Savings Show Success of IT Service Management Initiative

Transcription

1 P. Adams Research Note 27 September 2004 Savings Show Success of IT Service Management Initiative The combination of IT service management guidelines from the IT Infrastructure Library and Six Sigma processes helped this company identify process improvement areas. This led to $30 million in savings in two years. Core Topic Enterprise Management: IT Governance Key Issue How will IT build an effective IT operations architecture, including the definition and integration of IT processes and underlying tools? Success in implementing the IT service management (ITSM) process refinements recommended by the IT Infrastructure Library (ITIL) demands a clear understanding of the benefits to be derived from it. By setting a specific target for savings, a global manufacturing company used the ITSM process to save $30 million in two years, more than a year ahead of schedule. The ITSM process began four years ago, when the company started systematically to scope and implement change, incident and problem management from within the ITIL framework. Although the company is still implementing and refining processes, its use of ITSM has enabled it to attain tremendous savings and a high level of process maturity. Problem: The company provides services to business, manufacturing and dealer business systems, which involves supporting a variety of application and infrastructure components. The company is truly global, with more than 70,000 employees working in manufacturing facilities in 23 time zones. Each location has an IT service desk. The IT operating environment ranges from very large corporate and business unit data centers, with mainframe and distributed systems, to focused facilities with small-scale distributed systems. The IT organization is based on distributed business-unit autonomy, but is evolving to a central point of control with local management. As with many organizations, the company faced challenges aligning IT with business needs. It lacked an understanding of how IT components supported the business, and it didn't have a handle on customer relationships at all the various levels. For example, employees and customers did not know who to call to get IT service and when they did call, many times they were passed from one service technician to another trying to find a home for their request. This resulted in long problem resolution Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 times, extended service outages and, in some cases, significant business impact. Customers were dissatisfied with the IT organization as a service provider and outsourcing was being evaluated as an option. Overall, the business viewed IT as too expensive and too slow to deliver solutions. In addition, IT support costs were excessively high because the company lacked hardware standards and an effective IT asset management program. Because of the complexity of IT operations within the company, one early challenge the project had to surmount was obtaining a clear understanding of the starting point. Although the company had a help desk tool in place, it couldn't create a baseline of the environment because the data gleaned across the support organization lacked consistency. Thus, it had difficulty determining and quantifying how severe the problems were prior to ITSM implementation. Objective: To respond to complaints about inadequate service, excessive response times and high costs, the business demanded a solution that would provide a guaranteed level of quality service. The goal was to evolve IT from componentcentric (systems management) to IT service-centric management. The primary driver for the ITSM implementation with the ITIL project was to align IT with the business needs and objectives. The secondary drivers were to: Demonstrate value for IT services Reduce the cost of IT services Approach: Two department heads at the company sponsored the initiative that began the project. They recognized that processes needed to be re-engineered and thought that ITSM was the answer. They established lines of communication between the IT organization and the lines of business by communicating the potential value and benefits that could be achieved from the ITIL framework and ongoing improvements. First, the ITSM team documented business rules that described the process policies that should be followed when executing the ITSM processes. They communicated the rules via training, a Web site and presentations. They also implemented the process flow rules in the Peregrine Systems problem and change management suite. Getting technicians to adhere to the processes and enforcing the policies has been a challenge. To solve this problem, the company created the ITSM owner position, which will be responsible for ITSM throughout the company. The ITSM owner 27 September

3 will have the power to enforce standard compliance and implement penalties and consequences for noncompliance. To get an accurate view into process compliance, the company is defining service-level agreements (SLAs) for the business processes. The SLAs that are in place typically only have an availability metric for specific components and are based on what the business process partner wants rather than what the IT organization is capable of delivering. End-user satisfaction is one measure of success for the IT community but it is still refining how this is surveyed and quantified. The company recognizes the need to use this intelligence to make improvements but has not matured to the point where it can quantify the opportunities. Organization and Roles Today, the company's IT organization combines centralized and decentralized organizational functions. To reduce redundancy and improve service effectiveness, the IT organization is moving toward a centralized structure that leverages the capabilities of the IT community. Timed with the introduction of a new CIO, the transformation to a single IT organization companywide is under way. Considering the diversity of the company, this transition is expected to occur within the next two to five years, although there isn't a management mandate on timing. Staff roles that focused on specific tasks were created to reflect these changes. The ITSM implementation defined roles for process owners; process managers at the company, regional and local levels; requestors; approvers; process coordinators; stakeholders and sponsors for Six Sigma projects to deploy processes. The activities associated with these roles were based on the ITIL best-practice framework. In some cases, where the activity did not require a full-time equivalent, the role was included in one of these job descriptions. Change Management Process Although problem, incident and change management are closely aligned, the company is only beginning to integrate all of the different management disciplines, including asset management. Despite this, the company has formal and informal approval workflows in place. Its change management teams meet to review and approve or reject changes planned for the coming week. In the Global IT Solutions organization, change management meetings are held twice a week. In other business units, the IT change management meetings may be held weekly. Depending on the impact of the change and understanding of the risk, the change requestor's management will determine the 27 September

4 required approvals for a request. The documented standard defines the approval requirements through an operations-level agreement and business service impact. The company elected to use Peregrine's service management tool, ServiceCenter. After the Peregrine tool has been fully deployed, it will manage changes and change categories defined by designated approvers. When changes are pushed out, change managers will perform scheduling: The company's change manager is responsible for scheduling significant and major changes. Regional and local change managers are responsible for scheduling minor and standard changes. Business rules describe change categorization by category and priority. Change categories are standard, minor, major and significant. Change priorities are urgent, high and normal. Change requests are classified by the service or product being modified. When the appropriate service owners are notified of the change, they can assess potential impact before the change occurs. Test procedures, quality control measures and modeling activities are employed in the application quality assurance process. However, the company recognizes that this activity is inconsistently controlled and audited, and needs to be improved. A forward change schedule that can be accessed by the global help desk communicates when changes will occur. Changes are communicated to users only if an application is changed or a service disruption occurs. In the future, users may be notified of other changes, because the tool is capable of supporting it and provisions for doing so have been included in the published change management standard. When changes are rolled out, the global help desk is informed. Sarbanes-Oxley compliance is driving an effort by the service desk to correlate any problems that occur as a result of a change and maintain records on the quality of the change management process and controls. In an effort to align IT with the business, incident management tracking is used to assess the impact on the business of outages resulting from a bad change. The company now has a fully integrated product set of problem, change, incident and service-level management. It believes that these tools are essential to: Enable and support the processes Enforce the business rules Reinforce successful deployment of the ITSM processes 27 September

5 To document the value of the tool and the processes, key performance indicators used during the past year included incidents collected, incidents resolved within the stated service provider commitment, incidents escalated, problems identified and resolved, component availability, incident recovery period, changes processed, changes that result in incidents and changes implemented on time. Identifying a Cost Reduction Opportunity To justify the company's return on investment (ROI) in the ITIL process, a third party performed an assessment that identified cost-reduction opportunities. The process framework investment was significantly less expensive to adopt, because the company used a publicly available best-practice framework. An ROI was developed for the tool and Six Sigma techniques were used to identify the ongoing improvements. Results: The target savings for this initiative was $30 million over three years. However, the company reached its goal after only two years. In one year, the company attained $2 million in savings from its problem management efforts. Using Six Sigma to measure the dollar value returned as a result of the new efforts, the company discovered that the results had greatly exceeded its expectations. To assess this performance, metrics were put in place to measure user/customer satisfaction, alignment with business needs, effective communication of business value, service availability, increased availability and reduced number of incidents caused by changes. These metrics have proved valuable to IT management and business stakeholders. The company achieved initial savings because it was able to: Standardize hardware components and platforms More-effectively manage hardware Closely track assets and remove those that should have been retired Improve response time for high-impact outages and restoration of service All of this was done manually, without the benefit of an ITSM tool. ITIL doesn't have any in-depth IT asset management guidance and the high-level documentation came out in late 2003, two years after the company initiated its project. Critical Success Factors/Lessons Learned: To successfully implement ITSM, a company's management must recognize the 27 September

6 need for a strategy. It must also acknowledge that this effort will require resources, that the change that will be implemented is significant to the organizational culture and that efforts must be made to overcome the reluctance to embrace change. The company discovered that leveraging continuous improvement initiatives like total quality management and Six Sigma assisted it with identifying and implementing improvements based on what the customer defined as important to the business. Defining the problem that the organization is attempting to solve enabled it to focus on problem areas and demonstrated to management that success could be achieved early and would be repeatable. During the past three years, the company learned that to succeed in implementing ITSM requires: Sponsorship Resources dedicated to starting up the effort A strategy for the delivery and support of services A best-practice framework for ITSM processes Metrics for processes and IT performance Deployment champions in the business units to facilitate the change Consulting partners An education program Organizational change management Enterprise governance for enforcement Process and project owners The processes need to be applied where measurable benefits can be obtained in quality as well as in savings. Acronym Key ITIL IT Infrastructure Library ITSM IT service management ROI return on investment SLA service-level agreements Bottom Line: An IT service management initiative should result in a more stable, reliable and available IT service for the end user, business process partner and customer. The company in this case study expended three years on continuous improvements to achieve the cost savings and level of efficiency that it has attained today. 27 September