The language of service portfolio management enables IT staff not well versed in business-speak to convey their value in terms that can be understood by non-IT people. Businesses are cutting budgets and streamlining operations. Without adequate means of communicating the value of their activities, many IT departments are feeling pressure to over-deliver relative to their capacity. Still others are being asked to justify their existence as cloud enablement creates the rise of the latest outsourcing fever. SPM can help change the nature of the conversation between IT and business to one of fact-based service delivery.
Businesses require deep visibility into the nature of their investments. A company would not be likely to buy real estate, build a manufacturing plant, acquire production materials or sign a service contract without understanding precisely the risk-to-cost-to-value matrix of that investment. This is precisely what the business is now demanding of the investment it is making in IT. Historically, IT itself has had little clarity into the specific value it provides. This accounts, in part, for the wide and rapid adoption of ITIL. By shifting the focus from being a siloed technology provider to being a holistic service provider, ITIL helped forever change the way IT perceives itself. SPM takes that even further by providing the translation from IT speak necessary to convey investment analysis information.
The challenge of SPM comes in how the information relating to IT service cost and value is calculated and presented. IT project ROI is notoriously built on “fuzzy” math and “soft” value. Further, IT budgets are largely beholden to the ever-present cost bucket of keeping the lights on, or KLO, which seems to grow year over year with little or no visibility into the discreet value provided by those investment dollars. Add to this the fact that studies show 60 to 75 percent of IT projects fail, and it becomes clear why there is so much resistance to increasing the IT budget. How, then, are metrics necessary to convey reliable investment data produced?
Automation is the key to elevating the current fuzzy calculations to predictable, defendable analysis that businesses can accept. Fully understanding this requires insight into precisely why this information is so fuzzy to begin with.
The majority of IT service value targets are crafted at project inception. During the strategy phase of a project lifecycle, there is incentive to paint a picture that may in fact be somewhat rosier than reality. A project without an adequately projected ROI will likely never be approved in the ideation phase, promoted to the project steering committee or approved for capital budget by the finance committee. In this phase, most project owners present the best possible outcome of a proposed service. One might ask, “How can they get away with this? Surely these misrepresentations would be discovered at some point in the service lifecycle.” That is precisely the issue with most IT service processes.
Typically, the analysis performed on the delivery execution of a service is managed very closely through service inception, design and release, but at the point a service is deployed, most IT organizations toss it over the wall to operations. From the moment a service enters the service operation lifecycle, the majority of the accountability around service cost, risk and value becomes detached from the initial service project plan and lives in a separate KLO black box. Upon entering this box, any misrepresentations around the effort of sustaining engineering to maintain the service, risks associated with poor service design or even lack of adoption based on initial projections become operational issues and obfuscated by inclusion in the giant KLO category.
From here, it is impossible to track the assumptions made around the cost, risks, quality or projected value of a service. This leads to the ever increasing size of the KLO budget without an ability to tie this increasing cost to a specific value. Assets are acquired to replace failing ones, labor is consumed fixing problems, and the service desk incoming call volume continually increases with no visibility into why. Operational reports can be generated loosely tying activities to services in the service catalog, but there is no means of identifying how trends of cost measure against the portfolio expectations, or where the operational projections are simply wrong.
Further, on diving into the details, operational reports are based largely on guesswork and best estimates. When increased network load due to faulty application design necessitates procurement of an upgraded router, are the costs associated with that upgrade applied to the service that was the causal factor? When allocating a given employee’s labor costs, are we dependent on the accuracy of that employee’s own time card entries? What is the likelihood employees have the necessary visibility to align the increments of their time to the appropriate service container? What is the likelihood they even remember what they did at the end of a given week? This is why automation is key to providing accurate SPM information.
By driving the various component processes of the service operation lifecycle though an automation framework, it is possible not only to optimize the execution of activities, but also drive the metadata associated with each of these activities into a service knowledge management system for portfolio analysis. Through the effective use of automation, the SSPM capabilities can be easily optimized, and the following core SPM objective areas can be targeted.
Where demand in an organization is disjointed, it is difficult to understand both the value and the cost a service provides. Only by streamlining a single channel for all demand (operational, tactical and strategic) can relevant questions be answered. For example:
- How many people are using a given service?
- What level of service are they consuming?
- How much time is spent supporting their interactions with that service?
Without answers to these questions, it becomes impossible to identify which services are good investments and which are bottomless pits of resource consumption. Automation provides the framework necessary to unify demand across the enterprise.
Alignment and Orchestration of Execution
Demand fulfillers in an organization spend too much time manually managing the flow of work items between systems. For example, in a request for a new computer, the process flow might follow a path similar to this:
- User initiates with a phone call.
- User is asked to fill out a request form.
- Form is processed into a request management system.
- Authorization is sent to approval chain.
- Upon approval, request is forwarded to asset procurement.
- Procurement is completed and request is forwarded to technician for fulfillment.
- Technician delivers asset and completes configuration.
- Request is closed.
This is a fraction of the activity that would normally occur to deliver this request, but even following this simple flow, it is clear that a single unit of demand necessitates action by multiple actors operating from various departments. In most organizations, these activities occur in distributed purpose-driven interfaces that lack central coordination or integration. Part of the value of enabling SPM comes when an IT department steps back and looks at how demand is fulfilled holistically, and how it can be optimized through the strategic application of automation.
In this flow, automation can manage the orchestration of tasks between the previously disjointed workers. This is important not only in the reduction of manual effort in delivering against a unit of demand, but in the alignment to the service portfolio. As each actor in the process completes their work in their own role-based interface, the automation layer can trigger the propagation of that work item to the next actor with the necessary details while simultaneously reconciling the activity metadata back to the service portfolio. This means that at the end of a given week, rather than being tasked with classifying their own work effort from memory, an employee can instead be presented with a cumulative view of their activities by service. With this alignment, deeper insight can be gained into the true labor costs of providing a service and explode forever the KLO cost bucket that dominates the existing budget allocations.
Most capital projects are forced to fight for resources with ever present sustaining engineering efforts. Many IT projects fail due to lack of critical resources. Often these resources are appropriately allocated but are pulled during the course of project execution to maintain existing systems. SPM-aligned automation in the service operation lifecycle provides better planning and real-time alerts to eliminate this contention. Based on the collection of actual activity driven from the metadata collection, it is possible to continuously align the work effort allocations with the actual consumption of resources. Immediate value is derived from this reconciliation as labor consumption deltas over or under the allocation targets can trigger exception notifications, allowing project managers to address potential critical path events in their resource plan before they occur. Long term, these automated alignments allow for more realistic allocation planning, and should, over time, reduce the number of exceptions that occur in the sustaining engineering allocations in the initial service definition.
Fluid Service ROI Calculations
Perhaps most important to SPM is the service ROI calculation. Fluid ROI calculations capture and reconcile the metadata flowing between the service operation aggregation points (control and current states) and the service strategy, design and transition aggregation point of the service portfolio. With this, it is possible to generate the true value of a service inclusive of the cumulative cost (labor, asset, legal/contract, etc.) over time. This ROI can provide the necessary insight to make strategic decisions about future direction of the IT investment. Questions about outsourcing, insourcing, enhancement, decommissioning, cloud and more can be addressed using quantitative facts that help demystify the service portfolio. Investments can be managed and evaluated based on their objective merits void of the subjective complexities, soft values and fuzzy calculations.
Automate Service Portfolio Management Now
The challenges associated with quantifying the value of IT investments are not going away. IT has emboldened business by allowing them to apply excessive cost pressure while simultaneously maintaining quality service. Without the language skills necessary to convey the long-term risks associated with diminishing capacity and increasing consumption, a tipping point will soon be reached wherein the core services necessary to sustain the business will be in jeopardy. It is time for IT to adhere to the standards of financial discipline from which it has been so long exempt. It is not a question of if, or even when, but rather who. Who will be the one sitting at the conference table driving the decisions that will shape the future of IT? Will it be a technologist armed with the discipline and objective data sets provided by SPM? Or will it be a business-aligned proxy, making decisions based on a half understanding of the impact they will have on the strategic direction of the company?
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