0. Convention itSMF Italia
Genova, 14 dicembre 2004
L’approccio Gartner
all’analisi e al miglioramento dei processi ICT
Mariagrazia La Rosa
Gartner Italia, Solution Director

1. Client Issues
Client Issues
What converging global trends are encouraging IS organizations to adopt ITIL?
What best practices can accelerate ITIL implementation and help to successfully
deliver benefits?
How can we combine and leverage different models?
How can we use ITIL as a basis for IT optimization?
What converging global trends are encouraging IS organizations to adopt ITIL?
What best practices can accelerate ITIL implementation and help to successfully deliver benefits?
How can we combine and leverage different models?
How can we use ITIL as a basis for IT optimization?

2. Michael Porter's "Efficient Frontier"
Low
Best Practice
on the Efficient Frontier A
Cost B
Less Than
Best Practice
High
Source: Adapted from Michael Porter, "What is Strategy?” Harvard Business Review, November-December 1996
Michael Porter's well-known "Efficient Frontier" model suggests that best-practice organizations can choose to improve quality or lower cost, but not both at the same time.
However, organizations that are performing below best-practice standards can improve quality and reduce cost by moving toward best-practice goals. One very effective way of doing so is through process improvement, particularly by copying best-practice processes.
The IT Infrastructure Library (ITIL) represents best-practice processes in the IT service management arena. Thus, ITIL has gained widespread adoption because it serves as an "open platform" for implementing IT service management processes.
Low
Quality
High
Source: Adapted from Michael Porter, "What is Strategy?” Harvard Business Review, November-December 1996

3. Which Process Improvement Model?
Tactical Guideline: Models that are likely to integrate well are closer together on the matrix than those that don’t.
CMM = Capability Maturity Model
COBIT = Control Obj. for Information and Related Technology
eTOM = enhanced Telecom Op. Map
ITIL = IT Infrastructure Library
MOF = Microsoft Op. Framework
TCO = Total Cost of Ownership
BS15000 = IT svc. mgmt. standard
ISO 9000 = quality mgmt. standard
Specific
eTOM
TCO
MOF
ITIL
CMM
BS15000
COBIT
IS/IT
Relevance
People CMM
Lean (Toyota)
Six Sigma
ISO 9000
National Awards (e.g., Baldrige)
Holistic
Scorecards
To select a set of process improvement models, you must honestly assess: 1) the organizational scope of the improvement initiative — for example, whether it covers the IS organization or the entire enterprise; and 2) the ultimate goal: operational process improvement or business transformation. This awareness, combined with a solid understanding of the various process improvement models (that is, their purposes, strengths, weaknesses, philosophical orientations and shared attributes), will make it easier to select and integrate appropriate models to achieve the desired results.
The models in the upper left of the figure are extremely relevant to the IS organization and can be powerful tools for improving performance, but the tools themselves will have little meaning to anyone outside the IS organization. The models in the lower right of the figure have achieved high degrees of credibility with business people, so the IS organization that can employ them successfully will earn credibility. Deciding which approach to take will depend on a variety of cultural factors, including enterprise predilection for following the "proven path" or charting an independent course; power, influence and role of the champion; governance maturity; and organizational vision. No "best practice bundle" of approaches will work for every enterprise or IS organization.
Low
High
Level of Abstraction

4. Why ITIL? Mature, best practice framework
Strategic Planning Assumption: By 2007, 40 percent of IS organizations will be cited for providing tangible benefits for the enterprise, an increase from 25 percent in 2002 (0.7 probability).
Strategic Imperative: Diagnose the current level of IS credibility, and implement plans to increase that credibility through IT service management.
Mature, best practice framework
A "de facto standard " (almost)
Integrated, holistic set of processes
Well-established training programs
Corporate certification (BS15000)
Support infrastructure in itSMF and consulting
Why is ITIL emerging as a "de facto standard" in the arena of IT Service Management? Proprietary process models have been created by external service provider organizations, but they have not achieved broad adoption. ITIL's positioning as a nonproprietary standard appeals to many organizations. The involvement of the itSMF and the international standards bodies has given ITIL increasing credibility as a global standard. Over time, ITIL has attracted a rich community of users, consultants, trainers and vendors of tools that are compliant with ITIL's processes. Organizations involved in outsourcing found that ITIL provides a helpful common ground for both client and service provider, particularly in cases of "selective sourcing" where end-to-end services may involve in-house and outsourced components.

5. Gartner View of ITIL
ITIL is a well established, easily accessible, affordable process model for IT service management that is built around a set of best practices. A well-established service and consulting industry has been built around ITIL, especially in Europe. ITIL is better known for its back-office operational process definitions than for its application management processes.
ITIL is based on defining best-practice processes for IT service delivery and support, rather than defining a broad-based control framework. ITIL is more-prescriptive about the tasks involved in those processes and, as such, its primary target audience is IT and service management. ITIL's structure enables incremental adoption, which facilitates continuous improvement.
ITIL has a much narrower scope than CobiT (Control Objectives for Information and Related Technology), but CobiT and ITIL are not mutually exclusive and can be combined to provide a powerful IT governance, control and best-practice framework in IT service management.
Source: Gartner Research

6. Processes and Structure — Getting Focused on the Customer
Strategic Planning Assumption: Through 2005, 65 percent of IS organizations that attempt to run their groups like a business will fail because they confuse processes and technologies with services (0.8 probability).
Result
Process
Step 1
Step 2
Step 3
… to a focus on end-to-end service delivery
Application Development
DBAs
Network Technicians
Production Control
Desktop Technicians
Help Desk
From silos ...
Oops
Break
Missed
Kludge
Blame
Collaboration
Consistency
Reliability
Efficiency
Multidisciplinary Team
Key Issue: What best practices are needed to implement the ITIL?
To implement a service-oriented culture and transform into an ISCo, the internal provider must accept process-based management principles. Processes are collections of identifiable and repeatable activities performed to support a service. Service outcomes and improvement rates, required competencies, skills and tools, and measurement and performance programs are all determined by process design. This means that: 1) The IS organization must have the ability to analyze process flows; 2) handoffs between departments, teams or software applications are equivalents to “steps” that run the risk of negatively affecting process outcomes, and they should be minimized; 3) IS structure and tooling changes should follow process changes, not vice versa; and 4) process flows and outcomes should drive measurement to facilitate continuous improvement and drive SLAs. Although the average IS organization has approximately 15 true services, it may have as many as 200 processes. Because of this, one service will typically have several supporting processes, and processes can repeat themselves across services. It’s essential to identify the explicit relationships between services and processes before attempting any re-engineering or reorganizing. Only by doing so can the ISCo understand service complexity and process interdependencies, and identify core processes.
Action Item: Define services and map fulfillment processes to them before embarking on any re-engineering efforts.
With the exception of silos, all IS service delivery models are process-based. Unless the enterprise is in a very low-tech industry, characterized by tight profit margins, where cost containment is the primary driver of success, becoming process-based is a necessity. Process organizations are focused on the outcomes of a collection of steps, rather than the steps themselves. By treating all the activities associated with a process holistically, the IS organization can optimize performance, reduce latency and cost, and drive service-level predictability — all of which reduce reactionism and complexity. Processes also create the foundation for business-based service-level metrics and are the first prerequiste for answering the question, "What business value does the IS organization deliver?" They are key to managing complex outsourcing relationships and global delivery structures, providing the common performance framework that all participants are accountable to, irrespective of their organization or location. After work is aligned around processes, structures also change, migrating from functional silos, where individual resources are accountable only for their own step in a chain, to multidisciplinary teams that collectively succeed or fail based on the process and service outcomes they deliver. This restructuring eliminates handoffs and finger-pointing, replacing them with collaborative and innovative, customer-centric behaviors.
Action Item: Adopt processes as the primary workflow and organizational framework.

7. Where Does IT Service Management Save You Money?
Strategic Planning Assumption: Through 2007, enterprises that focus on process development and integration before technological integration will improve network and system management implementation time and deployment scope by at least a factor of three (0.8 probability).
Direct
Reduced cost of incident resolution
Reduced self-inflicted incidents via integrated and reliable change
Increased productivity of IT staff
Improved asset utilization and life cycle management
Reduced service cycle times
End-to-end service cost optimization
Automation
Improved risk management
Indirect
Reduced peer support
Standardization
Consolidation
Non-IT staff more productive
Improved availability
Managing appropriate expectations
Improved efficiency of security and business continuity planning processes
Targeted training of users
Improved IT governance
Drives continual improvement
Each step along the path of improving process maturity creates its own incremental benefits. Set appropriate targets for realistic benefits at each additional stage of process maturity. Delivering incremental benefits helps to maintain motivation among the staff, and builds credibility with the business.
While enterprises are focusing on process improvement, they are challenged to develop metrics (and tools to collect and report them) to capture and report on real costs and service delivery performance. "You can’t manage what you can’t measure."

8. Combine CobiT and ITIL for Powerful IT Governance
Control Objectives for Information and Related Technology (CobiT) was originally an IS audit tool oriented to risk mitigation.
CobiT establishes what formal IS processes, practices and controls should be in place, and the minimum results they should predictably deliver.
ITIL and CobiT can combine well together. ITIL maps reasonably neatly into the CobiT high-level governance and audit framework, but although they are trying to achieve different things, they are not contradictory and have few interface problems.
CobiT is a complementary framework to ITIL.
CobiT's processes and control objectives are segmented into four domains
Planning and Organization
Acquisition and Implementation
Delivery and Support
Monitoring.

9. Combine CobiT and ITIL for Powerful IT Governance
CobiT is based on established frameworks, such as the Software Engineering Institute's Capability Maturity Model, ISO 9000 and the Information Technology Infrastructure Library (ITIL).
Unlike ITIL, CobiT does not include process steps and tasks because it is a control framework rather than a process framework. CobiT focuses on what an enterprise needs to do, not how it needs to do it.
ITIL is based on defining best-practice processes for IT service delivery and support, rather than defining a broad-based control framework. ITIL is more- prescriptive about the tasks involved in those processes and, as such, its primary target audience is IT and service management.
Many of the CobiT processes — particularly those in the delivery and support domain — map well onto one or more ITIL processes, such as service level, configuration, problem, incident, or financial management.
The development processes of the two frameworks are not linked and both would benefit from closer collaboration. However, they are unlikely to contradict each other in any substantive way.

10. Capability Maturity Model
Key Issue: What best practices are needed to implement the ITIL?
Level 2: Repeatable
Solve problems based on experience
Heroic efforts
Level 3: Definable
Focus on defined processes
Problems viewed as unforeseen circumstances
Level 4: Manageable
Metrics and monitoring
Integrity of processes is audited
Level 5: Optimal
Processes are self-tuning
Training replacements is critical
Level 1: Ad Hoc
Problems come from outside
Change is the enemy
People are often inclined to pick and choose best practices. This approach risks mixing up the process of replicating recognized best practices with the process of innovation. Learners must accept that their primary goal is to replicate best processes. There are many aspects of sequencing, process and skills development of which learners may become aware at a later time. The best Capability Maturity Model (CMM) programs offer a visible model to study and replicate. CMM programs involve more than merely achieving process competency. Each stage requires a deeper level of personal commitment — that is, being able to recognize how our preconceptions, habits and values may be limiting growth to the next level. Thus, progression to higher levels of competency is also a process of self-discovery, personal growth and change. This inner journey is often more difficult than achieving the external tasks required at each level. Many students experience difficulties when they focus too much on process-oriented tasks and not enough on the human tasks of mental, emotional and behavioral change. The most successful CMM programs offer support for personal growth. The association with personal growth may seem out of place in the business world, but it holds the key to any significant progress in process improvement programs. The focus on personal growth and change parallels the growing recognition of “emotional intelligence” as a key contributor to successful business leadership. [See research by Daniel Goleman.] In the Harvard Business Review article “Getting It Right the Second Time” (January 2002), Gabriel Szulanski and Sidney Winter suggested that enterprises are most effective at replicating best practices when they copy a “living model” exactly. This concept has obvious implications for CMM adoption strategies.

11. CMM Assessment Key Process Area Rating

12. Gartner ICT Process Model
ICT Strategy
Membership
Integration
Equity
Program
Management
Relationship -
Account
Demand Management
Application
SW Product Engineering
Infrastructure
Development &
Support
Network &
Systems
Operations
ICT Asset
Service Desk
Service Level
Problem
ICT Governance
Relationship and Demand Management
Service & System Integration
Application & Maintenance
Infrastructure & Operation Management
Service Management
Solution
Service &
System

13. IT Optimization Assessment Processes and Costs
Program Management
Costs and Service Assessment
for IT Infrastructure
Process Assessment
for Application Development and Support
Roadmap
for
Impro-
vement
Gap
Analysis
“As Is”
to Best
Practice
Recom-
mendations
Survey shows a clear imperative for IS mangers to cut costs, add value, keep in sync with their business partners and communicate across multiple levels effectively.
These are the comments we hear from CIO’s looking to engage with Gartner:
I am being asked to reduce my IT spend another 20%, I don’t know where that will come from, we have been cutting for years
I need way to show my leadership team we are spending too little on IT – how can I do my job if I can’t get any project approved
I am constantly being asked by Business units what value we are delivering to the business, and why are allocations are so high when they see our service as good (at best)
Gartner thinks IT Optimization is important – in terms of the health of our businesses. We also believe it is most powerfully used as an overall way of management - not a point solution (although that’s how most CIO’s start!)
Optimization is a point in time analysis, but strategic context is important.

14. ICT Infrastructure Costs Total Spending
Total Spend for XYZ is $24.3M.
This compares with a total spend of $18.8M for the peer, $18.0M for the Top Quartile and $29.1M for the bottom quartile.

15. Application Development and Support Unit Costs

16. Case Study: ITIL Implementation Costs and Savings0% 5%
10%
15%
20%
25%
30%
35%
Training
Service Model
SLM
Config. Mgmt.
Service Desk Tool
Other Processes
Services Portfolio
Project Management
Tools (software and hardware)
Consultants and Trainers
Internal People Costs
The case focuses on a European IS organization. It has more than 300 IS staff, started its two-year program in 2001 and has spent around 2.6 million euros on it.
Results included a savings of nearly 3.5 million euros a year (approximately 7 percent of IS operating costs) through the identification of unused or underutilized resources like software licenses. This represented about 90 percent of the tangible savings formally identified to date.
The IS organization is now billing around 1 million euros (approximately 2 percent of total billings) for services that were being delivered but were not being charged for.
The IS organization's customer satisfaction rating went up from 6.8 to 7.6 out of 10.
This case study focuses on a midsize European IS organization. It has more than 300 IS staff, started its two-year program in 2001 and has spent around 2.6 million euros on it. Expenditure includes external resources, such as training and consulting, software licenses for service management tools, and internal costs — staff costs directly associated with the program. The company recouped its investment within the first 12 months and benefited from a stream of less quantitative returns during the second year. Internal staff accounted for more than half the total cost. This reflects the organization's decision to avoid using external consultants other than for training. Some internal consultants helped set up service-level management.
The whole program was dealt with as a substantial change management program. The company recognized that service management is about people and behavioral change. Although tools and process definition played a large part in the work and took most of the investment, they were not the focal point of the program.
Results included a savings of nearly 3.5 million euros a year (approximately 7 percent of IS operating costs) as a direct result of improved asset management — that is, through the identification of unused or underutilized resources like software licenses. This represented about 90 percent of the tangible savings formally identified to date. Before the change, less than 5 percent of incidents were recognized as a known problem, with a known resolution. Now, more than 30 percent of incidents have a known resolution, reducing incident handling times. Half are solved in less than one hour and 80 percent within 24 hours. The IS organization is now billing around 1 million euros (approximately 2 percent of total billings) for services that were being delivered but were not being charged for. The IS organization's customer satisfaction rating went up from 6.8 to 7.6 out of 10.

17. Recommendations
IT service management will be a prerequisite for demonstrating business value. Success requires commitment and perseverance. Start now!
IT service management requires fundamental cultural and behavioral change. Pay careful attention to organizational change management issues.
Success in IT service management is based on repeatable processes. Use ITIL as the basis for IT operational processes and then focus on continually improving them.
Seek opportunities to learn from and copy best-practice processes.
Measure ICT costs and relate results to process analysis to find saving and improvement opportunities for optimization.
Enterprises that are not moving toward ITSM will be at an inherent disadvantage because they will not have put in place the necessary processes to understand business requirements, develop services to meet them, understand their costs and deliver efficiently. Moreover, their costs will be higher than their competition, often resulting in outsourcing. Worse, because they do not know their costs, or the processes and scope required for service delivery, they would not be in a good position to negotiate an outsourcing contract; thus, they are more likely to have a failed outsourcing relationship. ITSM provides significant benefits, including raising IT credibility, but success requires significant commitment and perseverance. Start now to assess the IT management process maturity in your enterprise and move toward ITSM. In doing so, you will need to focus on key processes that drive ITSM, including relationship building across the IT operations group and the business units, and building IT services in conjunction with infrastructure, software and operations architecture/standards.

18. Convention itSMF Italia
Genova, 14 dicembre 2004
L’approccio Gartner
all’analisi e al miglioramento dei processi ICT
Mariagrazia La Rosa
Gartner Italia, Solution Director