Ways to Improve IT ServiceDelivery While Reducing Costs

By Stephen Mann

Presented By:

Intro

INTRODUCTIONA great Oscar Wilde quote is that ...

The cynic knows the price of everything and the value of nothing,”but does the average corporate IT department even know what IT services cost, let alone the value each discrete IT service delivers to the business?

The Wilde quote raises a number of questions for IT organizations:

What does the money “invested” in IT each year deliver in terms of business value? Which IT services deliver the most business value, and which deliver little or no value? What’s deemed to be “valuable” from a business perspective?

An oft-stated solution to such questions around IT costs and value is to “run your IT organization as a business.” It sounds sensible until you realize that IT “run as a business” might not be in the best interest of the parent business – the real business here – with decisions made sub-optimally as the bigger picture is forgotten.

Instead it’s best to use the term “run IT like a business” – it’s a subtle di�erence but hopefully you can appreciate why this approach is better.

What Running IT Like a Business Really MeansIf a corporate IT organization is to truly be “run like a business,” to create maximum business value for its parent organization, then it needs a focus on things beyond managing the corporate IT infrastructure and spending within the aggregated IT budget, including:

• Understanding customer needs & wants• Knowing what individual IT services cost & what drives these costs, including the trade-o� between cost & service levels• Delivering high quality services, support, & customer service• E�ective financial stewardship to minimizecosts while not adversely a�ecting service quality (as maximizing margins & profitability is most likely not applicable to an internal service provider).

This eBook focuses on the latter two bullets, as well as talking to the importance of business value. O�ering five opportunities for corporate IT organizations to improve how they are run, and the value they ultimately provide to their business, across:

Exploiting automation Improving service desk performance while reducing costs Better matching services and service levels to needs and value Better IT asset management Financial management that focuses on the right things

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EXPLOITING AUTOMATIONUsing automation for IT management and IT service management (ITSM) is nothing new – from running simple data center scripts, ITSM-process automation, to the orchestration of third-party systems (including cloud services), and more recently the use of artificial intelligence (AI) for doing the “thinking heavy lifting” – especially via machine learning use cases.

Whichever flavor of automation is considered, it o�ers a number of benefits to IT service delivery and support. For instance:

Your IT organization is probably already benefiting from data center scripts, ITSM-process automation, and orchestration – but what about the opportunities of machine learning? Find out on the next page!

Increased Speed of Execution whether it’s undertaking manual or “thinking” tasks, machines can do things much faster than humans can. Plus, they don’t need to stop to eat or sleep, or to take vacations – making the automation not just an extra team member but perhaps more of an extra team.

Improved customer experience we now live in an “instant gratification” society where the speed of issue resolution or service provision, and overall customer experience, are important drivers as to how we feel about and use service providers. Importantly, customer experience is now also applicable to corporate service providers, with consumerization meaning that employees now bring their consumer-world service experiences and expectations into the workplace.

Cost reductions Human labor still makes up a significant part of the total IT budget, and thus automation can be used to not only speed up execution but also to reduce the associated people costs. Plus, the reduced time taken to execute might also result in additional, knock-on cost savings or the ability to increase revenues.

Reduced Human Intervention Automation frees up highly-skilled, knowledgeable IT personnel from manual tasks to allow them to spend their time on greater value-add activities. Where in turn they might still benefit from further automation, for example predictive problem management including root cause analysis.

Reduced “human error” Or, more specifically, a reduction in unwanted consequences of human error. This might be business-a�ecting service downtime or the e�ort required to rework things – the former of which potentially has not only unwanted financial costs but also adverse customer satisfaction/retention and brand reputations “costs.”

Increased task adaptability Changing automation to reflect a new status quo is so much easier than trying to elicit people change. The former is a one-time thing that can be “forgotten about,” whereas the latter requires continued investment and checking to ensure that new policies, procedures, and practices are being consistently applied.

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EXPLOITING AUTOMATION - CONT’DYour IT organization is probably already benefiting from data center scripts, ITSM-process automation, and orchestration – but what about the opportunities of machine learning?

More E�cient Support Speed is an important facet of modern-day

support and customer service (customers tell us so). And machine learning can help with this at a number of customer touchpoints, starting with understanding the end-user issue through voice-recognition capture, understanding, and initial call direction.

Orchestration Enhancement Machine learning can work in conjunction with existing orchestration capabilities to

further remove the need for human intervention. For example, in making informed

decisions, transactional data analysis, and identifying potential improvements based on

historical performance.

Improved Knowledge Management Machine learning o�ers a number of

capabilities that significantly improve an organization’s knowledge exploitation. From intelligent search and recommendations, to

automatically identifying and filling knowledge gaps – with chatbots, virtual agents, and intelligent autoresponders a

high-value use-case scenario of the search/recommendation capabilities.

Identifying and Predicting Issues The technology can identify common issues (what ITIL would call “problems”) or the signs

of adverse things approaching (including change risk). It can also o�er up the most likely resolutions for identified issues and

schedule preventative maintenance.

Predicting Future Demand for IT Services This could be demand for new or existing IT services, or the future required levels of IT

support personnel to maintain or to improve service. It can also be used to predict future

levels of customer satisfaction based on support trends or proposed changes.

Automated Continuous Service Improvement Changing automation to reflect a new status

quo is so much easier than trying to elicit people change. The former is a one-time thing

that can be “forgotten about,” whereas the latter requires continued investment and

checking to ensure that new policies, procedures, and practices are being

consistently applied.

More and more businesses are investing in machine learning – and thus for IT to be “run like a business” it’s a valuable next step in the utilization, and exploitation, of automation.

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IMPROVING THE SERVICE DESK PERFORMANCE WHILE REDUCING COSTSThe corporate IT service desk has already been through two decades of cost reduction – from outsourcing to cutting back highly-technical sta� in favor of “script readers.” And service desks continue to face the pressures of having to “do (or deliver) more with less.” Some people now feel as though there’s little that can be done to reduce service desk costs, but there is – there are still ways in which to improve the quality of service and support, especially in light of consumerization, while improving e�ciency and reducing costs.

Most of the available service desk improvements are technology related, starting with one that has already been mentioned:

Is your IT organization providing, and paying for, low value services (or paying for services that don’t o�er any value at all)? Would customers be upset if they knew how much particular “low value” services cost the business (or their line-of-business budgets)?

In e�ect, is the corporate IT organization doing what it thinks is right rather than what is actually right for internal customers and the business as a whole?

Thankfully there are two existing ITSM capabilities that can be employed to help here:

Business relationship management (often called BRM), and Service portfolio management.

With each capability somewhat reliant on the other – in that business relationship management supports service portfolio management (as well as many other ITSM capabilities). And service portfolio management supports business relationship management (again as well as other ITSM capabilities).

Business Relationship ManagementThe role of “business relationship manager” and concept of business relationship management was introduced in ITIL v3 in June 2007. With the role tasked with acting as a conduit between IT and other lines of business to better:

• Understand di�erent lines of business and their needs• Assist in the prioritization of IT-related projects and investment • Direct IT strategy in support of business strategy.

The role is intended to work at di�erent levels within the business, from strategic planning down to day-to-day operations, to ensure that the right IT services are delivered at the right price to meet customer needs. Importantly, there’s far more to business relationship manage-ment than regular service level management conversations with customers about IT service demand, budgets, and IT service delivery issues.

The BRM Institute states that:

“Business Relationship Management stimulates, surfaces and shapes business demand for a provider’s products and services and ensures that the potential business value from those products and services is captured, optimized and recognized.”

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Business Relationship Management - cont’d

It also o�ers up four core BRM disciplines, which are paraphrased below:

Demand Shaping – it “stimulates, surfaces and shapes business demand for provider services and is focused on optimizing the business value realized through provider services.” Exploring – it “identifies and rationalizes demand, and helps sense business and technology trends to facilitate discovery and demand identification.” Servicing – it “coordinates resources, manages business partner expectations, and integrates activities in accordance with the business partner-provider partnership.” Value realization – it “ensures success of business change initiatives that result from the exploring and servicing engagements. Value realization includes activities to track and review performance, and to identify ways to increase the business value.”

Service Portfolio ManagementService portfolio management was also introduced as an ITIL v3 discipline – in June 2007 – within the service strategy book, but has struggled with widespread adoption in part due to a lack of ITSM tool vendor technology to support it. Service portfolio management capability is also an odd beast, in that it can be viewed, or understood, in two disparate ways:

The more traditional view of “the portfolio of services that needs to me be managed” – the sum of the service pipeline, service catalog (of live services), and retired services. The alternative view of “the portfolio management of services” in a similar way to which large companies use “project portfolio management” (PPM) tools and techniques for their projects and programs.

And it’s in the latter way that savvy ITSM professionals can use the PPM tools and techniques to better manage services, along with:

• Improving control over, and reducing, IT cost• Helping to demonstrate the value that IT services, and IT as a whole, delivers to the business.• Providing governance-dictated visibility into the use of financial and people resources• Improving decision-making and demand management capabilities.

Thus, both business relationship management and service portfolio management should be seen as key elements in running IT like a business. Allowing IT to better: understand customer needs and wants; assess how services, support, and customer service are meeting expectations; and know how costs compare to business value, including the trade-o� between cost and service levels.

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BETTER IT ASSET MANAGEMENTAs already mentioned, the art and science of IT asset management is not as popular as it should be. Most IT organizations probably do some form of IT asset management, but too few do enough. As to why they don’t, they answer is more likely to be “Because they don’t have to” than it is “because it’s too hard.”

Rightly or wrongly, ITSM has a higher adoption rate than IT asset management because of two key reasons:

Most companies need a help desk, service desk, or IT support personnel and ITSM adoption piggybacks on this unavoidable need. ITSM has benefited from the ITIL IT service management best practice framework and its adoption (including within ITSM tools). IT asset management, on the other hand, has various bodies of best practice but nothing that has been as dominant as ITIL has been for ITSM.

But neither of these reasons are an excuse not to invest in IT asset management – and the word “invest” is deliberately used, because IT asset management done well will more than pay for itself. With benefits that include:

Reduced costs having more information related to IT assets – both hardware and software – allows organizations to make more informed purchasing and investment decisions. This isn’t just the replacement, or conversely “sweating,” of existing assets but also project decisions related to adding assets to the IT estate. IT asset management will also help procurement teams to negotiate better deals and renewals (including maintenance contracts), due to them having greater insight into past, current, and future asset use.

Improved operational e�ciency importantly IT asset management isn’t just about saving money, it’s also about doing things better. And asset data is a valuable input to other ITSM processes such as incident, problem, change, and capacity management – allowing for swifter fixes and better decisions.

Higher-quality IT services and a better customer experience knowing what IT assets are in use, where, by whom, and for what purpose not only improves operational e�ciency across other ITSM processes. The better insight into IT assets supports actions that ultimately improve IT services and how customers and end users feel about the IT organization, its services, and its overall business worth.

Improved governance, risk mitigation, & compliance Again, IT asset management isn’t just about reducing IT costs. The ability to track and control assets throughout the IT asset lifecycle protects the business and supports: internal and external governance needs, risk management activities, and the need to be compliant with contractual and regulatory requirements. In particular, in terms of software licenses and ensuring that software installations tally with held licenses and usage rights.

Better alignment with business needs Understanding existing IT asset investments and the remaining economical life of assets, or asset groups, allows organizations to better recognize whether new investment decisions are optimally aligned with business needs. This is not only relevant to IT managers but also to colleagues in other lines of business such as finance, procurement, security, and facilities.

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FINANCIAL MANAGEMENT THAT FOCUSES ON THE RIGHT THINGSIT financial management best practice has been around a long time – including in ITIL – but, as with IT asset management, it’s often an ITSM discipline where “just enough” is done. Normally across the two areas of budgeting and accounting, with IT organizations needing to request and justify future spend, and to account for what they have already spent.

However, this isn’t enough for IT to be run like a business – as a business wouldn’t survive without knowing what individual products and services cost to make and deliver, what the cost drivers are, and how individual margins contribute to overall profitability.

Sadly, many IT organizations still don’t have clarity over the IT services they o�er (due to a lack of service catalog management and service portfolio management activity), how these services are formed (due to a lack of configuration management and IT asset management insight), and what it costs to provide the individual services versus the value the business reaps from them.

Consequently, the organizations have no idea:

Which are the most valuable services (and there is thus the danger that decisions to kill or cut back services are made based on usage and cost rather than value). Whether the cost of providing each service outweighs the business’s perceived value obtained from them. Whether money could be saved by reducing service levels (or if service level enhancements are worth the extra cost). How to improve upon existing services to deliver even more business value

There’s still much to be done here despite the promised benefits of lower costs and better business value being nothing new. And it starts with recognizing the need for better financial stewardship, improving in other areas, and investing in the right skillsets:

Build a platform for better financial management financial management can be improved in isolation, but also improving other ITSM capabilities will make it even better. For instance, getting a better understanding of the services delivered and how they are made up will require a mix of service catalog management, service portfolio management, IT asset management, and configuration management. Without the additional insight that these capabilities bring, it will be di�cult to look at costs and value at a granular level.

Get access to financially-minded people I think most of us would agree that the average, stereotypical IT professional isn’t interested in financial matters and, even if they were, they would struggle with the science of finance. So, find someone who can do what you need to do with the numbers – if you are lucky this could be an existing IT team member who happens to be financially-minded, or alternatively seek help from the finance team. It will be the start of “getting under the skin” of IT costs to under-stand why things costs what they do and how these costs can be changed.

Continued on the next page

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Start to build an IT cost model using “service costing” where service costing is the allocation and apportionment of IT costs across di�erent IT services based on known cost drivers. It’s only by getting to this level of granularity of cost understanding that organizations can start to understand more about value, i.e. they need to understand costs before they can be compared to perceptions around the business value created in incurring the costs. In doing this there will be cost-saving quick wins, as a better understanding of costs will identify monies spent where no value is being created – it’s IT wastage – and services where the costs incurred far outweigh the delivered business benefit or value.

Make better business decisions better financial management arms IT organizations to make better business decisions. Where understanding what individual services cost to deliver allows IT organizations to compare the status quo to other options, which could be increasing or reducing service levels (and the associated costs), outsourcing relatively expensive but not business-critical services, changing funding models, or swapping on-premise-delivered IT services for infrastructure-, platform-, or software-as-a-service alternatives.

Start to position IT services in terms of business value most IT organizations su�er from the mid- to end-of-year, corporately-mandated, budget cut. You know the one, where forecasts and future expenditure need to be pulled back for the required, annual financial position to be achieved. Projects are canned and day-to-day IT expenditure is also reduced. But consider a di�erent scenario – one where business colleagues can see the value of, or positive return on investment (ROI) from, IT expenditure. Surely the IT organization would instead be asked to spend more on IT, thanks to the positive ROI, not less? It’s moving IT from being merely a “cost center” – and potentially being perceived as a “money pit” – to a “value center” and the positive attributes this brings. Using PPM-style service portfo-lio management can definitely help here.

The better financial stewardship of IT is a must-do for modern IT organizations. And not to improve in this area just creates more work for cash-strapped IT teams. Like problem manage-ment, financial management is the equivalent of spending a cent to save a dollar – reducing costs and improving the perceived value of IT and the services it provides.

NEXT STEPSSo, there’s still much that can be done to improve IT service delivery while reducing costs – andto run IT more like a business. However, rushing to attack each of the above opportunities at once will most likely spread your limited resources too thinly. Instead a phased approach is recommended, an approach that seeks to address your organization’s key opportunities, and pain points first.

Thus, your next steps should follow a path similar to:

Assess how and where each of the proposed opportunities will positively impact your organization. Seek out operational and customer pain points that should be addressed as a priority.

Understand the high-level cots of change, including the organizational change management aspects.

Prioritize what could and should be done in conjunction with key stakeholders.

Agree the early phases and overall plan, seeking additional funding and suitable people resource as needed.

Start running your IT organization more like a business.

NEXT STEPSSo, there’s still much that can be done to improve IT service delivery while reducing costs – andto run IT more like a business. However, rushing to attack each of the above opportunities at once will most likely spread your limited resources too thinly. Instead a phased approach is recommended, an approach that seeks to address your organization’s key opportunities, and pain points first.

Thus, your next steps should follow a path similar to:

Assess how and where each of the proposed opportunities will positively impact your organization. Seek out operational and customer pain points that should be addressed as a priority.

Understand the high-level cots of change, including the organizational change management aspects.

Prioritize what could and should be done in conjunction with key stakeholders.

Agree the early phases and overall plan, seeking additional funding and suitable people resource as needed.

Start running your IT organization more like a business.

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