The business Case for Effective Service Management based on ITIL

THE BUSINESS CASE FOR ITIL SERVICE MANAGEMENT

IT is what drives business today.  In fact in many sectors like telecommunications, banking, finance institutions, insurance companies IT not only drives the business but it is the business.

The quality of an organization’s IT is reflected in its reputation and brand, and has direct impact upon sales and revenue. The cost of IT is never insignificant – it is essential to get good value from IT investments, but often this value is not realized. For an IT investment to provide benefit, the resulting IT service must be well planned, well designed, well managed and well delivered. That is what the practice of IT service management is about.

ITIL’s value proposition centers on the IT service provider (internal IT or external supplier) understanding a customer’s business objectives and priorities, and the role that IT services play in enabling these objectives to be met. ITIL adopts a ‘lifecycle’ approach to IT services, focusing on practices for service strategy, service design, service transition, service operation and continual service improvement

THE BENEFITS FOR ADOPTING ITIL SERVICE MANAGEMENT

From a business perspective, the adoption of ITIL practices by IT service providers – whether in-house providers or external suppliers – ensures many benefits, including:

• IT services which align better with business priorities and objectives, meaning that the business achieves more in terms of its strategic objectives
• Known and manageable IT costs, ensuring the business better plans its finances
• Increased business productivity, efficiency and effectiveness, because IT services are more reliable and work better for the business users
• Financial savings from improved resource management and reduced rework
• More effective change management, enabling the business to keep pace with change and drive business change to its advantage
• Improved user and customer satisfaction with IT and IT services.
• Improved end-customer perception and brand image.  Real organizations have benefited from ITIL practices in a number of ways – for example:
• A nationwide retail organization made savings in excess of £600,000 per annum by adopting service strategy practices for its financial management.
• An organization identified that most of the cost of delivering IT support came from resolving customer issues. By adopting ITIL approaches to knowledge-based information and self-help, it was able to reduce costs of support by over 75% while at the same time increasing user satisfaction with the service, and improving user productivity.
• A medium-sized IT service organization invested 2.6m Euros in a two-year programme to improve its IT service management. It recouped the investment within the first year, and achieved annual savings of 3.5m Euros mainly through rationalizing unused and under-used resources (people, software licenses, IT hardware etc). It also reduced IT incident resolution times and improved customer satisfaction by over 11%.

HOW TO RECOGNIZE POOR IT SERVICE MANAGEMENT

Does your IT really provide what your business needs?  Do your IT projects always deliver what you expected, and

at the right cost? Is your IT flexible enough to keep pace with business change?

If you answered ‘no’ to any of these questions, it could be the result of poor IT service management. Table 1 in the appendix will help you recognize when IT service management is being practiced well and when it is in need of improvement – in which case adopting ITIL best practices will help.

Common mistakes about building new services is designing and developing IT services that are fit for purpose but not fit for use:

•  Focusing on system functionality but not the usability of the whole IT service will delay (or even prevent) delivery of business benefits
• Retro-fitting IT service design later is a high-risk strategy which will prove more costly and be fraught with problems.

A well-designed IT service provides both functionality that is fit for purpose to support business processes, and infrastructure, operations, processes, people and competencies to make it fit for use. The IT service needs to be easily accessible, available when required, performing as expected, with sufficient data and processing capacity, protected and secure from threat, robust and recoverable from failure, maintainable, capable of being enhanced when required, recoverable from disaster, and at an acceptable cost which is under the control of those who pay. The IT service must be capable of being de-commissioned when no longer required without punitive cost. The end product of a development project is an IT service, not merely a functional application system.

Focusing on the one-off project cost but not the ongoing operational service cost:

•  Failure to take account of ongoing costs of ownership when developing a business case will lead to a poor financial decision and a failed return on investment
•  Operational costs will continue beyond the project payback period, so cannot be offset against one-off savings.

For a well-designed IT service, the annual cost of ownership is fully understood and there is a clear distinction between the one-off project cost and the ongoing cost of ownership. Service design aims to minimize overall cost, not merely the one-off cost. Skimping on one-off development expenditure has a high risk of increasing annual operational costs.

HOW AND WHERE TO START IMPLEMENTING SERVICE MANAGEMENT

Although any organization can embark on the journey of implementing ITIL service management by hiring a consulting company, we need to understand that almost 60% of the company projects fail because of luck of management support and relentless execution.  Service management is not only a practice that can be implemented by decree.  In order for service management to be successful we need to take into account the three different components that all of them play an important role.

1. People
2. Technology
3. Processes

People are by far the most important aspect to be considered when launching a Service Management initiative.  People need to be engaged, feel important, and understand their role in the overall company strategy and success.  Therefore they have to have strong guidance and be engaged through leadership in order to be fully committed on the success of the initiative.

Technology has be to be selected to support the Service Management framework.  Expensive tools are not always the best solution, and one size does not fit all organizations.  Careful consideration of the budget, costs, targets and overall organization size, clientele and culture have to be considered during the selection of tools to be used.

Processes have to be defined in a pragmatic way.  Building elaborate, multipage long processes with multiple control points just for the sake of creating an elaborate process framework may be totally misleading and create less benefits for the organization than the problem it solves.  Careful consideration of the company culture, maturity, expertise and seniority of the staff will assist on creating processes that are fit for purpose but also fit for use, and can be followed by everyone within the organization.

APPENDIX GOOD AND BAD SERVICE MANAGEMENT

1. Koulogiannis