THE GREAT DIVIDE. What is the Business Impact? A White Paper about IT Service and Business Alignment. By Sue Southern

Transcription

1 THE GREAT DIVIDE What is the Business Impact? A White Paper about IT Service and Business Alignment By Sue Southern Independent Business & IT Service Management Consultant Updated April 2010

2 TABLE OF CONTENTS Introduction...3 How does the Great Divide Manifest Itself?...4 Mutual Perception...4 Confidence Disruptions...5 Business Strategy...6 Good and Bad Customers and Service Providers...7 Best Practice Processes...8 SLAs and other Metrics...8 Causes of the Great Divide...10 Desired Results...11 Conclusions...12 Sue Southern Page 2 of 13

3 Introduction The Great Divide. That perceptible gap between the IT service provider and the business that is created and maintained by friction and blame. This can be seen not just in the case of the internal IT Department but also in external contracts for managed services and outsourcing. The presence of the Great Divide has been acknowledged for many years but it needs positive actions to be taken to beat it into extinction. This paper, aimed at managers, considers some of the well known and perhaps lesser known causes of the problem and whether there are any workarounds or fixes that can bridge the divide and truly align the IT service with the needs of the business. A business that is not continually adjusting to what its customers need, will find trouble just around the corner. There is broad understanding that businesses and other types of organisation are dependent upon their IT to be able to operate it is seen as an enabler and it touches our lives every day to some extent. Like business, IT can be a large and complex beast to control requiring skill, judgement, tools, processes and experience to make it work effectively. Experience shows that structure, best practice disciplines and understanding the component parts can play a significant and valuable part in driving improvements. When IT goes wrong or is unavailable it can be anything from mildly inconvenient to a huge business disabler, involving for example, considerable losses in terms of finance or reputation. The complexity of business can be simplified when considering the three fundamental needs from which everything else stems: 1. Making a profit 2. Retaining customers 3. Growing the business The relationship between IT and the business is symbiotic. It would seem reasonable to deduce therefore that IT and business alignment happens naturally and automatically. But so often it doesn t work that way. So how and why does The Great Divide manifest itself? Sue Southern (suesouthern13@hotmail.com) Page 3 of 13

4 How does the Great Divide Manifest Itself? Evidence of the Great Divide between business and the IT service provider is typically quick to surface. Pinpointing the cause is not always immediately obvious as there is often a history and baggage to be waded through, but often the cause can be found within it. Necessarily, the people who manage the business are looking for the people who manage the IT service to contribute to the business success through support and innovation. The business management must be able to successfully articulate its mission and strategy to stand a chance of gaining this commitment from those in IT. This is such an important area that it has a section of its own later in this document. Edison articulated this point when he said Vision without execution is an hallucination. What follows is an outline of some of the factors that contribute to creating or maintaining the Great Divide. Mutual Perception Examples of how the great divide manifests itself can be seen in the perception that the business has of IT and vice versa. Such as: Business Perception of IT Service We Need Aligned with business Available when we need it Consistently high quality Competitive cost Service We Get Slow and unresponsive Unreliable service and unbelievable reports Expensive without value Lack of business understanding Tireless commitment to mediocrity They create the downtime IT Perception of Business Service They Want Cost must be reduced Quality must be improved Newest, latest, fastest IT 24x7 service for 9-5 price Service We Deliver Service quality is high with reports to prove it Our costs are controlled End-users never satisfied Invisible business strategy (and how does it affect IT anyway?) Downtime is a fact of IT service delivery These are common examples of the perception of both parties and show that trust and respect have taken a back seat to conflict. Differing views of perception are not the cause of the divide but a strong indicator of its existence. Perception, when effectively managed, can give some very clear pointers to what is creating or maintaining the Great Divide. Lack of trust is a major concern; unreliability and failing to keep promises are big issues for which a resolution path can be found. Sue Southern (suesouthern13@hotmail.com) Page 4 of 13

5 Confidence Disruptions Every day IT support and management people go about their tasks trying to do the right thing but finding constant pressures and a reactive environment. One of the most frequently heard complaints from IT service deliverers is that they have no time for proactive activities too busy fighting fires. In addition, they report that Service Review meetings require a hard hat to survive the onslaught from the customer! Service providers can disrupt their customers confidence through hundreds of small actions over the course of any week or month, small events that cause irritation, often about inconsistent (or consistently bad) service. A typical dissatisfied customer will tell 8 10 people about their problem Approximately 95% of dissatisfied customers don t complain, they simply walk away. Confidence disruptions give cause for complaints. Complaints give substance to the Great Divide. Research has found that it can take approximately 12 positive service encounters to make up for one negative incident. Conversely, a well-managed complaint can leave the customer with a better impression of the organisation than before. Examples of this, both good and bad can be found in many areas, not just IT service delivery. Every customer, however, has a patience and tolerance threshold and even well-managed complaints will not increase customer satisfaction if they happen too frequently. A service provider can benefit from engaging with their customers to encourage complaints where service is poor. If something has gone wrong and a customer gives them the opportunity to correct it then they have the chance to retain their customer. Worryingly, research has found that between 94-96% of dissatisfied customers don t complain, they simply walk away. An action that certainly widens the Great Divide. Sue Southern (suesouthern13@hotmail.com) Page 5 of 13

6 Business Strategy What is the mission and strategy of your business? Ask this question of any room-full of business and/or IT managers across a variety of organisations and the responses are varied and include laughter and cynical remarks but rarely the ability to articulate what the mission or strategy include. CEOs and other business directors are usually intelligent, hard working people who have the vision to see where they are taking the business. One of the key differentiators between the CEOs of the most successful organisations and brands in the world and the rest is their ability to cascade their vision, mission and strategy through the business and clearly express what this means to everyone and how everyone contributes to its achievement. They not only motivate their people to translate the strategy into action but they also provide the means to make it work effectively. The use of tools, such as balanced scorecards, is widely acknowledged to be a best practice method to achieve this. Achieving the strategy should be the business of every employee, but it takes above average leadership to make it happen. Top management teams maintain this strong focus on the strategy month after month, year after year. Strategy is everyone s business Top organisations also differentiate themselves by having a clear understanding of what their customers need and how they can provide it better than their competitors, through trusted relationships. Without this top-level leadership and direction, the business units, departments and employees will busy themselves on the wrong things. This can lead to operating silo-style and to personal agendas being worked which may be contrary to that of the Executive Management Team. This is certainly a contributing factor to creating and maintaining the Great Divide. We don t need computers to build houses, we need bricks. There is evidence that some people don t see the connection with IT and business. An employee of a well-known company in the house building business commented we don t need computers to build houses, we need bricks. This is an interesting remark as it is more common to find the accusation from the business that those in IT do not understand the business, whereas this example is the other way around. How long could that organisation continue to build houses without their computers? Businesses that don t rely on IT are few and far between. Sue Southern (suesouthern13@hotmail.com) Page 6 of 13

7 Good and Bad Customers and Service Providers If you can t change the people, change the people. This can be a sensitive area and for this reason it is often only discussed behind closed doors. There are good suppliers and customers whose characteristics include forward thinking, being open minded and customer focussed with positive attitudes. These customers and suppliers work together for the common good of the business, often creating what is referred to as a win-win trusted relationship. It is refreshing to find these relationships in an industry that s known for poor supplier management. Then there are bad suppliers and customers who have the opposite characteristics. Bad customers and suppliers seek to create or widen the Great Divide to perhaps meet a hidden agenda. These relationships will be in the category of hard and difficult and will typically be represented by a lack of trust in a few key people. There are also combinations of the two; such as good supplier and bad customer or good customer and bad supplier. A winwin relationship is unlikely to be the outcome. In addition, there is the business-to-business relationship chain, giving more than one level of customer and the opportunity for good and bad players to be found at any level. The Great Divide could also be found at any level but this paper concentrates on the customers and users of the IT Service plus the customers of the business. An understanding of the requirements of both is highly desirable if not essential but not always present and Figure 1 below, illustrates the positioning of the key players. External Customers Recipients of the products/services The Business Customers of the IT Service The Great Divide? The IT Service Provider (maybe internal or external to The Business) Service managed from IT infrastructure External Suppliers Products/services required to meet the Business needs Figure 1: Levels of Customers and their relationship to IT Service Sue Southern (suesouthern13@hotmail.com) Page 7 of 13

8 Best Practice Processes There is a wide range of best practice standards, plus open standards for good practice, that have been determined in the UK and/or internationally. In the IT and business management arena, these include: 1. ITIL IT Service Management certification for individuals 2. ISO/IEC ITSM certification for organisations 3. ISO 9000/1 Quality Management certification 4. COBIT (Control Objectives for Information and related Technology) an open standard for good IT security and control practices 5. Six Sigma for process improvement 6. Sarbanes-Oxley (SOX) for the business control environment processes to meet financial legislation 7. Balanced scorecards for at least three management areas of business, IT operations and customer perception. The seven standards listed above could all be present in one organisation and in fact in many areas they support each other. There is a danger that the scope of processes can be misinterpreted by IT and other internal or external organisations. The distinction between business process and IT process needs to be well defined and communicated - confusion can quickly result when used out of context. Confusion of this nature can be a contributory factor in the Great Divide. Processes should be consistently repeatable, understood, scalable and continually improving to achieve operational excellence. ITIL (IT Infrastructure Library) has existed as a best practice standard since the late 1980s but is currently experiencing huge international adoption and traction. It can play a key role in most of the other six standards listed above. ITIL has three highly valid objectives: 1. Align IT services with current and future needs of the business and its customers 2. Improve the quality of delivered IT Services 3. Reduce the cost of provision in the long term. These objectives are given considerable emphasis throughout the ITIL books; they are robust and grounded in common sense. The overriding message is to ensure that core IT processes are operationally excellent - singular and consistently repeatable, well understood, measured, scalable and constantly improving. They also provide a significant contribution to closing the Great Divide, when deployed effectively. Alarmingly, the perception found among some people in the business is that their IT service provider causes much of the downtime that they suffer. Arguably, they have a valid point. With the absence of effective Problem, Change and Release management processes, for example, then this is a likely outcome with the consequent effect on the Great Divide. Sue Southern (suesouthern13@hotmail.com) Page 8 of 13

9 SLAs and other Metrics Customer relationships are not built on statistical measures. Establishing Service Level Agreements and other metrics can present considerable challenges in reaching an agreement that is acceptable to both parties. This is a time when the service demands of the business can seem impossible to meet for the price they are willing to pay. The negotiation process is often carried out by commercial, procurement and/or financial people and they transfer the ownership to the IT Service Management team for delivery. This can result in misunderstandings or incorrect interpretations that give rise to difficulties in the relationship. Once set, achieving SLAs demonstrates nothing more than basic competency to do the job. IT Service Management staff can feel disheartened when they find little or no recognition occurs from business customers by achieving SLAs, despite the considerable efforts that went into that success. This disappointment grows when failing to achieve SLAs results in penalties being applied. Developing business relationships and closing the Great Divide, will not occur from statistics. There can be a long record of consistent performance to SLA and yet the contract can still be lost to a rival. Service performance metrics are produced month after month but often no tangible added value can be seen by customers. Emphasis is often on statistics and exception reports with little or no reference to how the IT service has aligned itself with the needs of the business. The service provider typically expends a significant amount of effort to produce reports only to find that the recipient gives them little or no attention. Customers may not believe what is presented in the reports which is further evidence of lack of trust and conflict. With the passage of time it is not uncommon to find that the service provider s delivery team members are unable to express what the full complement of services comprises and the same can be true for customers. This problem often goes unattended because to admit that it is a problem would result in a loss of credibility. Confusion is a likely outcome. Conflict, confusion, mistrust and misunderstandings are all elements that will add to the Great Divide. Sue Southern (suesouthern13@hotmail.com) Page 9 of 13

10 Causes of the Great Divide In summary, the Great Divide can be caused or maintained through several areas: 1. Lack of coherent business strategy or the strategy not being communicated and understood by everyone in the business. 2. People busy on the wrong things (and they are being paid to do the wrong things!) 3. Organisation is run in silos leading to inconsistency and even customer and employee confusion. 4. Lack of trust and positive engagement between the people who manage the business and those who manage the IT services. 5. Poor management of customer complaints. 6. Bad customers and/or service providers who amplify mistrust. 7. Customers and service providers are confused about the product/service offerings. 8. Ineffective, inefficient and inconsistent processes, particularly those evident to customers. 9. Performance reports are panic driven and/or are measuring inappropriate service level targets and demonstrate no value added. 10. Lack of best practice that causes re-work and creates no time for proactive activities; this increases operational costs and hinders innovation. The Great Divide is a negative force that undermines and inhibits the potential of any business or organisation. Sue Southern (suesouthern13@hotmail.com) Page 10 of 13

11 Desired Results A desirable outcome is to neutralise the forces of the Great Divide. As with any good process improvement model, it is necessary to understand where the aiming point is located. A destination statement for each area will facilitate greater understanding. Based on the list of causes shown on the previous page, corrections can be achieved through setting destination statements that show the aiming point, for example: 1. The Corporate mission and strategy have clear focus, interpretation, management and communication. 2. Workforce is busy on the right things that cause the strategy to be achieved. 3. Organisation is managed for performance against business objectives. 4. The business and IT service provider are aligned through the use of best practice standards with frequent and effective communication. 5. Customers benefit from perception management and complaints are seen as a chance to improve. 6. Key stakeholders (including customers, IT service providers and suppliers) understand the business objectives and how to achieve them. 7. A Service Catalogue presents current product/service offerings and is communicated to customers and service provider staff. 8. Best practices implemented for effective process control. 9. IT Service Performance reports are aligned with the business needs of the users and reflect the needs of the customers of the business. 10. Best practice processes are a basic competency and include proactive service delivery and management. Having understood what is to be achieved the next stage is to plan and implement the route to get there and by when; a level of detail that is outside the scope of this white paper. The desired results for the business, in their most simple terms are to make a profit, to retain customers and grow the business; these key objectives are unlikely to be achieved without IT. Therefore the alignment of IT and those who manage it with the business is essential. Sue Southern (suesouthern13@hotmail.com) Page 11 of 13

12 Conclusions Wal-Mart view technology as an enabler, it permits scale and responsiveness to customer needs. Where the Great Divide exists it has a negative business impact. It is an inhibitor to the general well-being of the business. That is not to say however, that it exists in all organisations. Some have mastered the resolution to this problem and created a culture and environment that allows the business objectives to be achieved using IT as an enabler with demonstrated added value. A point illustrated by some of the most successful organisations and brands in the world. Technology has been central to business success for many years; this trend increases continually. For those businesses where the Great Divide is present, then CEOs would do well to accelerate their business transformation plans to maximise and publicise the value of IT to the business. In support of this aim, increased leverage can be gained through processes such as ITIL and COBIT. Proven best practice demonstrates tried and tested skills leading to what customers want; a relationship trusted for consistency and reliability. This leads to customer retention and strong referrals. The organisation s strategy and mission must be clear to every employee so that they know how their contribution makes a difference. Trust must exist between employer and employee and between customers and service providers. Performance objectives should be actively managed through the use of dynamic tools such as Balanced Scorecards. Out-performing rivals leads to business growth and profit. IT service providers must recognise the importance of their role in the business and engage accordingly. There is no room for private agendas or over-inflated egos; team work and strong communication are essential to deliver business value. Sue Southern (suesouthern13@hotmail.com) Page 12 of 13

13 About the author Sue Southern is an independent Business and IT Service Management consultant and trainer specialising in implementing Balanced Scorecards for managing business performance, service delivery and customer perception. She is first qualified in ITIL to Manager s Certificate level in 1996 and actively uses this knowledge to deliver improved customer service, management capability and operational excellence. To maintain her ITIL knowledge, Sue also delivers courses from Foundation level upwards. She has earned a reputation for professionalism over 25 years by meeting objectives and delivering high standards. Sue has written this paper on the basis of her direct experience and industry research and hopes you have found it to be interesting and relevant to your work. Should you wish to contact her, please to Suesouthern13@hotmail.com. Trademark acknowledgements COBIT ITIL Balanced Scorecard A trademark of the IT Governance Institute and is now in its third edition. A registered trademark of the UK Office of Government Commerce and is in its second edition, published by TSO (The Stationery Office). A creation of Drs Kaplan & Norton, published by Harvard University Press. Scorecard development has reached the third generation. Sue Southern (suesouthern13@hotmail.com) Page 13 of 13