The Case for the SIO. A guide to navigate the new challenges of Service Management. kpmg.ca

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1 The Case for the SIO A guide to navigate the new challenges of Service Management kpmg.ca

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3 Contents 1 Introduction to the Services Integration Office (SIO) 2 2 The SIO broken down 4 3 Final thoughts 9

4 2 The Case for the SIO 1 Introduction to the Services Integration Office (SIO) Disruption after disruption, the face of outsourcing and shared services has changed dramatically in recent years. The benefits of labour arbitrage, sole sourcing, and other commonly accepted truths of outsourcing and offshoring no longer hold, and new paradigms are being rapidly created with the adoption of new and innovative technologies and the evolution of old ones. Organizations now find themselves having to rethink service management in order to stay competitive. Without a question, efficient execution of operational services can have a big impact on both top and bottom line, and can make or break organizations as competition grows and performance pressures increase. So how can organizations get to that next level? The benefits of outsourcing and offshoring are now table stakes and no longer a differentiator. Organizations now find themselves having to completely rethink how they provision their end to end services: from the way that services are consumed by end users, to how they are sourced to how they are manage and controlled. All of this in much shorter cycles than ever before to be able to meet the demanding needs of the business. Through empowerment and by integrating different disciplines, the Services Integration Office can function as a smart hub enabling the day to day operations of any organization. By leveraging new technologies and best practices, the SIO can empower organizations to attain levels of flexibility, productivity and transparency beyond what was ever before possible. Cheap, flexible, high quality are not trade offs anymore, and can now exist within your services landscape simultaneously. The role of the SIO. Cloud Based Services Traditional IT and BP Outsourcers Application Development Services Integration Office The Organization Retained Shared Services Software and Hardware Vendors

5 The Case for the SIO 3 The service management challenges that the SIO can tackle, are outlined on the table below. The trend Ubiquity of cloud services The shift from IT services to Technology enabled services Consumerization of IT Most service innovations are happening in the cloud, and every day more and more vendors with compelling solutions are available in the marketplace with different analysts predicting compounded annual growth rates from 17% i to 36%. ii Services are converging and the lines between traditional IT, HR, Finance, Customer Support and other shared services functions are becoming blurry. iii Anyone with a corporate credit card can acquire IT services that were reserved before only for the office of the CIO. iv The challenges How do you tap into the cloud strategically as an organization? How do you manage the increasing complexity of the service provider landscape? How do you ensure that all services speak the same language and use the same guiding principles? Service organizations must make a compelling case for users to come to them. Commoditization of IT outsourcing services The need for speed The need to do more with less IT services are becoming more and more discrete with well understood service levels and components that are used across the industry, with 60% of service providers listing reducing operational costs as their top driver to improve service delivery capabilities. v Business cycles become shorter and shorter, and with them the need for organizations to realign quickly to serve their markets. vi KPMG s research indicated that an 87% of enterprises that engage in outsourcing have cost reduction as one of their key motivations behind outsourcing. vii IT outsourcing organizations are now more in the business of providing lean, cheap and standardized services, and less in the business of providing tailored solutions. Shared services need to be agile and nimble to allow for quick ramp ups and ramp downs. Old traditional outsourcing agreements make it difficult for organizations to react quickly. Traditional IT arrangements are not well positioned to deal with innovation and traditional labour arbitrage and efficiencies in outsourcing agreements can t solve all problems. Organizations are in the need of completely rethinking the way they deal with service issues as smart sourcing alone might not be able to resolve all cost containment needs. i Louis Columbus, 451 Research: Platfrom-as-a-Service (PaaS) Fastest Growing Area of Cloud Computing., louiscolumbus/2013/08/20/451-research-platform-as-a-service-paas-fastest-growing-area-of-cloud-computing (August 20, 2013) ii Louis Columbus, Gartner Predicts Infrastructure Services Will Accelerate Cloud Computing Growth., louiscolumbus/2013/02/19/gartner-predicts-infrastructure-services-will-accelerate-cloud-computing-growth (February 19, 2013) iii Ernest von Simson, The new role of the CIO., (May 22, 2013) iv KPMG, 2nd Quarter 2013 KPMG Sourcing Advisory Global Pulse Survey Results., (June 26, 2013) v John Quelch, When Your Product Becomes a Commodity. (December 14, 2007) vi Charles Var, Consumerization of IT Paves Way for Disruptive Technologies. consumerization-of-it-paves-way-for-disruptive-technologies (May 7, 2013) vii KPMG, State of the Outsourcing Industry 2013: Executive Findings. (July 25, 2013)

6 4 The Case for the SIO 2 The SIO broken down History has taught us that tactical innovations can have a very tangible impact on strategy. Stemming from IT, Service Management platform capabilities have evolved rapidly, making all sorts of smart automation possible. However, to be able to fully exploit the potential of Service Management technologies, implementation of tools and automation need to be carefully thought out, implemented and managed to ensure a close alignment with the business and therefore maximize the potential value of automation. To that end, automation platforms must be seen as an enabler of the Services provided by the SIO which are described below. The components of the SIO Services Strategy and Architecture Service Processes Improvement and Reengineering Services Delivery Processes Management Hardware and Software Procurement Management Services Sourcing Management Services Automation and Orchestration Services Transformation and Transition

7 The Case for the SIO 5 Services Strategy and Architecture To enable the SIO, services must be closely aligned to the overall business objectives. Services must be managed as a whole and be assessed closely to ensure that they fit strategically with the business. To this end, a services roadmap and thorough analysis of options must be made to ensure that the services in place are the right ones. What functions make sense to source? What is more important (cost, agility, quality) and for which services? Where does it make sense to deliver from? What services should I have in my service catalogue? Should we centralize or localize a service? Are the services we are sourcing the most cost effective? What technological capabilities are out there that can transform delivery of services? How should I organize for services? These are all questions that should be addressed by the SIO. The SIO must close the gap between business strategy and services operations. By leveraging tools from strategy, enterprise architecture and benchmarking the SIO can translate real strategic goals into actual operational requirements, and then into a clear architecture and design framework for services.

8 6 The Case for the SIO Service Delivery Processes Management Process management is a day-to-day effort that needs to take place in any organization. To be able to truly reap the benefits and efficiencies of shared services, mature processes management capabilities must exist. Through the use of frameworks such as COBIT, ITIL, CMMI and other service delivery best practices, the SIO can make this happen by ensuring that proper controls are in place, process compliance is met and that meaningful KPIs are being measured, reported and acted upon. As well, the SIO can act as an enabler for change, helping to ensure the fast adoption of new processes enabling services through close monitoring, control and communication, which is particularly critical at the early stages of a roll out. Hardware and Software Procurement Management Procurement management plays an important role in any organization, and it is usually associated services that must be performed throughout the lifecycle of an asset (support, maintenance, etc.). Through the use of automation and standardization of a standard procurement catalogue, the organization has the opportunity to standardize and streamline processes that can be cumbersome to maintain, while at the same time automating asset management backend processes, facilitating cost management and streamlining the approval process, translating into lower maintenance costs.

9 The Case for the SIO 7 Through leveraging asset management best practices and a good understanding of automation capabilities and a tight integration of procurement with other service management practices, the SIO can ensure that an efficient and speedy procurement process is in place, while at the same time enable the ability to understand at any time what assets exist, what costs are associated to them, what is their existing life span, and where they are, in other words, full balance sheet transparency. Services Sourcing Management Today s service providers complexity can prove very taxing. Obtaining meaningful decision making data can be difficult and lack of transparency in the Services rendered is not uncommon. Through a tightly integrated and automated sourcing management practice and through leveraging best practices from services sourcing and delivery, the Services Integration Office can enable a true understanding of what is being provided, when, and at which service level, minimizing the effort associated with oversight of such services. Services Automation and Orchestration To truly enable the SIO, workflow and reporting automation are key ingredients. Historically relegated to a non critical functions and not well understood, ITSM platforms now play a pivotal role in the enablement of organizational operations as more and more services become enabled by IT. A good ITSM practice has the ability to: Provide real time reporting of KPIs and metrics and make them available across the organization to help really understand how money is being spent Maximize self help capabilities leveraging automation therefore lowering operational costs Provide real transparency of services cost allocations

10 8 The Case for the SIO Provide a high level of transparency into the services that underpin the different lines of business Enable the organization to perform real data mining and understand key trends and metrics that can be key decision inputs into the services strategy Minimize service response times through the enablement of integration of vendors and 3rd parties into a single source of record Serve as a source of record for services billing and cost management across the organization. The SIO can make this happen, by leveraging best practices in Service Management (such as ITIL) and Systems Management and Implementation. Services Transformation and Transition Services implementations can fail because of a faulty design and technology, but can also fail because of a poor execution. A rapidly changing organization needs to ensure that consistent methods and best practices are used in the implementation of services. By using best practices found in project management, organizational change management, transition management and service delivery, the organization can ensure a consistent approach and therefore check all the necessary boxes to ensure that a new or upgraded service is implemented successfully. The SIO has the capabilities necessary to ensure that all the different service management moving pieces are addressed, including items such as: Organizational change management Operationalization of services (tools, processes, people) Quality of the services delivered to the organization Testing and configuration of services automation Service Processes Improvement and Reengineering To fully maximize the value of the SIO, continuous improvement must be an ongoing effort, and for that to happen, a prerequisite is for measurable and quantifiable data to be available. Through best practices on continuous improvement (such as Lean and Six Sigma) and services automation we are able to do just that, and therefore empower the SIO to truly understand the real cost and quality of services, removing ambiguity and noise from the environment, and being able to propose service solutions well cemented in objective quantifiable data. As well, because of its closeness to the services, the SIO has the ability to spearhead the implementation of continuous improvement initiatives and take operational ownership of these.

11 The Case for the SIO 9 3 Final thoughts Just like any business strategy can t afford to remain static in today s highly competitive environment, the same holds true for operations. To realize the full benefits of service management, unique programs such as outsourcing, tools acquisition or reorgs are not enough. A methodical, relentless and persistent effort must be put in place to enforce, communicate, improve and engineer services. Service management can be a game changer when aligned to the business, however the challenges to operationalize strategy are not negligible. The SIO can close the gap between strategy and operations in service management and have a big impact on any organization every day.

12 Contact us Felix Acosta IT Advisory T: E: kpmg.ca The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

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