’ ability to suggest contributions other than cost savings and productivity gains.
The overemphasis on software, application systems and infrastructures at the expense of of other value drivers e.g., organizational issues, management practices and even corporate culture has over the years promoted the erroneous idea that technology alone could bring in value. The reality is they do not create value, they are enablers of value creation.
Generating business value transcends the concerns about reducing IT costs through outsourcing and streamlining business operations through deploying software, application systems and infrastructures. As a matter of fact, extracting value from IT capabilities builds upon the belief that organizational, managerial and human factors are the key determinants to unlocking the potential value of technology and processes.
The impacts of organizational, managerial and human factors on processes and technology are obvious; the confusion that results from organizational misconceptions disrupts processes execution and prevents from taking advantage of technology. Similarly, the confusion that results from deficient management practices e.g., lack of executive commitment and absence of effective governance mechanisms affect processes execution and prevents from taking advantage of the benefits of technology.
The impacts of the organizational, managerial and human factors demonstrate that in reality extracting value from IT services is primarily a complex change management process that involves the people, process, management, collaboration and technology factors of organizations.
For illustration, iPad, an Apple’s high value product, wasn’t invented by technology e.g., MacOS, CA Clarity PPM v184.108.40.206, and HP Proliant BL460c Blader Server. Rather, it primarily resulted from the imagination, innovation, commitment and marketing strategy developed by Steve Jobs and his team. This is to say that the multidimensional nature of value involving the people, process, structure, technology and culture factors is ignored by the major IT consulting firms.
Business-Oriented Approach to IT Service Will Change the Relationships Between the Business and IT and in General the Way IT is Managed
The introduction of the notion of service in business practices, as defined by the IT Service Management Forum, will definitely change the relationship between the business and IT and in general the way IT is managed. Indeed, from the ITSM Forum perspective, a service is a set of business assets i.e., people, process, partnerships, suppliers and technologies aggregated into a capability supporting the achievement of specific business objectives.
As illustrated in exhibit 1, a service is something intangible that includes four specific elements, not one, nor two and three but four including People, Process, Partners / Suppliers and Product.
People relates to the human factors and refers to all human elements e.g., work force and skills needed to design, transition, operate and improve services.
Process relates to the ITSM operations and refers to all elements e.g., activities, methodology, deliverable and performance metrics required to effectively and efficiently design, transition, operate and improve services.
Partnerships / Suppliers relate to the organizational, managerial practices an capabilities required to ensure a high level of collaboration within the organization and with vendors throughout the service lifecycle. Product relates to the underlying technology required to design, transition, operate and improve services.
By breaking down traditional silos, the 4Ps of service design, offer a common language that forces the business and IT to work together on defining, planning and delivering expected value. Three areas of today’s approach to IT service design are affected by that service-based approach to value; they include (1) the perspective of IT contribution, (2) the focus of both the business and IT on the value drivers, and (3) the evaluation of IT contribution to value.
The Perspective of IT Contribution Shared by the Business and IT
The notion of service through the 4Ps elements i.e., people, process, partnerships/suppliers and technology offers a rigorous framework that forces the business and IT to think beyond traditional software, application systems and infrastructures concerns.
The effort is focused on jointly fine-tuning organizational, managerial and human capabilities so as to unlock the inherent potential value of processes and technology. The Service-based approach to value gets the business and IT focused on what really matters: value propositions and competitive advantages.
Unlike traditional strategy planning which is based on an incomplete three-phase agenda i.e., (1) the business defines its goals, objectives and value propositions, (2) the business asks the IT departments to provide the software, application systems and infrastructures to invest in and (3) the business and IT agree upon an investment budget, the service-based approach forces the business and IT to jointly work on how to take advantage of IT to turn value propositions into superior customer experience and turn desired competitive advantages into IT capabilities that outperform competitors and increase customers’ value.
A typical example of value proposition turned into positive customer experience is Amazon’s promise to simplify online orders turned into the 1-click ordering process while example of competitive advantage is the implementation of Agile Scrum mechanisms for improving collaboration and accelerating services delivery.
SLAs Facilitate the Evaluation of IT Service Contribution to Value
Evaluation of IT contribution to value is probably the one of the most valuable areas of the service-based approach; the notion of Service Level Agreement (SLA), which is an integral part of service, through expressing requirements, expectations and performance metrics in business terms provides an unprecedented opportunity to properly measure IT contribution to value.
The service approach allows the business and IT to work on and discuss IT contribution in terms that are meaningful to the business. Examples, the notion of time-to-market (TTM) refers to the metrics that measure the extent to which the IT department meets the organization’s desired TTM requirements. Examples of another issues measured in connection with IT contribution to customer experience improvement include cost of new customer, annual customer retention, cost of complaint, customer lifetime value, and on-boarding conversion rates.
THE IT SERVICE DESIGN MATRIX PROVIDES SOLID FOUNDATIONS FOR THE DESIGN, IMPLEMENTATION AND DEPLOYMENT OF BUSINESS-ORIENTED IT SERVICES
Managing IT services requires a balanced approach that considers the people, process, partners / suppliers and technology dimensions of not only the IT department but the entire organization. The ITSM 4Ps for service design provides a solid foundation for implementing such a holistic perspective. The Business-Oriented Service Design Matrix illustrates a powerful framework I have been using for 10+ years to support IT services development efforts:
The business-oriented service design matrix addresses three essential dimensions of services including the Voice of the Business, the IT Perspective, and Value. It is a set of questionnaire, best practices and analytical tools supporting the service design process.
The Voice of the Business Dimension
Very often IT folks assume the concerns of business folks relate to applications performance and revolve around availability, capacity, continuity and security. In fact, they reduce IT service design to the systematic application of ITIL Service Warranty through deployment of sophisticated ITSM software.
The problem with that approach to service design is it, stucks the business and IT in their silos and results in IT-focused services that generate extremely poor business value. The purpose of the business-oriented service design matrix is to offer a common language and framework shared by the business and IT to define, plan, implement and deploy services in line with priorities and expectations.
To achieve these objectives the voice of the business dimension sees a business service through two categories of needs: core needs and support needs. Core needs represent functional requirements expressed in business terms while support needs address performance requirements.
This section is set of questions specifically designed to capture business needs, requirements and expectations as to desires business services (core services) and supporting services (IT services).
The IT Perspective (or the 4Ps) Dimension
The IT Perspective dimension dimension supports the specifications of services from the perspective of IT; it allows the business and IT to discuss and agree upon factors as critical as people, process, partnerships / relationships and tools. Like the voice of the business dimension, it is a set of questionnaire, best practices and tools specifically selected to support the translation of the core service needs and support service needs into complete services in line with the business priorities and expectations.
The Value Dimension
This dimension relates to the projected value of the services being design. It assumes that a service value is a correlation of discrete values generated by the organization’s people, process, partnership / relationship and technology factors. It is a set of questionnaire, best practices, metrics and tools used by the business and IT to collectively evaluate the contribution of the factors mentioned above.
The Business-Oriented Service Design Matrix has helped to support the design and roll out high return IT services, re-engineer IT service of global ITSM organization, align service provisioning, configuration and activation processes with ITIL in industries such as telecommunication and media / entertainment.
Philippe Abdoulaye is a former Accenture IT Strategy and Transformation Advisor with hands-on and versatile experience as cloud transition advisor, ITIL architect and implementer, business process outsourcing (BPO) architect and PPM / PMO subject matter expert.
He has seen project management from the consulting and client organizations sides. In addition to system integration projects, his experience includes cloud transition, IT service management, business process outsourcing and IT transformation, project management office (PMO) and project portfolio management (PPM) projects.
Philippe has served a number of top global consulting firms including Cognizant and Accenture and has helped businesses around the globe derive value from their IT investments and initiatives. Examples of clients include in the US Educational Testing Service (ETS), Ralph Lauren Polo, Bristol-Myers Squibb, Del Monte Food, and American Express and in Europe France Telecom, Orange France, Bouygues Telecom, SFR and Vodafone.
He is the founder of PMPragmatic LLC a New York consulting firm specialized in IT strategy and transformation with a focus on cloud computing.