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.

Aligning business-IT strategies

In business enterprises with low maturity IT organizations, IT is traditionally perceived to be a “necessary evil” and treated as a cost center because of the following key business reasons:

• IT costs are taxed across all businesses / customers irrespective of whether a particular business / customer uses any of the ‘things’ provided by IT or not. These ‘things’ are normally not well understood in low maturity organizations and may not actually qualify as something that is delivering value to the customers. Therefore, they may not be services.

• Businesses / customers really do not understand what their IT organization does for them and in most cases, may not have the visibility into what they are paying for and why.

• Businesses / customers really do not have any control over what they want from IT and what they don’t.

• Businesses / customers view IT as a “necessary evil” because they know that they need certain ‘things’ from IT and that they will not be able to function with those things. In other cases, existing IT organization / service provider is the only option available and businesses / customers do not have any choice.

• Businesses / customers know that IT does not know what they do and what all pains they go through on a daily basis. In addition, businesses / customers know that they will have to literally go through a painful journey to have IT enable their business processes.

• IT is perceived as disconnected from the business and as a ‘spender’ that does not understand itself what it costs them to create their services. 

• Business / customers know that IT makes promises and rarely delivers.

• Lastly, if businesses / customers could, they would get rid of IT in a split second.

Well, I can actually just continue down this list. These are the real ‘pain’ points of most businesses and customers that have to deal with low maturity IT organizations. The most unfortunate part of all this is that continuing disappointments on the IT part has largely led the businesses / customers believe not to actually believe IT. The result may be that, under these conditions, if you go to your business partners with revised Service Level Agreements (SLAs), they will not even sit down to look at those. The most common reaction that Business Relationship Managers or Account Managers will get is that, “you don’t know our pain points”. This is not an exaggeration and is actually based on my experiences with real clients. Key question is that how do you go about creating that trust again?

On the IT side, we must realize the following facts:

• Understand what you do for your customers and how well you do it – First and most important, you need to clearly understand what you do for your customers. This will involve interviewing both business customers / end users as well as IT stakeholders. You will need to quickly establish a clear understanding of what are your customers pain-points on all that they receive from you.

• Stop that bleeding immediately – When you understand what you do for your customers and their pain-points, plan (as part of the larger BSM implementation) to address the pain-points immediately and achieve quick wins.

• Plan to achieve business-IT integration – In strategic terms, one important reality is that if IT does not align its strategy with the overall business strategy, then it will continue to be a cost center and perceived as a necessary evil. IT organizations must plan a longer-term transformation to become a value-add business partner if they are to survive the competition from outside IT service providers

So what organizational maturity level is right for us?

Having discussed the various maturity levels, next important question for you is to ask yourself what level is appropriate for your business and customers. Do all IT organizations aspire to become ‘value-add’ business partners with their customers? One can simply argue that if any of the core business process is automated / enabled by some level of IT services, then IT is perhaps playing a critical role in the success of that business. Other relevant aspects that may be considered in determining the relative importance of IT are as follows:

·      Reports and dashboards: Are reports and dashboards generated by using IT systems? Are these reports used by senior management to make important business decisions? Are these reports used by IT senior management to plan IT improvements?

·      Computational needs: Do businesses and / or customers and / or end users depend heavily on IT systems to perform complex large volume data analytics and calculations? Do these computations provide business critical information? Can businesses be profitable without such computational capabilities? Are IT systems used to store the results of these computations?

·      User base: What percentage of total employees in your company (in case of internal IT service provider) or in your customers company (in case of external IT service provider) depend on IT for completing their every day tasks?

·      Business challenges: Are business challenges associated with lack of proper IT services? Does your customer’s business face challenges if IT does not deliver right products / services at the right levels?

·      Communication and collaboration: Do your customers use IT for collaboration and communication related activities?

·      Business process enablement: Is IT used to enable all or part of business processes?

·      Support IT Services vs. Enabling IT Services: Finally, is IT used in a ‘support’ function or is viewed as an ‘enabling’ function? Do your customers / businesses believe that IT is just there to support their work through email, storage, telephone, and other basic support services? Or, is IT used to really enable your businesses to better provide their products / services to their end customers? For example, if you are in a manufacturing business, does your business depend on IT for their supply chain management processes?

In order to achieve Organizational Maturity Level 3 or above, a comprehensive effort to improve service management processes needs to be planned and implemented. If your organization is currently at maturity level 1, then achieving maturity level 3 or above will mean more cultural transformation than any other single factor. In the process, the overall IT capability – the ability of an organization to achieve the most business benefits from its IT resources – is enhanced.  

Understanding organizational maturity levels

The extent to which a business enterprise is able to exploit IT capabilities to achieve its business objectives is determined by the maturity of its IT organization. ITILv3 provides a set of good practices in order to build IT capabilities so that it is able to deliver what IT organization’s businesses and / or customers are looking for. IT organizational maturity ranges from just being a technology shop i.e., Level 1 to become a value-chain value-add partner i.e., Level 5. In this blog, we will try to gain better insights into what these levels actually represent. This discussion will help us with future topics as well.

Here is my perspective on different levels of organizational maturity.

Level 1 – Technology

IT organizations at “Maturity Level 1 – Technology” demonstrate the following characteristics:

• Technology focused and technology aligned
• Lack of appreciation on which technology components enable which business services.
• IT investments are primarily made based on technological aspirations rather than business enablement and return on investments.
• Technology domains are managed in technology silos. For example, problems are prioritized and resolved based on technology focus not because of the potential impact of these problems on business / customer priorities.
• IT organizations plan and deliver their services largely in a vacuum without a comprehensive appreciation of the business needs.
• IT organizations largely find themselves in ‘reactive’ mode of operating.

Level 2 – Products / Services

IT organizations at maturity level 2 exhibit the following characteristics:

• IT organizations understand the products / services that are created / delivered by their technology components.
• There is a better understanding of which technology components deliver what services.
• Organizations are still largely technology-driven because of lack of business and customer needs.

 

Level 3 – Customers

At maturity level 3, IT organizations are able to clearly understand their customers and what they actually need. At this level of maturity, IT organizations are able to identify the gaps between the products and / or services that they produce and the products and / or services that customers actually need. Based on this, IT organizations are able to improve / define services such that the actual customer / business needs are met.

Level 4 – Business

With the concrete understanding of 1) technology capabilities, 2) products and / or services produced, and 3) needs of the customers and / or businesses, IT organizations are able to run IT as a business at maturity level 4. Some of the characteristics are as follows:

• IT organizations clearly understand the market (customers and / or businesses) that they are trying to service.

• IT organizations understand its distinctive capabilities and in what services they are able to provide differentiating services at competitive prices.

• Customers / businesses have control over the IT-related costs and what they want from IT and appreciate the value delivered by IT.

• IT organization is no longer a ‘cost-center’.

Level 5 – Value Chain

IT organizations at maturity level 5 clearly understand the value chain i.e., how do IT services enable business processes and ultimately create value for the end-customers (customers of your customers and / or businesses). These IT organizations are able to clearly relate their IT services to business processes and business products / services. At this level, IT organizations actually become value-add partners.