LE Donna Scott

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1 Donna Scott Letter From the Editor 29 May 2003 IT Operations Management Is Undergoing Transformation IT operations needs to transition from a component orientation to running like a business. Managing the budget in difficult economic times is possible. The role of IT operations is changing. Five years from now, you will wonder how you governed with your current IT operational processes. One issue is the move from a component orientation (such as networks, systems, storage, database and applications) to managing business-oriented, end-to-end IT services. Business units, lacking interest in individual IT components, are driving this evolution; they want the end-to-end IT services that support their business processes to be available and perform to meet their needs. Yet, because IT operations has been so segregated in its component-oriented, organizational structure and metrics, this transition is challenging for most enterprises. We estimate that only 20 percent of large enterprises have made this transition, including setting end-to-end IT servicelevel agreements (SLAs) and managing service delivery to the SLAs. This evolution does not relieve IT operations from IT component management. Rather, both functions must be done well to meet business requirements. Gartner recognizes that IT operations is at a critical juncture, and has developed the IT Operations Directors Membership Program to provide strategic insight, best practices and advice, enabling you to make informed decisions and improve return on investment (ROI) for your business. This valuable information will help you increase the visibility, reputation and success of your IT operations organization, while being responsive to and evolving with changing business requirements. An overview of the IT Operations-focused research content follows, along with membership benefits. Running IT Operations as a Business To move to an IT service orientation, the IT operations organization must run like a business and put in place customer relationship managers that manage the relationship between the business operations and IT, as well as negotiate IT services and prices. Although IT operations does not directly own this relationship, it is responsible for service delivery to the agreed-to SLAs. It has a vested interest in customer relationship management and negotiation of service delivery metrics. To negotiate IT service pricing, IT operations must understand its cost structure; yet, frequently, it does not. Lacking IT service cost knowledge helps to erode IT operations credibility with business units, and encourages IT operations outsourcing evaluations. The best method to achieve business requirements for IT and stave off outsourcing is to run the organization like a business, establishing IT services that meet business requirements and delivering them in a cost-competitive way. Rarely is a well-run, internally managed IT operations department displaced in favor of outsourcing. Rather, outsourcing is considered when service quality is low or costs are unknown or uncompetitive. Delivering IT services requires mature, disciplined and well-designed IT operational processes the heart of effective and efficient IT service delivery. In 1999, Gartner first presented its IT Process Maturity Model (see Table 1), which was developed to aid IT operations management in plotting a course toward 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 IT service management and value creation. Since its initial publication, approximately 30 percent of large enterprises have moved up the maturity scale from reactive to proactive management, or have outsourced their IT operations to attain it. This is a massive improvement from four years ago, when just 10 percent of enterprises were managing proactively, and 60 percent were in a reactive state. Through 2005, fewer than 25 percent will have attained an IT service management maturity, up from less than 20 percent today (0.8 probability). Progress is slowed due to IT complexity, as well as the substantial IT process re-engineering that is required to reach Level 3. Table 1 IT Process Maturity Levels Level IT Process Maturity Description of Management Processes Implemented 4 Value IT and business metric linkage, use of management and business application data to improve the business process, enhanced cost recovery 3 Service Capacity planning, end-to-end IT service-level management 2 Proactive Performance management, change management, problem management, configuration management, automation, job scheduling, availability management 1 Reactive Basic event up/down, console management, trouble ticketing, basic backup and recovery, inventory, basic topology 0 Chaotic Multiple unconsolidated help desks, user calls notify status, nonexistent IS operations (operations are the responsibility of those deploying the IT asset) Source: Gartner Research (July 1999) To help you move toward running IT operations as a business and maturing IT operational processes, we are committed to providing you the highest-quality research on the following topics. IT Operations Governance focuses on best practices in IT operations organizational structures, metrics, justification methodologies and cost management by answering: On what key performance metrics will IT operations be measured, and how does their performance compare to other enterprises? What organizational structures offer best practices in achieving IT operations goals? What is the right number of people and skills to achieve IT service management goals, and how does this compare to other enterprises? What best practices assist in evaluating and justifying sourcing decisions, as well as projects that reduce costs, improve business value from IT or achieve ROI? 29 May

3 What methodologies should IT operations use to assess end-to-end IT service costs and price/chargeback service use? Internal Service Companies Provide Organizational Changes is representative of the research provided in this area. IT Service Management and Delivery focuses on best practices in evolving to end-to-end service management and maturing IT processes, addressing: How can IT operations successfully evolve from component management to end-to-end IT service management, encompassing business applications and their underlying infrastructure? What best practices provide effective and efficient IT service delivery? How should SLAs be developed, structured and measured? Which IT service and management vendors and products should be selected to achieve qualityof-service and cost-containment goals? Change Management Delivers Uptime to Hershey Foods provides a case study in this area. Budget Pressures During IT operations transformation to a business orientation, it is also being asked to do more with less specifically, to reduce its budgets, often, without sacrificing service quality. This is difficult to achieve, given the complexity of the IT applications and infrastructure, as well as the high fixed costs comprising most IT operations budgets. Therefore, IT operations management is evaluating many initiatives in hopes of reducing costs, including maturing IT operational processes, enterprise management tool deployment, standardization, consolidation and stronger vendor management. Reducing IT operations budgets is considered by many enterprises as a way to find new money to invest in new projects. With IT operations and application maintenance frequently more than 80 percent of the IT budget, just 20 percent is left for innovation. Gartner research will help you manage your IT operations budget, including identifying areas of potential cost savings and answering your critical questions. Cost Savings Strategies offers tips and techniques to reduce IT operations costs. These questions are addressed: What best practices enable negotiating the most favorable pricing, terms and conditions for IT hardware, software and services? How can vendors, contracts and SLAs be effectively managed to achieve the right balance of quality, cost-effectiveness and risk? How will IT operations consolidate vendors, data centers, servers, storage, client devices, IT support and operational processes to reduce cost? What architectures, technologies, strategies and operational process improvements will enable IT operations to reduce costs without sacrificing quality of service? 29 May

4 Research in this area includes Negotiate Functionality Replacement in Software Licenses. Technology Continues to Evolve Adding to IT operations challenges is the increased rate at which new technologies are emerging. These include open source, new server and storage architectures and form factors, and enterprise management software. Vendor hype around the real-time infrastructure is at its height, promising a lot, yet delivering very little today. IT operations management clearly needs to keep an eye toward the future, while persevering with business alignment, cost reduction and service quality goals. Gartner s strength has always been in assisting clients with emerging technologies, infrastructure architectures and managing vendor relationships. We will continue on this course, with research on the following topics: Architecture and Planning concentrates on building an agile IT infrastructure that is responsive to business requirements by responding to these questions: How will IT operations effectively plan and execute on an IT infrastructure that is responsive to the needs of the organization as it evolves toward the real-time enterprise? How will IT services (applications and underlying infrastructure) be architected to achieve business requirements, including continuous availability and business continuity? Which vendors and products will lead in IT infrastructure and architecture? What best practices will enterprises adopt when migrating to new technologies and architectures? Will Consolidation Still Be a Hot Topic in 2006? provides an example of research that is offered in this area. Technologies and Vendors evaluates the IT infrastructure products and vendors used to build and manage IT operations toward an agile IT infrastructure, addressing: How will IT infrastructure (server, systems software, storage hardware and software, network, client devices) standards, architectures and technologies evolve, and on what criteria will selection and procurement be made? What technologies have the potential for market discontinuities, and how will they affect IT operations? How will open source evolve, and what effect will it have on IT operations? On what criteria should vendors and products be selected, and how will IT operations best manage vendor relationships to meet business objectives? Research on this topic includes IBM s Linux Strategy: An Appraisal and Outlook. IT Operations Directors Membership Program Benefits 29 May

5 IT operations has never been under more pressure to run like a business, improve quality of service, reduce cost and reduce risk. The failure of IT operations to fulfill its mission means that IT is not working for the business. Poor application/infrastructure performance and downtime is indicative of a failing grade for IT and, therefore, IT operations. Money-losing or poor-performing IT services negatively affect revenue, productivity, competitiveness, image and reputation, and ultimately put business survival at stake. In addition, failing grades often result in outsourcing. Business is simply too dependent on IT to do without it. The IT Operations Directors Membership Program will assist you in meeting critical goals and objectives. Key aspects of the program include the research library and a sense of community. In addition, the program offers the use of Gartner Measurement total cost of ownership (TCO) tools, and an interactive on-site workshop to help you with your most-critical IT operations issue. The IT Operations Directors Membership Program Research Library Gartner s IT Operations Directors Membership Program is dedicated to the crucial issues faced by IT operations personnel. Research is organized in a member library under these topics: IT Operations Governance, IT Service Management and Delivery, Cost Savings Strategies, Architecture and Planning, Technologies and Vendors, and Gartner Presentations. The most-current research for IT Operations will be published in the Spotlight on the home page, followed by news and additional research. Community We will increasingly seek to offer opportunities for sharing and collaboration across member organizations. This may include: Facilitating audioconferences in which members share experiences and best practices on a key topic Surveying members on important issues and publishing results for use by members Facilitating in-person roundtable discussions, where members share experiences and best practices, perhaps in conjunction with key Gartner conferences IT Operations Directors Membership Program Summary The IT Operations Directors Membership Program goals are to provide strategic insight, best practices and action-oriented advice on the interests and critical issues that IT operations management is facing. This valuable information will help increase the visibility, reputation and success of your IT operations organization, while being responsive to and evolving with changing business requirements. The program offers targeted research, measurement tools, an interactive on-site workshop and an opportunity, over time, to meet other members and share experiences and best practices. We extend a warm welcome to our new IT Operations Directors Membership Program members. For nonmembers, we encourage you to evaluate the program and the benefits it offers to IT Operations management. We welcome your frequent portal visits, and hope you will tell us what you like, what you don t like and what s missing. Schedule inquiries with Gartner s many IT Operations analysts to get additional insights to your issues. For more information, or for questions, comments or suggestions, please contact us by sending an to ITOpsMember@gartner.com. We look forward to hearing from you. 29 May

6 Featured Research Internal Service Companies Provide Organizational Changes Customers need to be the focus of your cultural change, even if they are internal. By Susan Dallas Change Management Delivers Uptime to Hershey Foods Change management can focus your business objectives, but a significant realignment of processes and roles will be required. By Kris Brittain and Donna Scott Negotiate Functionality Replacement in Software Licenses. Functionality replacement clauses should be a standard part of any software licensing agreement, even if the software is upgraded. By Jane Disbrow Will Consolidation Still Be a Hot Topic in 2006? Although cost control and tight budgets are driving server consolidation today, it will be an ongoing process. By Mike Chuba and John Phelps IBM s Linux Strategy: An Appraisal and Outlook. IBM s primary Unix strategy will be to support Linux in the future, but users don t have to abandon AIX. By George Weiss Donna Scott Vice President, Distinguished Analyst ITOpsMember@gartner.com 29 May