Measuring Business-IT Integration

So we understand now what is meant by business service management or BSM and some of the critical success factors. Measurements are at the core of enabling IT organizations and IT leadership to assess how well IT organizations are supporting their respective businesses and customers. We will focus on indicators that help IT organizations appreciate the extent to which they understand their customers’ businesses and the level of support that they provide to their customers to achieve their respective business objectives.

Some of the factors that will be critical (aka Critical Success Factors or CSFs) to the overall success of Business Service Management initiative are listed below.  Each Critical Success Factor or CSF in turn comprises of a range of recommended indictors that will help us assess / measure the performance (aka Key Performance Indicators or KPIs) of our Business Service Management. Depending upon your particular situation and circumstances, you may decide on a subset of these metrics.

• Quality and maturity of business and technical services (IT services)
• Business process enablement and support
• Business-IT integration

In this blog, we will discuss the key indicators that will help us measure how well we are able to achieve the quality and maturity of business services that we offer to our customer(s) and technical services that actually implement those business services. 

Quality and maturity of business and technical services (IT services)

This critical success factor or CSF is about the quality and maturity of IT services. Once an organization embarks on the BSM journey, it is vital that we are able to demonstrate an improvement in the quality of services that we deliver to our customers. In addition, we need to continually measure and improve our IT processes that underpin our IT services.

Some of the KPIs that will help us measure this factor are as follows:

• Average response times to changing business goals and needs

• %age of IT resources involved in operations (keeping the lights on) vs. new development

• %age of IT budget spent in developing new IT services / capabilities compared to the total IT budget

• %age of IT budget spent in managing existing IT services

• Ratio of IT budget spent on developing new services to managing existing services

• %age of IT services (business or technical services) provided by supplier (i.e., outsourced)

• %age of IT services that use standard technology components and other standards

• %age of technical documentation and other training manuals that are up-to-date

• %age of incidents for which external suppliers are contacted for further assistance.

• Ratio between the total number of employees within IT organization to the total number of non-IT employees within the business organization.

Business Process Enablement & Support

The level of business value delivered by IT services depends upon the extent to which these services enable and support the business processes. Some of the performance indicators that will help us measure our IT services in terms of business value delivered are as follows:

·   %age of IT projects that deliver the value on investment (or VOI) as assessed and agreed in related business cases.

·   %age of revenue generated through the use of IT services

·   %age of services for which cost of unavailability is well understood and properly communicated.

·   %age of business processes that rely on IT services

·   Number and %age of users that depend on IT services to perform their day-to-day job functions

·   %age of service improvement decisions made on the basis of quantitative as well as qualitative service performance as well as perception related data / information.

·   %age of services for which business / customer perception of service quality is calculated.

·   %age of # of key business decisions that are made based on the information / knowledge processed and provided by IT services. 

Business-IT Integration

How do you measure the extent to which you IT is integrated with the businesses and / or customers that you support. Following are the key performance indicators or KPIs that will enable us to understand how well IT is integrated with the business. These include:

·   %age of IT projects (per year) that are business-driven, are initiated by IT, and are a result of alignment of business and IT strategies. These projects are considered innovative and will result in enabling core business processes and / or addressing core business needs / pain points. These projects must be conceived within IT.

·   %age of IT projects (per year) that are business-driven and are initiated by the business. These projects must be conceived with business.

·   %age of investments made in IT development compared to the total investments across the business enterprise (applies to internal IT service provider)

·   %age of IT budget of the total revenues of the business enterprise

There are other KPIs that are related to specific ITILv3 processes e.g., Change Management has its own KPIs, Service Asset and Configuration Management has its own KPIs and so on. Relevant ITILv3 literature should be used to understand, identify and select specific metrics to measure the maturity of these processes. 

Factors impacting Service Management implementation

This is first of two blogs that we will have on the factors that impact business service management implementation. As discussed in my previous blogs, business service management implementation is more about cultural transformation than anything else. It is a major shift in the way IT organizations plan, produce, deliver and manage their products and / or services.

Some of the critical success factors that impact business service management implementation include:

• Senior business and IT management commitment: Cultural change is not easy and requires strong leadership. Therefore, senior management commitment is the most critical factor in achieving successful implementation of business service management.

• Return on Investment: Business service management implementation requires significant investments and successful business leaders don’t make investments in which they don’t see reasonable / justifiable returns. Big-bang is not going to work. IT improvements that don’t actually impact the value that businesses / customers receive are not at all wise investments.

• Communication, communication and communication: Marketing and communication are the most critical components of trying to implement business service management. IT has traditionally been weak in sharing the success stories. Businesses and / or customers only get communications when something breaks down. Communicating good as well as bad to the customer is critical. Most of the time, we are focusing on only bad and leave the good out. As IT organizations embark on making improvements to products and / or services that they produce, communication planning and execution is critical. Service Level Management process provides means and ways in which service target achievements should be shared. In addition, business relationship or account management functions can prove very useful in communicating with the businesses and customers, identifying / defining services, and negotiating service level agreements. Scorecards, dashboards, heat-maps, and other displays must be made available to customers all the time. This is critical to maintaining IT credibility.

• Business drivers and needs that actually require IT organization to improve the way it delivers its services to the businesses. This will require IT organizations to make major investments in improving the quality of services that they provide. 

• Objective self-assessment: Realistic IT self-assessment to establish current state service management and process maturity is critical. This will enable the leadership and service management project teams to make better estimates on the levels of investments required prior to pursuing business service management project.

• Personnel performance management: Key performance indicators and metrics should be very thoughtfully established. Such performance metrics should be introduced that encourage IT personnel to be responsible for the delivery of end-to-end services. Such metrics will encourage cross-organizational teams to collaborate and work towards common objectives. 

• Not everything is important: Not every IT component is critical. Use business impact as a guide to identify the critical components and guide the prioritization. Focus on those 20% of the components that make 80% of the revenues. Focus on those that result in the improvement of end-to-end service quality. Select the right metrics that tell you what you want to know about the service quality. Those IT organization that start a big, all-encompassing business service management initiative with the goal of defining IT service dependency relationships for all lines of business and millions of IT components, and the intention of achieving 100% monitoring coverage of all IT components in the IT infrastructure often rarely make it to the end i.e., successful achievement of business service management. This is primarily because such a large effort results in a highly complex project that takes years to implement and generally leads to disillusionment and failure. The more-successful deployments break up the project into smaller business-focused and NOT IT focused components. Focus in successful efforts is continually maintained on defining and monitoring only a few critical IT services and underpinning IT components, then expanding after achieving critical successes. These initial successes are used to keep the momentum going. If your company has a disaster recovery plan, it may be a good source of important information as you prioritize which services are more critical and the respective underpinning IT components. This will also enable effective improvement in component monitoring capabilities. Redundant monitoring is removed and gaps in monitoring are identified and appropriate remediation plans can be created. 

How can I leverage Business Service Management to maximize return on my ITSM investments?

Business Service Management is about managing business services such that IT performance can be measured not in IT terms but in terms of business value delivered. Business Services enable the core Business Process and, in most cases, are really what business customers can relate to. It will be critical to any organization embarking on ITSM journey to get a good understanding of this idea and design and execute the respective programs accordingly.

At a very high-level, implementing end-to-end Business Service Management will involve the following key activities:

·      Identifying and defining the Business Service in the Service Catalog

·      Defining the Service Level Requirements for the Business Service

·      Defining and agreeing on Service Level Agreement necessary to ensure that needs identified in Service Level Requirements are met.

·      All Technical Services that support the Business Services are identified and defined in the Service Catalog

·      All necessary Operational Level Agreements are identified, defined, and agreed upon for these Technical Services

·      End-to-end Request Fulfillment processes are defined and implemented for all appropriate requests that can be place on these services

·      Configuration Management Database (CMDB) is optimized to represent the relationships between all the Configuration Items that ensure successful delivery of the Business Service

·      All other ITILv3 processes are implemented to ensure that this Business Service is managed end-to-end.

Achieving Business Service Management will require IT organizations to bring alignment across different IT teams (infrastructure, application development, operations, and so on) and components in an effort to achieve the highly envisioned business-IT integration. The separation between application and infrastructure results in a disconnect between business needs and end-to-end management of those needs from the fulfillment perspectives – applications teams architect, design and develop applications to satisfy functional needs (termed as utility in ITILv3) and, in most cases, when these applications get deployed, there are mismatches in network and server capacity resulting in unforeseen outages (due to lack of, what ITILv3 terms as warranty). These outages cause disruptions not only for business customers but also for IT teams. Such events result in increasing costs of delivering IT services, reducing productivity, and greater customer dissatisfaction. Business service management aims to implement end-to-end management for IT services provided by the IT organization with the goal to address the challenges mentioned above.

Therefore, if managed appropriately, Business Service Management can bring pragmatism to the overall approach that you may want to take in order to implement service management. The approach will help realize returns that can be directly related to business value thereby ensuring continual sponsorship and support for such initiatives. 

What do we mean by enabling business processes?

In almost all cases, business expectations from IT can be categorized as follows:

·      Core Business Services: These are those services that most businesses use in order to keep running their operational businesses. These include services like Email, Telecommunication, Back-up and Recovery, Voice and / or Video Conferencing, and so on. These may not directly enable any specific core business processes but are definitely essential to keeping the businesses going. Almost all IT organizations are expected to provide these and probably other core IT services.

·      Business-specific Business Services: The second set of services are those that directly impact the ways business executes its core business processes and develop and / or deliver its products and / or services to its end customers. Discovering and aligning business services requires a clear identification and mapping of business processes. Higher maturity IT organizations are now aiming to build better appreciations of what their customers’ businesses really do. This business knowledge enables IT organizations to achieve the following:

o   Achieve comprehensive understanding of those business processes that truly enable business enterprises to generate revenue and be profitable. Without these business processes, these business enterprises would go out of businesses. For example, in retail banking today, online banking is a must, in manufacturing industry, supply chain management is at the core, and so on.

o   Identify areas for business process improvement to ensure that IT is enabling efficient business processes and not the broken ones. Enabling inefficient business processes is going to result in wasted investments. This is a sensitive area and needs to be carefully managed. Normally, business processes should be owned and, therefore, improved by the business units and not IT. However, if IT discovers that a certain business process is in-efficient or broken, it is critical to communicate this to the customers / businesses and share the resulting impact so that appropriate improvements can be made prior to automation.

o   If IT organization is able to clearly understand business processes, it will be in a position to propose to the businesses / customers innovative ways in which IT can enable these business processes. Accordingly, business services are designed and developed that enable achievement of business objectives.

Business Service Management ensures the enablement of business processes by effectively managing all enabling IT components end-to-end and measuring performance of these components in relation to business performance. 

How do Business Processes, IT Services, Business Services and Technical Services relate or not relate?

In my previous blog, we briefly discussed the role of business processes when it comes to aligning IT with the business. Let’s now further discuss how these business processes are related to business services.

A good non-IT example is of a restaurant. Think about the Menu. It is mostly put together in a language that customers are able to understand what dishes can be ordered and what to expect from each (a brief description). Now, imagine a restaurant that is serving a hotel; room service menu may be different from restaurant menu. Lets see some IT-related examples. When you ask for high-speed Internet service, you do not normally ask for the number of servers, routers, and other infrastructure components you need. On the other hand, if you are providing infrastructure services and your customers are really Application Service Providers or Application Development organizations, the business services may be more technical in nature.

The point that I am trying to make here is that business services are what your customers are able to relate to. What constitutes a business service depends upon what business you are in and who your customers are. Remember the restaurant example. Their end customers are those people who come to the restaurant to have dinners and lunches. But these restaurants are themselves someone’s customers e.g., those parties that provide ingredients for example. Therefore, business services presented to the customers will vary depending on your particular business and your customer segments. Note that there may be more than one business services required in order to enable a given process and business services may be shared across a range of business processes. Note that both business services and IT services are types of IT services.

Technical services realize business services. Technical services, as the name suggests, are internal facing and are not normally visible to the customer. One or more technical services may be required in order to realize a given business service and technical services may be shared across multiple business services. Continuing on the same high-speed Internet service example. Some of the technical services that realize this High-Speed Internet service may involve Connectivity, Web Server Hosting, FTP, and other technical services and these may be shared by other business services as well.

We have defined the business services and technical services above. So, you will ask me what I think about IT services then. Well, both business services and technical services are types of IT services. Former is higher-level, business-focused, customer-friendly, and comprises of one or more technical services and the later is inward-focused (for the consumption of IT developers and manager), technical in nature, is largely shared and / or re-used to support other business services.

Why should I care about business processes when realizing ITSM?

A business exists because it creates and delivers its core products and services that are needed by its customers to achieve their respective desired outcomes. For an automotive industry, these products are cars and other automobiles, for banks, it may be a range of banking products and services such as personal accounts, mortgages, personal loans, and so on. The activities and steps that need to be executed in order to develop and deliver these products/services are logically grouped into business processes. Those processes that result in the creation of core business products and/or services are called business processes. The more efficient the business processes are, the greater throughput the business will have thereby increasing its profitability. Before the emergence of the Information Age, businesses used other means to improve their productivities. In recent years, emergence of Information Technology and the Internet created tremendous opportunities for the business leaders and entrepreneurs to exploit these new channels to transform their business processes and introduce new ones. eBay, Amazon, Google, and almost all financial services companies and many others are great examples of those companies in which business is IT and IT is the business. These and other similar companies have exploited IT to the point that IT is integrated into their respective business processes.

Therefore, although business processes are not something new, the inter-dependencies between the success of the business processes and the effective delivery of IT services is definitely something new. In case of automotive industry, raw materials include the automotive parts (engine, transmission, body parts, electrical system, and so on) and the assembly line business processes consumes these parts to produce a complete operational vehicle at the end of the assembly line. Similarly, in the case of IT, the IT components (applications, software, hardware, servers, networks, and so on) are the raw materials that feed IT processes. The end result of these IT processes result in the creation of IT services. For these services to be valuable to their consumers, it is absolutely critical that these are aligned with the respective needs of the customers.

Using people, process, partners and products (tools), IT managers must link IT infrastructure components together to create the concept of an end-to-end IT services that enables the business processes.

In order for them to be valuable, the IT organization must learn to communicate in terms of business metrics and customer satisfaction. Not metrics but business metrics are critical in order to build awareness of all the value-add IT achievements.