CIO Toolkit - Two biggest Pain Points
Every IT department I have worked in (and that’s quite a few) has shared the same two major pain points that downgrade their efficiency and also how their users view them. The two pain points are Service Delivery and Managed Services.
1. Service Delivery
IT Service Delivery is the manner in which a department allows access to users of its services, which include Infrastructure, Applications and Communications, and other business resources. IT Service Delivery covers design, development, deployment, operation, and retirement. Many IT professionals play a role in these various stages of Service Delivery.
Service Delivery benefits an organization with large or complex software and hardware deployments, diverse system requirements, dynamic IT configuration changes, high uptime requirements, and demanding user expectations. Business units have options outside of the dedicated IT team, including public cloud hosting and software-as-a-service products.
IT Service Delivery vs. IT Service Management
From a practical perspective, IT Service Delivery is defined almost identically to ITSM. ITSM aims for increased efficiency and benefits of the Service Delivery to the business and its users. In common usage, this subtle distinction is blurred.
The IT Service Delivery platform
The products and resources involved in the lifecycle of a service are referred to as the IT Service Delivery platform made up of IT Service Delivery tools.
IT Service Delivery tools - interchangeably referred to as ITSM tools - generally cover diverse functional areas, including the following:
· The overlapping categories of Help Desk and Service Desk.
· A Service Catalogue, which is a collection of services offered to users.
· Knowledge and issue management.
· A Configuration Management Database.
· Workflow management to follow queries and requests from development to delivery.
· Performance and log monitoring to track the behaviour and availability of each application and service.
IT Service Desk
The first major feature of Service Delivery is the IT Service Desk. As can be seen in the model below, the Service Desk is a central feature of High-Performance IT. A well-managed Service Desk with an appropriately structured database is all that is needed to manage performance and productivity across all of IT (excluding projects). Even a basic ITIL-compliant Service Desk setup is sufficient to satisfy High-Performance IT requirements. (ITIL improves management capability, but it is not essential).
Most Service Desk applications can satisfy the Management Reporting needs (metrics), those that cannot only need to add a simple program to interrogate the database. In around 25% of cases, the Service Desk application database will require restructuring or replacement; this is due to poor design at original implementation due to the database being designed around the information needs of the job ticket as against Management Reporting. In other words, the databases fail because they are back to front.
Model Benefits
1. The performance and productivity focus are on customers first, IT staff second and technology third. It frees up the CIO to concentrate on business and strategic needs. This model is designed to produce performance excellence.
2. It provides the IT executive with a macro view of IT performance and productivity forcing all IT managers to share in the responsibility for delivering departmental outcomes.
3. Under this model, each IT manager is responsible for all IT functions, that is, management responsibility is equally shared. (Mutual Accountability).
4. New communication lines are opened at inter-team touchpoints which improves integration. (The single most important thing that makes IT work.)
5. The value and quality of information exchanged at these touchpoints is dramatically improved and silos are broken down.
6. IT teams are highly organized under this model and performance is measured.
7. This model can produce operational (day to day activities excluding projects) human resource savings of up to 30%.
8. Displaced operational human resources are redirected to business projects as dedicated resources paid for by the business with associated IT cost savings.
9. Staff and customer satisfaction levels are considerably higher under this model.
Extending the Service Desk operation (ITSM)
The Service Desk operation can be extended with the addition of Information Technology Service Management (ITIL/ITSM). Service Management forms part of the Service Desk best practice IT standards, it integrates the Service Desk with a range of external IT services. ITIL and ITSM are UK government standards, now accepted as global IT standards, that are manifested in a library of books (ITSM is a set of processes, not software) describing 'best practices' for delivering and managing IT service functions. The aim of ITSM is to facilitate improvements in efficiency and effectiveness in the provision of quality IT services within any IT department. High-Performance IT does not implement all the ITSM external process links, only those that the IT department needs.
ITSM Implementation.
ITSM within the Service Desk environment.
ITSM external process links
1. Incident Management: Resolves symptoms in the short term by providing a temporary workaround so that service availability is restored with minimal interruption. Incident Management and Service Request Management.
2. Problem Management: Problem management solves the underlying root cause for an incident. Problem management will reduce the number of incidents by addressing the root causes of failure and minimize the impact of incidents.
3. Availability Management: Focuses on achieving and measuring the agreed availability levels for the services environment, including coordination of planned downtimes.
4. Change Management: Coordinates, prioritizes, authorizes, schedules resources for, and assesses the risk of changes. Change requests come in primarily via the Incident Management or Problem Management processes. Changes are typically required to effect required alterations to the existing environment to introduce a new component, modify or remove a component.
5. Capacity Management: Predicts capacity needs that ensures that the business’ requirements for capacity and performance are being met. It provides control over how resources are being used and provides a consistent view of capacity utilisation of the available production potential.
6. Service Level Management. The goal of ITIL Service Level Management is to ensure that agreed levels of current IT services are provided, (SLAs) and future services can be delivered within agreed targets.
7. Supplier Management. Ensures that the organisation obtains value for money from suppliers and contracts.
8. Configuration Management System. A set of tools and data that that is used for collecting, storing, managing, updating, analysing, and presenting data about all configuration items and their relationships.
9. Escalation Management. Focuses on ensuring incidents or problems encountered within the services environment have the appropriate levels of visibility. Requires an escalation and communications plan and escalation closure criteria.
Workload Management
The second major feature of Service Delivery is Workload management. The Service Desk owns the Workload Management process that controls all IT work (excluding projects) which in turn feeds directly into each IT teams Work Management process. The process makes all work visible, accounted for, prioritised, costed, and reported on. The Service Desk Workload Management process consists of:
1. Gating (work approval.)
2. Work Classifications (job type, priority setting and allocation of work to Level 2 Support.)
3. Performance Reporting (tracking of work across IT Teams.)
Gating
The first step in the Workload Management process is Gating - the process of registering and accepting work into IT. An essential element of the Gating is the mandatory rule that ‘all work is registered with the Service Desk before work can commence’. The benefits of this are it stops work coming in through the back door network, it stops the business bypassing priority setting rules, work is not lost, all work is trackable, and all work is charged to the correct cost centres. Gating helps to identify resource savings; facilitates accurate management reporting, it provides the Resource Management function with a sound information base, making it more accurate, it significantly improves staff morale by helping to bring order to areas that are usually chaotic, having high rates of rework and backlogs.
Problems.
1. Gating rule is unenforced.
2. All work is not visible or accounted for.
3. Incorrect cost centre allocation.
4. Use of redundant and overlapping Work Classifications.
5. Poor Resource Management.
High-Performance IT Assessment Outcomes.
1. All work is registered.
2. Essential information like cost centre, work classification and priority are captured.
3. Standardised work classifications are in use.
4. Overlapping work classifications are removed.
5. Accurate performance reporting.
Work Classifications
Work classifications are used by the Service Desk to classify work by job type, prioritise all work and allocate it to Level 2 Support work queues. The work queues are used by the Level 2 Support teams to manage incoming work according to its job type and priority. High-Performance IT aims to standardize work classifications across all IT teams as the preferred standard, however, given that the resolution times for Infrastructure and Applications Development work requests can vary significantly, different classifications may exist.
Problems.
1. Work classifications are not standardized.
2. Overlapping and redundant work classifications in use.
3. Too many work queues.
High-Performance IT Assessment Outcomes.
1. One work classification scheme.
2. No overlapping and redundant work classifications in use.
3. Minimal number of work queues in use.
Performance Reporting
High-Performance IT defines performance reporting as the measure of workload efficiency, using predefined metrics (or measures) that use job type and job work queue data to track departmental, individual team and managed services providers work completion. Metrics include such things as Completion times (Actual), Turnaround times (Duration), Queue sizes (Backlogs) and Inter- team transfers (Hold-ups)
The IT Executive Management team now has a view of each teams’ performance. The degree of inter-team integration is measured, consisting of workflows and touchpoints as these are the single most important thing that makes IT work. The objective here is to achieve the highest integration level possible. That is, as most jobs in IT need the input of multiple teams, having a seamless workflow, with no hold-ups between the teams, maximizes productivity across the board. This allows SLAs to be achieved with happier customers and staff, it is also a first step to reducing IT spend because it reduces resource needs.
Problems.
1. No performance reporting.
2. Meaningless metrics.
3. Reporting is not used as a management tool.
High-Performance IT Assessment Outcomes.
1. Meaningful metrics.
2. Reporting used as a management tool.
3. Better resource allocation.
Work Management
The third major feature of Service Delivery is Work Management which is carried out by the IT teams. The Service Desk Workload Management process directly feeds into each IT teams Work Management process which is the way each team assigns work to resources, completes, and tracks work through to completion and then advises the Service Desk that work is complete. Under High-Performance IT the Work Management objectives are to ensure there are no work request backlogs, that work turnaround times are being met and that customer satisfaction levels are not compromised.
Having enough skilled resources available helps achieve work completion times whereas resource shortfalls cause work queues to become backed up with old, dead, and outstanding work requests that then result in poor service delivery. Work request priority 1 and 2’s tend to get resolved fairly quickly, but priority 3’s do not, they make up most of the backlogs. Priority 3 work requests are often made up of work that effects business functionality - requiring longer timeframes to complete and scarce IT resources to complete it. Unresolved priority 3’s has a significant effect on the businesses’ ability to be cost effective, efficient and to provide high levels of customer service, it is for these reasons that High-Performance IT addresses priority 3’s as a matter of urgency.
Problems.
1. Priority 3 work request queues often contain hundreds or even thousands of requests (the largest I have seen is 8000) which are impossible to manage and are demoralising for the staff. Failing to address priority 3 work requests has a flow on effect to maintenance and production support where unaddressed priority 3 problems increase resource usage in these functions due to quick fixes or band aides being applied.
2. Work management is also concerned with the identification and resolution of recurring problems (problems where there are no band aides, or they just keep falling off) which on their own can account for up to 30% of total technical resource usage and are a major irritation to customers.
High-Performance IT Assessment Outcomes.
1. Reduction of backlogs, resolution of priority 3’s.
2. Resolution of recurring problems.
3. Increased automation.
4. SLAs and other metrics are met.
5. Reduced incidence of technical rework.
6. Lower technical resource needs.
7. Technical teams are more proactive than reactive.
8. Fewer unplanned outage windows.
Usual outcomes resulting from the High-Performance IT Assessments:
1. Putting in place an end-to-end workload management process.
2. Enforcing the Gating rule of ‘All work must be registered before it is undertaken’.
3. Reducing the number of work queues.
4. Enforcing the capture of cost centres.
5. Rationalising work classifications.
6. Analysing with a view to deleting work requests older than 6 months.
7. Batching backlogged work requests and creating projects.
8. Batching backlogged priority 3’s until cleared.
9. Putting in place either ITSM or equivalent in-house processes.
2. Managed Services
High-Performance IT reviews all managed services contracts in terms of their management, effectiveness, cost, and customer satisfaction. Why do you need to review your Managed Services? Because you pay a hefty sum for them and often do not get what you are paying for. Outsourcing your IT is a good solution for controlling costs, but it can be fraught with dangers for the provider and the customer if not properly managed.
Today, rather than being responsible for managing infrastructure, cloud-based solutions have enabled IT departments to dispense with the processes of acquiring, updating, and maintaining software and hardware, leaving these to third-party managed providers. By doing this, organizations can allocate a more significant share of their budget to activities that better contribute to improving business outcomes. Leveraging managed services from a cloud service or hosting provider allows organizations to free up their IT staff to work on more strategic, revenue-generating projects, instead of focusing on operating their own IT.
There are basically three reasons why a company outsources its IT: 1, to save costs and keep them fixed over a longer term. 2, to focus more on its core business and 3, to improve IT service delivery. That’s the theory, and whilst increased focus on core business activities is normally achieved, beyond that is something quite different. Costs are often only marginally reduced but not to the level anticipated or even stated in the contract. Costs may increase due to the dreaded ‘Additional Costs’ contract clause. IT service, project delivery and quality usually remain stubbornly bad. There are three reasons why providers do not deliver in accordance with their contracts. Firstly, the contracts are poorly executed, favouring the provider. Secondly, inexperienced customer contract managers simply lack the experience and skills to manage the contract and thirdly, smart providers who know how to milk their customers contracts meaning they get extra revenues and do not have to deliver on many promises.
I have been an Outsourcing Contract Manager several times. The key lesson I learnt is that unless carefully and skilfully managed, the promised services and improvements are not always forthcoming. This is even though the outsourcing business model is a good one where the provider can make use of an IT shared services solution (requiring fewer resources) to standardise the customers environment, reducing the cost of delivery and making it easier to achieve SLAs. But not all customers are moved under shared services arrangements as this involves up-front costs for the provider; rather the customers services are left as is (no or little change to platforms or software) meaning there are reduced chances of achieving SLAs. This is where the outsourcer saying of “We do your mess for less” comes from.
Customers need to maintain the upper hand when it comes to managing their IT managed services contracts to stop the provider managing the contract exclusively for their own benefit.
The best practice customer approach is to firstly have a detailed contract and then to make sure that contract obligations are being honoured by managing the contract according to the contract Schedules - noting that most providers actively fight this approach as they do not want to be held accountable or be managed in this way.
This is how I managed contracts and it was the basis of the Contract Management Offices I set up, (I even won a Gartner award for that). My customers managed there contracts very successfully in large part because the future customer contract manager was part of the contract negotiations. We negotiated great contracts, we had a good contract management office that was smarter than the average provider and we managed according to the Schedules. Under the contracts I managed, pricing remained fixed, service delivery including projects improved, improvements were delivered, and the customers satisfaction rating went up.
The managed service providers do work hard, too hard in fact, they are generally a case of working harder not smarter - in this respect they are no different to most in-house IT departments. Generally, the providers fall into two categories. The first take your mess and do little to fix it, saving money by having fewer resources working across multiple contracts. (You can’t do that in house as you need dedicated resources.) The second take your mess, move it under a shared services umbrella where they can save money through standardization with the need for even fewer resources.
As for cost savings, if you have a poorly executed contract, the providers are absolute masters at increasing their revenues through the dreaded ‘Additional Services’ clause and Project pricing. Surprisingly, some customer budgets post outsourcings do not take account of this additional (corporate or group) IT cost as it goes under the radar as a separate business unit IT cost.
Contract Management
Before going any further, let’s be clear on how a contract is constructed. It is in two parts, the Terms and Conditions and the Schedules. The Terms and Conditions set out the legalese of the contract, this is where the lawyers do most of their work, post contract execution a customer is or at least should be only interested in a few sections, - Meetings, Financial Obligations and Contract Disputes. The Schedules on the other hand are the guts, the details of the contract, they spell out the Services and Improvements to be delivered along with associated SLAs. (E.g., If a File Server fails it must be recovered within one hour.)
The Schedules are lengthy due to the sheer volume of IT Services that are scoped out which is why when preparing and negotiating the contract, 80% of the time is taken up with the Schedules. The Schedules also spell out improvements to be made to the customer environment such as the rationalization of servers, rollout of a SOE and so on. They also describe methodologies, approaches, and techniques to be used by the provider in the execution of the contract. Therefore, the people who will manage the contract after its execution need to be part of the Schedules construction and negotiation.
Usual Contract Management problems
1. Unanticipated and additional services costs.
2. Poor service and project delivery.
3. Financial disputes.
4. Lack of a customer contract management office. (Different to supplier management.)
5. Post execution contract managers not party to the contract negotiation.
6. Poor contract management practices such as no contract diary or schedule compliance monitoring.
7. Inexperienced contract manager. (The customer contract manager needs to have a working knowledge of each of the outsourced services (e.g., Development, Infrastructure, Communications).
8. The IT Architecture function is outsourced. (This must be retained in-house to ensure that the customer controls the IT Strategy to ensure alignment with the Business Strategy.)
9. The legal department manages the contract. (This is a huge no, no, as the lawyers only understand the terms and conditions and not the schedules which represent the day-to-day work).
10. Contract management meetings not being held weekly.
11. Provider not meetings SLAs and other contract obligations.
12. Issues and disputes are not handled in accordance with the contract terms.
13. Lack of accurate customer management reporting.
Assess Your Own Position
Take a moment to answer the following questions, it will give you a good perspective on where you are in terms of your managed services relationship and what level of service you are receiving.
Relationship.
1. How would you describe the outsourcer relationship? (Joint venture, partnership, friendly, contractually based, acrimonious.)
2. How satisfied are you and your users?
Contract.
1. Are their separate contracts with separate sets of schedules for each cloud platform?
2. Are new services negotiations held in good faith?
3. Are issues and disputes being handled to your advantage?
4. Are there any current or possible future contract disputes?
5. Is there a contract diary?
Account Management.
1. Is the providers contract manager held responsible for your overall satisfaction within the contract performance?
2. Does the providers contract manager have a detailed knowledge of the account?
3. Does the providers contract manager have detailed knowledge of the customer’s practices and procedures?
4. Do both parties have a working knowledge of the contract Schedules?
5. What if any outstanding matters are there?
Costs.
1. Are you incurring unanticipated or Additional Costs?
2. What if any financials are outstanding by both parties?
3. What financial disputes exist?
Delivery.
1. How would you rate SLA compliance? (Low, Medium, High)
2. Are business targets being met?
3. How would you rate project delivery performance? (Low, Medium, High)
4. How would you rate Service Delivery performance? (Low, Medium, High)
5. How would you rate the providers Service Desk performance? (Low, Medium, High)
6. What regular reporting is being received?
Customer IP.
1. Where is the IT Architecture function located?
2. Who controls Security Standards?
3. Who owns Data privacy (For example, does the outsourced data include personal data or competitively sensitive data such as trade secrets)?
4. Who owns the data and is data encryption implemented?
5. On termination of the contract, what data formats are available?
6. Who reviews the providers technology lock-in position (Where the supplier implements a proprietary solution)?
Disaster Recovery.
1. Have you personally toured the disaster recovery back-up site?
2. How familiar are you with the DR plan?
3. Where is the DR plan physically located?
4. If you share a back-up data centre with other customers, where are you in the recovery queue?
5. Have your staff been walked through the DR plan as an implementation exercise.
How To Turn Things Around
If you’re suffering from cost overruns, hidden costs or additional costs and poor service delivery, there is a way to turn this around.
1. All contracts can be renegotiated, in full or in part, this can happen at any stage, it does not have to wait until contract renewal. Renegotiations are a part of outsourcing, and the providers are used to it, they do not want to lose the business any more than you want to have move elsewhere or come back in-house. It’s generally in both parties’ interests to take a fresh look at the contract after one year’s execution.
2. Failing this, putting in place a stronger contract management function goes a long way to getting what you need and what you are paying for. It is a case of the squeaky wheel gets the oil. Manage the contract strictly in accordance with the schedules and any special terms and conditions. Do not let the provider take any advantage of you, be spartan in your management approach.
3. Do not be afraid to withhold payments for full or partial non-delivery of service or failing to meet some other contractual obligation. This more than anything else will get the providers attention and if necessary, get your lawyers involved to lay out to the provider what a legal case could look like to justify withholding payments.
4. At weekly contract, service delivery meetings - take the provider through the sections of the contract that you are not happy with, be detailed, record everything (the lawyers may want those notes later) and insist on the provider taking down Actions to address each failure. Then manage the provider according to the Actions and insist on detailed written explanations of their responses to each action and every delivery failure.
5. Make changes to your contract management by establishing a contract management office.
Best Practice Contract Management
High-Performance IT implements a Contract Management Office for the exclusive management of managed services contracts. (I received a Gartner award for world’s best practice – managed service contracts.) The set up a customer contract management office looks like this.
1. A customer contract manager role or position is created depending on the scope and scale of the contract(s). The contract manager should ideally have been party to the contract negotiations otherwise they need to be extremely well versed in the contract(s).
2. An IT management role or position as a SME for each of the major services the contract covers. For example, if Infrastructure including Network and Communications has been outsourced then an Infrastructure Manager is required.
3. A Service Delivery Manager position is required to counterbalance the providers Service Desk and Service Delivery functions. This is a position and therefore is a full-time position.
4. The IT Architecture function is to remain in-house to ensure that the customer retains control over their technology destiny and to ensure alignment of IT and Business strategies. As such an IT Architecture role or position is required.
5. Creation of a Contract Diary that includes all events and obligations for both parties, such as regular meetings and contract annual reviews.
6. Weekly Service Delivery meetings to review as a minimum all service delivery activities, Service Desk performance, SLA performance, Project performance, Improvements, Financials, Reporting, Customer satisfaction levels and Disputes. The providers Service Desk should also table two reports 1) Top ten Problems report and 2) Top ten Recurring Problems report.
Best Practice Outcomes
1. The squeaky wheel gets the oil.
2. Reduced or Fixed costs.
3. Cheaper Additional Services costs.
4. Improved Service Desk.
5. Improved service delivery and project performance.
6. Both parties have a detailed knowledge of the contract schedules and obligations.
7. Customer can maintain constant vigilance over service delivery, contract obligations and financials.
8. The managed service providers performance improves.
9. Should the providers performance fail to meet contractual obligations, the customer has a recorded history of events that can be used for legal action or for the withholding of payments.
10. Contract management practices such as a weekly review meeting and a contract diary keeps the customer in the driver’s seat.
11. The provider’s contract manager can be evaluated and held accountable for contract performance.