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From Silos To Services – Transforming The IT Organization Part 1

Author by Randy Steinberg

When it comes to providing IT support to the business, a major evolution is on the horizon. The traditional IT operating model of delivering IT to the business in the form of bundled capabilities and assets is wearing thin in an age of cloud computing, on-demand services, virtualization, outsourcing and rapidly changing business delivery strategies. What IT traditionally engineered, built, owned and operated can now be bought from many sources more easily without inheriting the specific risks of ownership, support, building and managing an operating infrastructure.

IT is starting to evolve from a focus primarily on engineering (applications, servers, networks, desktops, etc.) to a focus on managing a networked value chain of suppliers targeted towards delivery of specific services to the business. The IT role is becoming that of an integrator which bundles valued services together from the many pieces and parts, provided from both external and internal suppliers, creating and managing the service supply chain and filling in the gaps between providers to ensure service value is delivered.

So far, we have looked at some of the primary concepts around IT service transformation. In Part 2 we will look at some steps that can be taken to effecting that transformation.

The IT universe is rapidly changing – what IT traditionally engineered, built, and operated can now be bought

Failure to recognize and adapt to this shift can already be seen by those delivery organizations that are still organized heavily around technologies and platforms. Common signs include:

  • Executive leadership taking on service integration roles, frustrated that IT business and support units cannot seem to work together to solve IT problems
  • Availability issues where the business finds service outages and problems before IT does
  • Much finger pointing across IT business and support units with little or no accountability for the overall service that is supposed to be delivered to the business
  • Confusion within the IT organization over delivery handoffs and responsibilities
  • Low levels of customer satisfaction with IT services or lack of confidence that IT can get things done

Evidence of this shift is already taking place. Nearly 90% of all IT organizations are either considering or already have in place some form of service catalog and set of service portfolios to better understand the services they are supposed to deliver. Many companies are starting to relook at their IT organization and delivery strategies to change their sourcing models and focus around services. Hiring efforts at the executive level are requiring at least some background in service management.

How best to undertake this transformation? Is there an orderly set of transformation steps that can be used? How best to organize to effect this transformation? What key elements of IT service management practices need to be in place? How can IT determine the services they deliver and how should these be governed?

What Does It Mean To “Operate By Service”?

Unless operating by service, IT is merely delivering bundles of technology capabilities that in themselves have little inherent value for the business.

IT cannot manage itself by technology silos in a world where services depend on a well-coordinated chain of delivery technologies individually managed by those silos.  The service is the sum of what is delivered from all the technology silos that support it. If one silo fails, the service fails. Therefore, accountability needs to be built into the organization for the overall service. Without this, it is IT executive leadership that is stuck providing the coordination and integration points to get services to work. This is a situation that IT leaders find themselves stuck in many times resulting in much frustration and a feeling that IT cannot seem to communicate and pull things together.

It is impossible to operate as a service delivery provider unless there is clear transparency about what services are being delivered with service targets that have been agreed with the business. This is not easy to identify. Development of service definitions typically require new skill sets that IT does not normally possess such as the capability to recognize and define who the real customers are that use the services, conducting a needs analysis to identify desired business outcomes and bundling or packaging services in ways that the business can understand and see value.

Once services have been identified, IT must understand how the various servers, storage, databases, people, applications and other elements combine and interact to deliver the services that have been identified. This provides transparency in how services are put together and delivered. A means must be put into place to develop these models, store and access them when needed.

Complicating all of this, are emerging solutions in the realm of Cloud Computing, Virtualization and use of external service providers. These create complexity in identifying what the services really are and who is delivering what pieces and parts of those services.

Key Elements of ITSM Transformation Effort

The transformation cannot be managed exclusively by an IT organization heavily organized and focused around technology silos. Key roles are needed within the organization to operate as a service provider. These are:

Service Owner

This role is accountable for one or more services end-to-end. This includes everything from supporting applications to servers, networks, people and delivery processes involved with the service. This role ensures that the delivered service meets needs of the business, reviews service metrics and takes proactive actions to initiate service improvements when needed.

Process Owner

This role is accountable for one or more processes end-to-end. This role ensures that processes operate efficiently and provide value. It also oversees activities to imbed processes across the enterprise, reviews process metrics and takes proactive actions to initiate process improvements when needed.

Business Liaison

This role is accountable for business unit and customer satisfaction with IT services. It assists business units with selection of appropriate IT services to meet their needs, provides customer feedback to IT for service improvements and changes, reviews service quality and status with  customers on a scheduled basis, and oversees resolution of customer IT service issues when needed. Ultimately, this role acts to provide the voice of the customer in all IT decisions.

Technology Owner

This role is accountable for expertise, management and ownership over specific technology platforms, tools and software. It is the go-to role for providing expertise for specific technologies, ensuring technologies are available when needed, and maintaining technologies in accordance with vendor specifications.

Service Manager

This role is accountable for all IT Service Management processes, supporting technologies, improvement projects and service governance. It is a hands-on role to make sure that all ITSM activities are coordinated and that services are being delivered effectively at acceptable costs. It also has a responsibility to ensure that all ITSM activities are being communicated across the enterprise.

In addition to establishment of the key roles, other practices need to be solidified from the outset. These include:

  • Identification of critical success factors and key performance indicator measurements along with the infrastructure to report on them
  • Establishment of a Program Management Office to coordinate, plan and manage transformation projects and activities
  • Identification and establishment of key strategic partnerships that will be leveraged to both effect the transformation and execute it once put into operation
  • Establishment of a communications and organizational change program (OCM) to prepare people for the transformation and ensure that consistent effective communications are taking place

Execution of a current state assessment to understand IT capabilities that can be leveraged and those that may be needed but missing

Organizing To Deliver Services Effectively

An inherent conflict exists between the need to focus around technology versus services. A technology focus is needed to effectively engineer and support all the technology assets that underpin services. Failure to maintain skills and capabilities in this area will result in service outages and delays putting the organization at great risk. On the other hand, a customer and service-based focus is needed to protect those investments in technology and ensure that those technologies are delivering in a manner that meets business needs.

How best to organize with these competing goals? Operate by technology, service, or both?  Those organizations undergoing an ITSM transformation appear to be using one of three models:

Network Model

Coordination Model

Collaboration Model

Minimize disruption to the existing IT organizational model by formalizing interactions between each technology unit such that logical value delivery chains are created across IT

Keep the existing silos, but add an additional silo focused on ITSM that will serve to provide the IT customer focus, service ownership and coordination

Utilize a matrix structure with vertical technology ownership and horizontal customer and service ownership

Pros:

  • Less managers needed
  • Can adapt quickly
  • Encourages collaboration between  IT units and providers

Pros:

  • Provides accountability for process and service ownership
  • Clarity of service coordination responsibility across the IT organization

Pros:

  • Balances technology considerations with service considerations
  • Provides strong collaboration with business units
  • Highly adaptable to changing business needs

Cons:

  • Requires focus on integrating activities
  • Service ownership and accountability will be a challenge
  • Some external 3rd part business models may not integrate well
  • Dealing with conflicting IT unit priorities will also be a challenge

Cons:

  • Will require an additional investment in people and resources
  • Leadership of existing IT silos may see this as a threat
  • Balancing priorities between the ITSM silo and other IT silos will still be a challenge

Cons:

  • Potential for conflicts between technology and customer groups
  • Requires high levels of teamwork and negotiation
  • Requires a solid investment in IT governance to balance conflicting IT priorities and needs

Analysis:

Most efficient approach but may not work well with large complex IT organizations. Unless governed well, technology considerations within each silo may override larger service and customer considerations.

Analysis:

Requires additional investment, but this approach has been used with success at many organizations that have been implementing ITSM transformations. Works best with mid-size to large organizations.

Analysis:

Best approach for very large organizations. Use of this approach has run into political issues at times and it should be recognized that more time may be needed to come to agreement on key decisions and strategies.

 

Author

Randy Steinberg

ITSM Process Architect

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