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What is an IT service?

One of the most universal discussions within IT organizations is the discussion about what services the IT organization actually provides to its customers. In this article, we propose a new way of looking at IT services. In fact, this represents a paradigm shift in relation to past (and current) practices.

What IT does

We need to identify what customers of IT actually want from IT. If we go to the fundamental essence of the service of IT organizations, we find the following. IT organizations deliver 3 Basic Services:

  1. IT ensures existing functionality is available for use
  2. IT provides new functionality as and when needed
  3. IT advises its customers about the first two services

Note that customers are interested in the functionality IT provides, not the “hardware” or “software”. It’s all about functionality. (see “Performance: Ensuring real improvement” for a full description)

Value Propositions

The next step is based on an unfulfilled demand from the customers of IT: what is the value of IT for the business? During the last five years, businesses have increasingly asked IT to prove its value. But how do you prove value if you do not define your services in the form of value. For this reason, it is more useful to talk about IT Value Propositions. A Value Proposition is a combination of customer, service and price. If these three components are “in harmony” then we can speak of a Value Proposition since the customer perceives value in receiving a particular service at a stated price. Depending on how the service is defined, it may be useful to define “time” as a fourth component of the Value Proposition. This is particularly useful if the IT organization is able to deliver the service more economically/better if the customer clearly defines when he wants the service. “Defining a Value Proposition” means understanding the value that a particular service has for a customer. This means that IT must enter into a serious dialogue with its customers about the value that an IT service provides. The dialogue is not simple because it involves looking at how a customer of IT provides value to its customers, and what the role of IT is in that relationship. Experience has shown that business people are not always prepared to make time for this discussion and sometimes do not even know how important the role of IT is. This does not relieve IT of its obligation to find out the value of its services to its various customers.

Delivering Value

Let us take a look at the current state of affairs within the world of IT. An average Service Catalogue (where this is available) provides us with the following list of typical IT services:

  • Office Automation services
  • ICT Helpdesk services
  • Application Services
  • Consulting Services
  • Project Management services
  • Training Services
  • Data and Telecommunication services
  • E-mail Services
  • ICT Support Services
  • E-Business (internet/intranet)
  • Network Services
  • Security
  • Data Center Services

To us as IT professionals, this list appears logical but, depending on how the various services are defined at a detailed level, there may be some overlap which would allow the list to be shortened. To the average customer of IT (no matter what the hierarchical level), this list makes little or no sense. Fortunately for IT, the business tends to invest in people like Information Managers and Functional experts who can translate IT-speak into business language.

Customer View

Now, having ascertained that the business customer does not understand what IT is talking about – that is why he needs to hire people to translate – we can investigate IT services from the customer’s perspective. Imagine the following:

An IT account manager sits down with a customer and asks: “which services would you like?”

“I’ll have the Office Automation service, thank you”, replies the customer.

“OK, that’s great; for how many people?”

“Oh, for 68 people; I understood from the service catalogue that I can get desktops and laptops. I’ll need 22 laptops for the account managers, the back office will have desktops.”

“Would you like anything else?” asks the account manager

“Yes, my people will need e-mail, internet and MS Office, of course. And they’ll all need access to SAP SD.”

“Fine, I’ll get that sorted out for you.”

“Thank you” says the customer relieved that it was so easy.

“Just to recap: you want Office Automation in the form of 22 laptops and 46 desktops with e-mail, MS Office and internet, and 68 licences for SAP SD. OK. You do realize that you will need Network services, Security, Data Centre services, ICT Helpdesk services as well. I’m assuming you want some telephones as well…so that’s Telecommunications services. To get this all sorted out, we’re going to need to scope the job; work out the details, that’s Consulting services, and Project Management services to get the whole thing rolled out …I’ll get back to you in a couple of weeks”

The business customer sighs, feeling like he’s been dropped into a Dilbert cartoon.

Just to be clear: IT Customers DO NOT CARE about the services as stated above, especially when they do not have a choice about what they can and cannot have.

Being linked to the network is a must if you want e-mail and internet, why do IT organizations offer it as a separate service? They apparently want to give the customer the choice of bandwidth, something about which a customer is totally incapable of making a decision without advice from the IT organization, and whatever the IT organization says cannot be challenged in a sensible way.

IT Services: Next Generation

If the past/current way is not right, what should IT organizations do? Well, they need to look at their services through the eyes of their customers.

Ask this question: “what IT ‘stuff’ does an employee need to be part of this organization?”

A possible answer is:

To be part of this organization, you need access to a PC or laptop, an e-mail account, MS Office, internet/intranet, the network, the data centre, a telephone and the ICT helpdesk. We have a security policy that is part of the whole set-up and is included in the way people access the functionality they need.

If we look at the picture this generates, we see someone sitting at a desk with a telephone, behind a PC (that works) and is able to log on and start one of 3 bits of functionality: e-mail, office applications or internet/intranet. This person has not, for one moment, thought about the technical wizardry that makes this possible – nor should they need to.

The Ante

To cut a long story short, IT together with the business must define the bundle that is needed to “play the organization’s game”. That is the first IT service; call it “Basic Infrastructure”, or “the Ante” (the chips you need to wager to be admitted to a round of poker – the basic technology needed to play the organization’s game).

For the customer, this makes life easy because IT ensures that everything that she needs is delivered for a single price per person. The only variation that is possible is the level of service, meaning that the IT organization needs to give, for example, Gold, Silver and Bronze level services. The price for each level can be standardized. The customer can, from one year to the next, readily see whether the service has got cheaper, more expensive or stayed the same.

For IT, life becomes easier since it is no longer necessary to define separate prices for each component for the customer, and subsequently be confronted with the painful selling process as illustrated above. IT only needs to know the internal costs (not prices) of the different components, and needs to manage the integral cost down. It may be the case that the licence costs of software goes up, but that through good supplier management the communication costs can be reduced; leading to a price for the Basic Infra Service to the customer that does not change or reduces slightly.

Applications

We have dealt with the issue of Basic Infrastructure since this causes the most discussions between IT and its customers. IT also provides other services particularly in the form of business applications. Customers of IT more easily perceive the value of an application because it directly helps them to run their business and carry out the activities they need to execute to satisfy their customers.

Again, IT should aim to bundle software where this is possible. If an account manager needs access to both Siebel and SAP to do her work properly, why does IT insist on providing a Siebel application service and a SAP application service, when the customer sees an “Account Management IT service”. The fact that this service is made up of two applications that are supported by different groups within IT is neither of interest to the account manager using the software, nor to the manager of the department. The latter only wants to know what the IT cost associated with doing his work. If the service is of sufficient value as defined above, then reducing cost will not be a primary concern of the manager. Having said that, no business manager will object to lower IT costs for the same service.

An additional benefit of this way of working is that invoices become very simple and understandable for customers.

The New Service Catalog

Summarizing this article, we can propose a new table of contents for the Service Catalogue. It could look very similar to the following:

1. Basic Infra (“The Ante”)

2. IT support for:

  • Account Management
  • Production
  • Finance
  • Management
  • Research and Development
  • Etc.

3. Advisory services

For the first two services, it is vital that the IT organization explains:

  • How it intends to ensure that existing functionality is available for use (Basic Service 1)
  • How it intends to provide new functionality as and when needed (Basic Service 2)

The last service (advisory services) basically represents the last of the basic services (3) as described at the beginning of the article (“IT advises its customers about the first two services”).

The other side…

So why is it then that in the vast majority of IT-customer relationships we find detailed (sometimes to a ridiculous level) “service” descriptions in a Service Catalogue. The answer is “Trust”. Customers of IT do not trust their providers (even internal), and as a result want all products and services broken down into the smallest manageable parts (and often even smaller) so that the customer has the illusion that he is steering the costs of IT.

The problem stems from the fact that IT spent the first 30 years of its existence pulling the wool over its customers’ eyes with an overload of jargon and incomprehensible detail when asked for an explanation as to what IT is actually doing. Also, business people did not really take an inordinate amount of interest in IT, despite the fact that IT is as important as other resources for producing services for the enterprise’s customers.

Since the internet bubble exploded, business people have taken an acuter interest in what IT does and, more particularly, costs. The mystical veil has been removed and it now turns out that IT can be managed like any other business unit – according to business rules. The technical content continues to become ever more complex, which demands an opposite movement from the managers of IT: keep the governance and management of IT simple and clear for everyone involved.

The most important task for IT is to regain the trust of its customers. Achieving simplicity and clarity in the management and governance of IT is a critical step in achieving this trust.

Let’s be frank, customers ask for, say, a 10% reduction in the cost of IT. In the average organization, IT accounts for around 3% of costs. This means that the user community is asking for a 0.3% reduction in their overall costs, and are spending an excessive amount of time trying to achieve this. When maybe the solution is to make a business process that accounts for 10% of the costs 25% cheaper through a 10% increase in IT spend. The net effect of the second case is 2.2% reduction in cost versus 0.3% in the first case. Also, the second case focuses on growth, innovation and improvement, where the first is at best an improvement of IT efficiency, at worst destructive to the business.

Achieving Trust

Both cases do assume that IT is being run in a business-like way. However the second case requires trust that IT is serving the same goals as the rest of the business. One of the ways to prove that trust is to be clear on the services that are provided, i.e. define the content in terms of units understandable for business people, and execute them as required, that is according to the 3 Basic Services.

This will, in time and with consistent performance, lead to an increase in the trust of the business and of the credibility of IT.

Lean IT IT Service Management

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