The Service-Mâché

By:
Rakesh Kumar 
Sumit K. Jha

A Papier-mâché is an amazing material. It can create amazing shapes that can surprise as well as astound you. After all, it’s just the pieces of paper bound with adhesives like glue and starch to produce strong material that can take any shape. While paper is the key ingredient, the art of creating a Mâché lies in preparing the binding material (can be a mixture of water and flour or other starch, mixed to the consistency of heavy cream or complex chemical glues) and smearing it along.

Future of products and services lies in our ability to integrate the capabilities. With more and more innovations connecting to each other, the venue for bigger innovations opens up. The idea of integration is not new, but this has always been understood in piece meals. Understanding it in the full, at all levels and developing frameworks for managing it is a prerequisite to fulfill the needs of next generation products and services.

It’s been already predicted by a few in the industry that the next path breaking products and services would come from small players. This just highlights the predicament that can be caused due to number of products that try to make sense for a business. While some of them can aim at specific customer needs, remaining and most of them would have to focus on how to integrate and collaborate. Like brokers!!

Variety of products and services with multiple suppliers pose challenges that do not meet the eye easily. While utility of services and products is enhanced by integration; the warranty, which includes availability, need to be maintained as per the business requirements.

A Gartner research estimated the hourly cost of downtime as USD 42,000 in 2005. Another study by Gartner in 2011 pegged the cost of IT downtime at USD 26.5 billion in lost revenue each year.  Neverfail’s Outages Report 2013 suggests that average cost of data center downtime across industries is approximately USD 5,600 per minute. This does not attribute the loss to brand value or reputation.

Unplanned downtime, an evil that is cursed by every business, feeds on underlying shortcomings of an IT organization to manage itself. These include:

• Reactive IT support and services
• Disintegrated processes
• Bad knowledge management across the organization
• Improper mapping of business needs and IT capability
• Lack of agility in IT to match business changes like mergers/demergers/acquisitions /spin-offs

All these get exaggerated in a multi-supplier (internal or external) environment and hence the need of integration ameliorates.

While there is a fair understanding of the need of integration in the market today, there is blatant confusion on the framework to be adopted. The frameworks too depict a conservative picture of their   applicability. Service providers have practically used their own capabilities as fences to the scope of integration frameworks, and this has resulted in restricted and rather insufficient research on the subject matter. That’s more so is a reason why we see so many frameworks, each, ironically, requiring a need of further integration.

The concept of integration has taken all these forms with one form differing from other in many aspects. The common concepts used are SIAM (Service Integration and Management), MSI (Multi-Supplier Integration) and SMI (Supplier Management Integration). Surprisingly, many use them interchangeably. Below is simple deciphering of a few:

1. Legacy SI: Typically such suppliers are traditionally responsible for some of the process of Service Operation and Service Transition. They drive CSI for the activities (or technical towers) they own. If organizational processes for these lifecycle phases are available, they would follow these processes else they would use their proprietary set of processes. In many cases it has been experienced that either the documented processes does not exist or it is not followed. We can say that in Legacy SI the degree of process maturity is low.

1. SMI: SMI are responsible for all processes of Service Operation and Service Transition besides most of the processes of Service Design. A matured SMI drives CSI for the processes that are in the scope of SMI across the suppliers. It is process driven as the basic building block is a centralized service management layer. It has a high degree of process adherence and process maturity.

1. SIAM: SIAM is responsible for the entire lifecycle of ITSM. It drives continual evolution across the lifecycle phases and the suppliers through CSI.

However, the standard approach or framework has still eluded the industry.

The future of services is demanding. While resting on the shoulders of multiple suppliers, these call for -  better customer focus, alignment of business strategies, policies & objectives, return on value (ROV), proactive operations, technically advanced tools & platforms, governance across all layers and heavy automation; a comprehensive framework is needed that can address all and has space for improvements.

Not just to achieve seamless integration, this framework must be practical and aim to enable organizations with:

• Ideation and conception of new products and services

• Innovations

• Faster response to market dynamics

• Smoother production and delivery of products  and services

• Satisfied workforce
• Cumulative knowledge for decision making
• Continual improvements

Meanwhile, should provide means to realise investment done in people, knowledge and technology.

SIAM is the concept that encapsulates all the above and when looked with broad sight, can reap benefits to businesses IT and Non-IT alike. SIAM must be implemented with a larger roadmap that looks at the strategic needs of the business while being able to deliver tactically. The suppliers must be enabled to work in tandem to yield synergy and innovation. The supplier’s addition and removal must be made efficient and so must be the creation of new products & services. A feedback mechanism should ensure that the right information flows for continual improvement of services. And the visibility of services must be ensured to business and management.

The Service-Mâché is going to be used to shape the businesses of future, with suppliers as paper strips and SIAM as the glue. How strong the glue is, depends on what it’s made up of.

The book on SIAM 'Making SIAM Work - Adopting Service Integration And Management For Your Business' from the authors tries to address the need of an approach or model for SIAM along with the above aspects of the Next Generation IT organization. It suggests a model for SIAM and the way it can be implemented in a practical manner.

Need of ITSM

Overall complexity of IT is evolving with increased global scope and competition. Business is demanding more value even from their internal IT organizations. Besides, dependency of business on IT is increasing everyday which has made IT critical for success of the business. This has resulted in a shift of focus. In a number of organizations, IT is now being considered as a ‘Profit Centre’ instead of ‘Cost Centre’.

Thus, to ensure that IT is constantly able to deliver value effectively and efficiently, ITSM is the key. Today, every organization is investing in ITSM, trying to develop it as their capability and as a strategic asset.

IT Service Management

IT Service Management or ITSM is the ‘subject’ of ITIL.  Before focusing on ITSM, it is important for us to understand the meaning of Service.

Service: Service is the mean of delivering value to the customer. It assists in achieving the results that customer* wants. It takes away the associated costs and risks from the customer, i.e. ownership of the cost and risks is transferred from customer to service provider**.

Key characteristics of a service are:

• It enhances performance of the task it assists in delivering
• It facilitates achievement of the outcomes desired by the customer
• It reduces the effect of constraints that exists in service delivery

ITSM is the discipline responsible for management of IT services and systems. It includes set of processes and functions that are used to provide these services. It can be said to be the set of capabilities that an organization has which provides value to the customers in the form of services.

Let us consider the following example:

Couple of years back one of the banking institutions in India outsourced its entire IT infrastructure to one of the leading IT Service Providers. Charging was based on number of transactions that the bank performs. Cost of the entire IT infrastructure and its day-to-day maintenance was to be borne by the service provider.

Service provided by the service provider was ‘IT infrastructure provisioning’. This service facilitated the transactional requirements of the bank. The bank did not own the IT infrastructure or any risk associated with it. Thus, by availing the service, bank transferred the ownership of both cost and risk to the service provider.

---

* Customer is the one who pays for a service.

** Service provider is the organization or unit that provides the service. They can be internal (internal service provider) or external (external service provider) to the customer’s organization. 

Issues Facing ITSM Industry

Issues Facing ITSM Industry can be classified under the heads of 4 Ps of ITIL:

People: 

• Extreme internal focus of IT and lack of business understanding. IT is often not able to demonstrate value to business. 
• People need to engage more with business. 
• Communication with business needs improvement. 
• People need to constantly improve the quality of their work and deliverables.
• In many cases lack of leadership capability is having an impact on transforming and professionalizing IT so that new behavior (expected from ITSM process adoption) is embedded in the organization. Lack of management support is also resulting in poorly adopted process culture (or no process culture at all). 

Process: 

• More focus is required on customer interfacing processes and demonstrating ‘value’ from these processes. 
• More focus is required on integration of processes such that benefits are maximized by implementing various processes including ITIL. 
• Theory of adopted frameworks (ITIL, PRINCE2, COBIT, etc.) is not being translated into practice. It has been observed that in many cases the expected value from adoption is often not realized. Organizations refer to ‘implementing’ or ‘installing’ frameworks as opposed to realizing a behavior change.
• Business demands and IT technology capabilities are in constant change. IT lacks the capability to be flexible and ensure continual alignment to business demands. Continual Service Improvement (CSI) is often not in focus when adopting and deploying frameworks. There needs to be more effort and energy in embedding CSI in the culture and behavior at all levels in the organizations. 

Product:

• Need for automation of management, control and facilitation of knowledge capture and sharing.
• Tools are not being adequately used to enable people and processes which can help in greater value creation.
• Tools for strategic processes need to evolve to effectively address the demands of strategic layer of the organization 
• BYOD is becoming a norm globally. ITSM processes have to evolve to effectively address the resulting concern areas. 
• Rapid technology change 

Partner: 

• Today IT organizations have a multi supplier environment. Organizations need to evolve their ITSM to address the intricacies of such an environment. Organization’s ITSM capabilities must broker and manage multiple suppliers and ensure agreements are aligned and properly managed as well.

Future Of ITSM Industry

Today, we see that business strategy is not only driving IT strategy but in some cases are being driven by IT Strategy. In future we will see these ‘some cases’ becoming ‘many cases’. This would be a time when IT would be integrated with business. We have already seen this shift of focus from ‘alignment’ to ‘integration’ in ITIL V3. Also, this would enable IT to effectively address the continuous evolution of organizations and their policies. 

One of my earlier blog has covered how integration of IT with business can happen. 

I believe the future of IT would be driven by some of the key ITIL processes or some specific areas of the same that has not been in much focus across majority of organizations. Also, the tools that would be enabling these processes or areas and facilitate real time decision making would drive the business of Software Product Companies who have such tools in their product catalog. 

Some key areas that would drive the future of ITSM industry would be: 

• Analytics: We have data everywhere. But today the reports or data analysis is predominantly being used to measure vendor performance and in other cases initiate service improvement plans (SIPs). We rarely see the ITSM data driving business decisions. Analytics would be a key for business enabling them to make real time decisions. 
• Automation: According to Forrester, “Service Management and Automation” is one of the key things for future. Automation would drive customer-centric, service-focused, and automated IT operations. It would reinforce the fundamental that customers and services always come first. Besides, automation will allow IT organization’s support and delivery of IT services to be faster, cheaper, and of a higher quality. 
• Proactive IT organizations: Currently we see that majority of IT organizations are highly reactive. Future IT organization would be highly proactive ones. 
• Some ITIL processes would gain importance or would address some key areas which are not being effectively addressed in IT organizations today: 
• Strategy For IT Services and Demand Management processes would enable organizations to innovate and plan to outpace competitors and meet demand.
• Financial Management would ensure that value of IT services are defined and managed. It would act as a decision making process for development and delivery of IT services. It would gain even more importance in cloud environment since charging units, charge per unit and cost per charging unit has to be effectively determined besides billing the customer (and customer’s customer) based on consumption. 
• Business and Service Capacity Management would gain prominence. Currently many organizations are managing capacity only at component level, i.e. they are having only component capacity management in place. 
• Change Management and Service Asset & Configuration Management processes would have more emphasis on focusing Services as CIs and Service Changes (Practically Service is not being recorded as a CI by many IT organizations) 
• Knowledge management would drive automation of management, control and facilitation of knowledge capture and sharing. 
• Proactive problem management, not effectively followed in many IT organizations, would drive pro-activeness. 
• Continual Service Improvement would gain focus so as to continually improve service performance and quality besides process efficiency and effectiveness