2007 yankee sm study - elevator pitch 180907.ppt

© Copyright 2007. Yankee Group Research, Inc. All rights reserved.

Camille MendlerVice President, Enterprise [email protected]

Paris: XX XXXXXX, 2007

Empowering Service Management Executive summary


Introduction

“Le langage est source de malentendus” “Language is the source of misunderstanding”

Antoine de Saint-Exupéry, Le Petit Prince


What we can prove

1. Speaking ITIL fluently is table stakes to deal with large enterprises

2. Depth and breadth of ITIL competence is a key selection criteria for more than 75% of large enterprises choosing managed IT and communications service providers

3. ITIL is top of mind among OBS’ leading competitors, and associated investments are accelerating

4. OBS’s Service Select campaign is differentiating: It creates a revenue opportunity in what was an operational function

5. Once committed, there is no going back: ISO20K is necessary to demonstrate and maintain world-class service management


Service provider and enterprise disconnectCommunication without mutual understanding• What’s at fault

– Service providers and enterprisesspeak different languages to definetheir ICT environment

• Lost in translation– Expression and interpretation of requirements

– Expression and interpretation of value delivered

• Consequences– Extended time to revenue to detail deliverables contractually– Focus on technical minutiae, rather than transformational impacts– Lack of recognition of potential service enhancements on offer– Risk of poor customer satisfaction, due to mis-communication of value

Pieter Brugel, The Tower of Babel, 1563

Service management, a body of practices governing the management of ICT environments, is at the front line of this communication disconnect


Introducing ITILA ‘lingua franca’ for empowered service management

Incident mgmt

Availability mgmt

Problem mgmt

Service Desk

Release mgmt

Change mgmt

Configuration mgmt

Service levelmgmt

Financial mgmt

Capacity mgmt

IT service continuity

Service Delivery

Service Support

Configuration Mgmt Database (CMDB)

Service Catalog

ITIL is a body of best practice in ICT service management organized into functional management groupings using a common definitional language

Source: Orange Business Services


Enterprise expectation of ITIL fluency is growing ITIL competence is a key supplier selection criteria

n= 525

2% 3% 1% 1%3% 4% 5% 1%

20% 16%23%

21%

51%49%

49%54%

24% 28%22% 23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All Enterprises North America Europe Asia

Extremelyimportant

Very important

Somewhatimportant

Not very important

Not at all important

ITIL competence is now a key supplier selection criteria for managed IT and communications services among large enterprises in key markets.

Source: Yankee Group 2007 Managed IT and Communications survey – large enterprises


Optimizing service management Summary: Does ITIL matter?

Company Agree? Comments

AT&T Agree • “ITIL is a standard element among the approaches required to deploy, monitor, maintain and optimize IT infrastructures”

BT Strongly agree

• “Adherence to [ITIL] standards creates opportunities that are revenue generating”• “It gives us a natural ability to add value”

DimensionData

Strongly agree

• “ITIL is great for us, it helps clients look behind big brands and see where we provide unique expertise – like unbundling the networking layer to us”

HP Stronglyagree

• “ITIL is fundamental for control over service environments, particularly with regards to compliance”• “We wrote [most of] the books on ITIL; we believe in the potential of continual service improvement”

TataConsultingServices

Agree • “ITIL’s popularity is tightly linked to growing outsourcing of support services and heightened regulatory concerns – it is part of what it takes to improve an organization”

Vanco Strongly agree

• “CIOs want to hear their language back or we have no credibility; with ITIL, we know what words to speak to the customer”• “ITIL is without doubt the most important of all frameworks we use”


Human capital: service management expertise Orange is in the leader pack

ITIL Trained Staff by Expertise

13%

10%

6%

2%

2%

70%

87%

90%

94%

98%

98%

2%

30%

98%

0% 20% 40% 60% 80% 100%

HP

IBM

BT GS/INS

Orange

Vanco

DiData

Sprint

Manager Other

Company TotalsAT&T refused*BT GS/INS 620DiData 550HP 5000IBM 5000Orange 1098Sprint 350Vanco 43

ITIL Trained Staff

Orange’s ratio of ITIL-trained staff is within comparative group, although a slightly lower ratio at Manager level. However, trained staff fall largely in internal rather than customer-facing functions. Others have focused their ITIL training investments from Sales outward.

*approximately 10% of consultants


Evaluating Orange’s Service Management Propositions Emergence of a new revenue stream: Service Select

• Market use of ITIL in managed services

• ‘Productization’ of service management

• Actively used in managed service provision

• But largely as internal tool to govern management processes

• Not as a means to market new service management propositions

Consequence: Majority of service providers recognize use of ITIL important, but have not made the strategic leap to use ITIL as a means to sell enhanced management capabilities in managed services

• Repositions service management as a differentiator and revenue stream

• Establishes clear boundaries between what is basic, extended and customized

• Reduces risk in scoping complex outsourcing projects

Consequence: Accelerates repositioning of Orange from connectivity heritage and its legacy competitors into ICT infrastructure management, broadening appeal of service management’s value to a wider audience


Competitive Environment and Service SelectSummary View: Threat Ranking

Ranking 1 (lowest) to 5 (highest): Plans and ability to replicate Service Select offer

Company Threat ranking Comments

AT&T 3• Pushing best of breed service management which could be formally productized to respond to Orange Service Select – no current plans articulated

BT(inc. INS) 5

• Actively developing ‘productized’ service management offers as part of drive toward utility computing

DimensionData

4• Some productized service management offers, ambitions more limited in scope

HP 3 • Partnership with BT gives direct line into service management activities, but not core direction per se

IBM3

• Disconnect between consulting and managed services operations, but brand and capabilities mean it could respond to Orange with its bulk

Sprint 1 • Nascent stage, internally focused on service quality improvement, limited global market presence

Tata 2• Seeking annuity revenue boost, but will take time to execute in similar vein, fragmented activities partly at VSNL as well as TCS level

Vanco 4• Service management core to value proposition, quickly ramping up ITIL skills, has market attention to exploit

5

3

3

3

1

2

4

4


Orange: ITIL maturity detail• Vision

– Definition: Definition of an ITIL service management vision integrated into company’s ICT services roadmap

– Orange: ITIL identified as element of ongoing and future roadmap

• Internal skills– Definition: Investment in ITIL competence

across organization to execute on roadmap– Orange: Investments not finalized on

systems level, strong training program

• Service management capabilities– Definition: Execution of ITIL processes into

service management propositions– Orange: ITIL overlay onto legacy processes

with progressive migration plan

• Sales approach– Definition: Ability to leverage ITIL knowledge

fluently in client engagements, including response to RFPs

– Orange: Pockets of ITIL knowledge across go-to-market teams, reliance on small number of evangelists – but level of proposed productization is differentiator

Orange: ITIL Maturity

3

2

3

3

0 1 2 3 4 5

Salesapproach

Servicemanagementcapabilities

Internal skills

Vision

On a scale of 1 (nascent) to 5 (highly mature)


ITIL service management: A double-edged sword?

• Upsides– Sets a new standard in competitive capability through Service Select– Creates a revenue stream in an area which was fundamentally a cost centre– Reduces risk in scoping & pricing outsourcing deals and other large projects– Facilitates new technology innovation in converging IT and communications services– Repositions Orange as a skilled service provider across ICT infrastructures– Improves time to revenue and sales efficiency

• Downsides– Butts head with IT services juggernauts with deep consulting capabilities and ITIL

competence– Raises the bar in compliance/certifications and triggers new requirements– Requires cross-company collaboration to achieve Service Select’s potential

But benefits outweigh risks if Orange follows through on what is has started:

-Creation of a new annuity revenue category leveraging an IT-centric framework that IT services companies have failed to act upon

- Creative management of integrated IT and communications metrics to achieve business transformation through proactive use of ICT


Conclusions

1. Speaking ITIL fluently is table stakes to deal with large enterprises

2. Depth and breadth of ITIL competence is a key selection criteria for large enterprises choosing managed IT and communications service providers

3. ITIL is top of mind among Orange’s leading competitors, and associated investments are accelerating

4. Orange’s Service Select campaign is differentiating: It creates a revenue opportunity in what was an operational function

5. Once committed, there is no going back: ISO20K becomes necessary to demonstrate and maintain world-class service management


RecommendationsWhat you need to do

• Achieve fluency in ITIL across departmental boundaries– Orange will only achieve significant service management revenue growth if all

staff, and particularly sales, speak ITIL – Basic fluency in ITIL is required to understand customer needs, and respond

to bids effectively and successfully– Consider change to commission plan to incentivize service management add

ons

• Practice what you preach and prove it– ISO20K is the next hurdle to differentiate service management offers– Use of ITIL terminology will become a marketing veneer among weaker, less

competent competitors – This will necessitate differentiation with ISO20K

• Build integrated marketing campaign and find poster child– Gap in marketing story exists without one or more case studies– (eg: as was leveraged with Le Meridien)

2007 yankee sm study - elevator pitch 180907.ppt

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