Business Service Management Hub

The Hub Commentary_

I’ve often written that you do not outsource for cost savings.  Cost savings can be achieved when right sourcing and giving up control, taking advantage of the economies of scale offered by a provider and allowing standard services (the commodity services of your organization) rather than custom services.

I find the commentary that follows the article interesting.  While I might agree that it may be an article for soft selling Google Cloud Services, you would be foolish to think any vendor doesn’t write to their strengths, but also wonder if some of the commentary comes from those IT organizations reluctant to change?

You don’t go the cloud just because you can, you right source it and must manage it accordingly and then you can spend your budget with the greatest gain.   In a CIO article today citing an MIS Quarterly study, for every dollar/employee invested in technology, twelve dollars/employee can be realized in sales gain.  The time for management and innovation investment is upon us and outsourcing the commodity.

How are you investing in the cloud?

Michele

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The economics of cloud computing are driving down the cost structure of business so far and so fast that it’s scary, Google CIO Ben Fried says.

“It deeply disturbed me … in 2006, 2007 consumer companies were forcing efficiencies on a scale never seen before,” Fried said Thursday during remarks at the Bloomberg Link Enterprise Technology Summit in New York.  (Read Full Article…)

The Hub Commentary_

Alex Barrett wrote a nice article a couple of weeks ago that I too wrote about last week.  IT is transforming and dwindling.  I suggest that there will be only a small staff left called “Operations”, there will be architects and there will be an Office of Innovation that resides closer to the business units knitting together the services that grow and manage the business.

Alex provides a couple of nice examples and worth the read and contemplation how your IT Organization will transform this coming year.

Are you part of the downsizing or part of the innovation?  How is your organization changing?

Michele

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Like a hurricane barreling up the coast, cloud computing is gathering strength and expected to make landfall shortly. In some IT shops, cloud is already here, bringing the winds of change along with it.  (Read Full Article…)

I ended last week with a little tongue in cheek humor. I had started the week on a conference call on Monday and as I was looking out the window, a large bird came swooping past my window to land in a tree overlooking my patio.Curiosity of a Scorpion was getting the best of me to figure out what kind of big bird just landed so close. With a handy pair of binoculars I see it is a fairly large owl, that’s kinda cool, but what is it doing. It took a minute or two to discern what exactly it was doing, oh no it’s eating a mouse or rat. This provided my quote of the week, “Eat or be Eaten”.

I posted twice this week, IT and the CIO Fast Forward 5 Years – How Will You Get There? and IT Departments Need to Run Like IT Vendors and it seemed I couldn’t stop finding articles regarding the IT transformation:  (Read Full Article…)

The Hub Commentary_

Nice article regarding the transformation of IT.  I would disagree with the transformation being fueled by the consumerization of IT, but rather the competition that has come into play with the consumerization of IT.  This is the New IT as I call it in many of my posts.

Transformation is already happening and IT is already in the business and it is this competition from the outside presenting the business with options to get things done in a manner that IT has not been able to present services.  It is this competition and requirement to speak in terms of cost, value, right sourced deployment options, driving business growth, etc. that is the catalyst for change in IT.

Why does anyone do anything?  Because someone else is out there working to do it better and faster than the current supplier – competition for change.

The role of IT is no doubt changing and will be a manager of service and integrator of how those services are delivered to be effective in the future.

How is your IT Transforming?

Michele

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As technology becomes easier to use, it becomes more complex internally. That means IT is less necessary in some ways and more essential in others.

There is a paradox in the technology that IT employs and deploys. As it becomes easier to use and simpler to manage, it is actually increasing in complexity. And there is a paradox within this paradox concerning how IT relates to the business. More on that in a bit.  (Read Full Article…)

The Hub Commentary_

IT at the speed of Formula One.  I’ve been writing about transformation for quite a while now and having spent 15 years in Indianapolis, I developed an affection for racing.  It’s hard to develop that affection from TV, you have to see it live, walk through the pits and garages, smell the fuel and rubber, hear the sounds which vary by type of car, etc. to appreciate what goes into racing today.

As an old application developer, I have to say how cool a job it would be to be working with racing teams, on the other hand the pressure for IT and the systems to perform might be too much stress.  To the risk taker go the spoils!

Here is the best quote that concludes the article,  “If [IT changes] reduce the amount of manual work engineers have to do, they can focus on the car and driver,” he says. The team, meanwhile, prepares for the next two races in Spain and Monaco this month.  Maybe Lotus F1 will find that three seconds.

This is IT in tune with the customer and what tuning means to the business, the business happens to be very cool racing with very large payouts for the successful.  This is true in commercial business as well.  Business requires technology and technology is the life blood of competitiveness, growth and profitability.

How competitive is your IT?  Where does your Drive come from?

Michele

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Lotus F1’s IT team made a technology pit stop and changed from a traditional application development strategy to an agile approach. Why shift gears? The pit crew and car designer wanted better data faster — and IT wasn’t about to pass on the opportunity.   (Read Full Article…)

IT is in the midst of a great transformation and wrote about this in a previous blog as referenced by a CIO article and a Forrester blog.  For those of us who have been in and around IT for the past 20 years, we’ve seen this ebb and flow of change.  New technology, growth of service providers, decentralization and then back to centralization and cost containment.  It was desktop computing and LANs, web services and eCommerce and now it is the cloud.  This time is different though, the business is driving and creating the new IT.  There is competition and easier buying models that didn’t exist previously.  I will also state that outsourcing is not cheaper, it is creating the change that cannot be created from within – the new IT requirement.

In the previous post and CIO article, I mentioned IT needing to run more like the vendors they purchase technology from and marketing would become a key component.  Many think of IT marketing as marketing great technology services and uptime within the organization.  It is just this wrong kind of marketing that is driving the transformation for change.  Your business does not care about technology uptime, the business cares about driving out cost for profitability and driving up revenue for growth and profitability.  Marketing of IT has 3 facets:

• Know your services, their cost and value
• Know your competition and their capabilities
• Know the market requirements of your customers

This is a transformation where internal IT is already late for the dance and few possess the capability to enter the dance floor with a perfect tango balancing technical capability and innovative intrigue.  The competition knows this weaknesses and is capitalizing on it.  Technology vendors are also making the shift as to who the new buyers of technology and services are – the business and the service providers.  The difference between the technology vendors and IT is that the vendors are used to identifying markets, trends, shifts and making the adjustments required to capitalize on a market based upon the buyers and their requirements.

Know Your Services

Assess your current landscape of services and future services and where they fall into this simple grid.  This will help you to understand business drivers.  For example:  services for competitive advantage have little care for cost or quality, it is about speed to market.  In order to accomplish this, IT will require the flexibility to deploy with speed and mitigate cost and negative customer impact with controlled risk.  This is service enabling the infrastructure leveraging management technology to perform the monitoring and controlled risk, while the technologists apply the internal IP to the services with the right technology and right deployment options.

This will transform IT into the service managers that are developing in the business today with the underground New IT movement.  I would suggest that the model adopted by IT in their strategy to transform would be applying focus of time and resources as accordingly:

• 50% on services driving competitive advantage
• 30% on services for service quality and service efficiency
• 20% on services driving out operating cost

The competition is focused on addressing the requirement of competitive advantage in your business, this is ITs greatest weakness and the service provider / vendors greatest ability to drive value.  ITs marketing efforts must begin here in developing the holistic strategy of technology, deployment options, cost and value to the business.

Know the Competition

Developing a holistic strategy will include a multi-vendor and service provider approach.  Understand internal strengths, weaknesses and the outside capabilities to drive the highest value, lowest cost solution and deployment.  This would break the traditional cycle of change driven out of frustration to outsource, not value or cost.  Outsourcing is not the lowest cost option, but right sourcing to meet the right objectives to deploy the right solution is IT transforming into strategic.

The competition also has weaknesses in high growth times like these.  The strength of IT is operational focus, while both the providers and IT could benefit from a bit of operational maturity, now is the time to illustrate operational maturity with good management practices, processes and ability to communicate business value.  The service providers are investing in the communication, while taking a risk (controlled risk in some cases) on management in meeting a time to market requirement.  To meet the same time to market requirement within your organization, evaluating how you leverage management technology to automate your processes and provide the communication required for your business, would provide both competitive advantage and allow you to focus your IP on driving new services.

Know your Customers

Typically when you ask IT about their customers, they respond with their users and internal employees.  Here I am speaking about knowing the customers of your business.  Why do they select your company for your services?  What do you do better than your competition?  Who is the competition of your business?

Instead of working to control the environment so tightly and throw up obstacles and barriers to change and adoption of new technology and interactions with both the employees (Service Efficiency) and customers (Competitive Advantage), embrace them.  Understand how and why they seek to use specific devices, technology, methods of interaction, etc. and how to best deploy the right option.  This is understanding the requirement, not necessarily mimicking each and every device and method.  Provide the flexibility, while balancing control and risk.  This is most important when evaluating customer requirements and creating loyalty.

Think about who you prefer to do business with and why in your personal life and bring this into your IT organization to start the transformation revolution.  While I agree that marketing within your organization is relevant, marketing the right services and message will drive the greatest value in your organization.  This is dependent upon knowing your customers, requirements, competition and a focus shift from technology operators to communicating and driving revenue as service managers.

Do you know your services, customers and competition?

Michele

This past week Kim S. Nash, Senior Editor for CIO, publshed an insightful article, “Top CIOs Predict the Five-Year Future of the CIO”.  I’ll paraphrase a few of the key points that I jotted down and stuck out when I read through the article:

• CIO of the future will be an Entrepreneur, Futurist, Global Talent Scout, Connector, Master of Business Metrics
• CIO / CTO Split?  No support for this prediction and fractures the ability to manage / deploy technology and be a strategist
• Big Technology Trends – Cloud, Mobile, Social Media, Consumerization, Big Data, etc. will not change the role
• Manage change, Not Technology
• Set strategy, Not server thresholds
• Technology will change the way a company interacts with it’s customers
• CIO Effectiveness – He/She handles and sparks major business shifts
• Entrepreneur
  • In-house futurist, will be measured by financial measure, will run a business and market like the vendors they purchase from
  • Set aside technology and focus on business outcomes
• Connector and Futurist
  • Will foster partnership with the providers to his company to deliver joint solutions
  • How workers, consumers and suppliers will create competitive advantage
• Global Talent Scout
  • Roles will change from operators to managers
  • Location won’t matter
• Master of Business 
  • Responsible to create new products and attract new customers, new revenue and thus new accountability
  • Innovate

There has been a long standing initiative and talk in the press and analyst papers regarding IT being part of the business and not separate from the business.  However, according to the analysts, more than 90% of IT organizations remain reactive and disconnected from the business.  I would concur with this.  We all attend industry conferences and think about how you answer this question, “What do you do?”.  Most of the time when I ask it, the response is something like I manage servers, I manage UNIX servers, I administer databases, I manage the networks, etc.  Then I look at their badge, see who they work for and respond with, “Oh you sell insurance or investment banking or ……”.

Before I visit a customer, I do a quick read of their annual report, the letter from the CEO and peruse their website so that when I shake the first hand, I have a fair idea what powers their business.  I continue to be surprise by the number of IT technologists that do not know the business their own organization is in or what powers the business, thus setting the easiest to identify priority.  Technology without imagination is a commodity, Technology with imagination has endless possibilities, however, most of us act as mere commodity operators keeping the lights on.  Keeping the lights on carries an annual cost of 1-2% of revenue, the time has come to power the business and drive with technology.

According to a Gartner and Forbes survey of Board of Directors (BoD), 65% of BoD count on technology to drive competitive advantage for the business and according to IDC >50% of IT will be outsourced by 2013.  The role of IT must evolve and it has become an imperative with the advent of competition and new buying models.  Competition with the MSPs/ASPs/ISPs, Cloud, SaaS, etc. has arrived and why the business has the buying decisions and is choosing to outsource IT.  The time has come to transform and the catalyst is the competition.  Kim does a great job describing the role of the CIO and the new face of IT in 5 years.

As a previous analyst in the outsourcing market, I will tell you as I have told many customers, no one outsources for cost.  It is a perceived cost reduction.  What isn’t factored into the equation is 3-7% of the cost of the contract to manage the relationship and the service and keeping overspending in check.  Outsourcing occurs to create change in the environment that is near impossible to do from within.  I wait each day for the new Fortune 500 list to arrive and I will hold it to compare with next year’s list.  Those that make the transformation to power their business with technology will take leadership spots in their industry’s.

Now let’s talk about what it will take to make this transformation.  To achieve the things Kim speaks of, IT must first know what the business is; then how best to use technology to operate it, create competitive advantage, communicate and market results, proactively make real-time changes, and why customers engage to drive future strategy.

What is the Business

In most businesses to drive revenue, you evaluate why customers engage with your organization.  In this case, IT in most cases, doesn’t know the business or the services of the business.  Step 1 must be to understand the business and current services.  I’ve written a previous post on The BSM Hub describing how to categorize and know your services based upon their value to the organization.  This will define how you manage these services and the supporting technology.  All services are not created equal and thus knowing the services and their relevance to the business is the first step to transforming to Service Managers versus Service Operators.

Here is a true story.  I once spoke at a medium sized regional event on the topic of Service Value and managing services in the winter of 2009.  After I finished speaking a man approached me and indicated while the discussion was interesting, IT is not strategic to his organization.  I looked at his badge and noticed he worked for a candy manufacturer.  So my first question was to go after the life blood of the business, the manufacturing line of the candy.  “Does IT have anything to do with the manufacturing line?”, the response was “no”.  Second question, “I know you must have an ERP system, correct”, “why yes we do…….”.  “I venture to guess that sales and distribution to your customers is important business, right?”, “Why yes it is”.  Now he is standing taller.  I mention how in September 1999 Hershey made the front page of the Wallstreet Journal for the poor deployment of an ERP and CRM system costing them Halloween, Thanksgiving, Christmas, Valentines and most of Easter.  The lesson was that the public wasn’t as loyal to chocolate as they are to toothpaste and will buy what is on the shelves at the time.  “So managing and providing high availability of your sales, distribution and customer relationship management is critical to your business, wouldn’t you say?”.  He left with a different perspective than he came to the conversation with.

Companies are in the headlines everyday due to technology failures pointing out that if you do not know your business and what it costs you to be a mere operator, reacting to incidents, the press and the outsourcers will put  value on the situation.  The time has come to know the business, the services and their value and the supporting technology in order to manage it accordingly.

How Technology Supports the Business

Now that we know what the business is, let’s take a look at how the technology supports the business.  It is no longer sufficient to keep the lights on and manage all equipment the same.  Understanding the underlying infrastructure that supports the services defined above will change the way you manage the infrastructure.  Priority must be applied, not just severity of an event, business impact will be factored into the management of the technology.  Service enabled management in real-time must be applied, it is not a nice to have, but a must have.  Given the organization is wasting 1-2% of revenue annually, a service enabling management infrastructure is cheap and paid for before the first year is over.

Many management vendors speak of speed to root cause and speed to restoration.  This is still reactionary IT.   What is required is real-time, actionable intelligence to do something before a business impacting event occurs and avoid that business impacting event.  This now brings me to what many of the financial institutions already know, management is a mission critical service and requires high availability redundancy (as described in a post by my friend Tobin).  Don’t believe me?  So then I ask this question, “When flying on an airplane, do you want the pilot flying without instrumentation?, Then why would you run your business without instrumentation?”.

Now that you know the business and how your current technology maps to those services, it’s time to evaluate the best technologies and deployment options for the services and service enable them with management upfront, not as an afterthought.  Again, go back to the quadrant of services I described earlier.  Just because you have capability in-house to deliver commodity services, that isn’t generally the best choice.  Outsource the commodity.  Keep the competitive expertise in-house and evolve to manage services and put the proper instrumentation in place to service enable the infrastructure to mitigate risk, provided controlled risk for speed to market and provide the real-time actionable intelligence to make shifts on the fly to keep business running and creating quality customer experiences.

Why Customers Engage

Now that you have a grasp on today, let’s now use this new service enabled infrastructure to start creating the strategy to provide  stickiness with your customers, improve the customer experience with technology, creates competitive advantage and driving revenue.  This evaluation is 2 fold:  keeping current customers and gaining new customers.  Look at how customers want to do business with you, what devices they use, where and when they conduct business, etc. and often times creating a higher quality of service to maintain current customers will drive gaining new customers.

True innovation changes how an industry does business, think of eBay in the early days.  These sorts of transformations are rare, however, we are in the throws already of just this sort of transformation with how IT must revolutionize itself into the new IT.  Business is creating the new IT on it’s own by taking business folks with consumer technology knowledge and making the technology purchases in a decentralized manner.  Some call this “shadow IT”, I call it the “New IT”.  They are doing this because the current IT thinks more about managing and not enough about how to use the technology they are so good at running.

Running technology is the commodity, leveraging the IP in house to use technology to drive both revenue and competitive advantage is the new reality.  Now we’re back to where I started with my opening question, “What do you do for a living?”  Know your business, customers and how best to engage with them to drive your business.  Shift the focus of IT because the change is already happening all around us.

As I conclude on how to approach this transformation,  an interesting quote from Kim’s article by Nasir Khan, Executive Director of Infornetics at Blue Cross and Blue Shield Association, the administrator of 38 Blue Cross and Blue Shield health care providers covering 99M people, “Tactical reactionaries will be obsolete”.  This is why I look forward to comparing this years Fortune 500 list to next year’s as I fully expect that there will be a shake up at the top of many industries.  The shake up will occur because some make the transformation and do it rapidly and others remain as operators and commodity IT.

I do not want to leave you with the impression that the first two steps leave the business out.  Starting with Step 1, knowing the services and business, IT must engage with the business, start managing priorities and services as they power the business.  This cannot be an IT project.  The second step of mapping technology and deployment options to the services cannot become an inward IT CMDB project.  Yes, a CMDB does support this initiative, but it is about the services, not the project of creating IT documentation fondly called a CMDB.  Another ascertion I would make is that a CMDB project is of no value, but I’ll save the discussion as  to why for another post.  This transformation cannot be another IT project, it is a business transformation and those that succeed, will lead their industries in next year’s Fortune 500 list.

Investment must be made as a business investment that gives IT the management capability to manage services, manage providers, communicate real-time in business terms and use that management intelligence to drive competitive advantage both with new services and quality services that keep customers loyal.  Drive the cost out of the commodity and drive value  into the revenue.

How are you preparing for your transformation and service enabled infrastructure?

Michele

The Hub Commentary_

This is a fun article.  Reminds me of “The Mainframe is Dying” and yet it is still here.  I tend to agree with Arthur on this one, the data center will live on, but is under great change and the speed of change is coming fast.

This is nothing new to outsource, we’ve been through this before.  The difference this time is that the business is calling the shots.  According to a Gartner and Forbes survey of Board of Directors, 65% of BoD count on technology to drive competitive advantage for the business. The role of IT is evolving and it is an imperative that IT move from reactive and managing technology to proactively managing services and a manager/broker of services and be able to answer 3 simple questions in real time, 24x7x365:

• Are we open for business?
• How are we performing?
• What is our current risk?

Answering these questions requires turning a sea of technical data into actionable, intelligent information in real time. The time has come to make a difference in the business with technology.

The reason for the dramatic claims that the data center is dying, much like the mainframe, is the level of business frustration to drive change in behavior within IT organizations.

How is your IT organization evolving?

Michele

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At the turn of the 20th Century, city planners in New York and other great metropolitan areas were in a state of panic. If population growth continued unabated, their cities would be rendered uninhabitable due to the enormous amounts of manure left behind by all the horses needed to cart food in for the starving masses.  (Read Full Article…)

The Hub Commentary_

Nice article summing up considerations that must be evaluated when assessing a cloud deployment option.  IDC predicts that by 2013, 52% of IT budgets will be dedicated to “OUTSOURCED IT” – ASP, Public Cloud, and Enterprise/Hosted Private Cloud.  There is also a shift in where the budget and where spending decisions are being made – in the business.

As a former analyst in the sourcing space going back to the first ASP/ISP/MSP, du jour of the late 90’s / early 2000, the speed of this shift and the shift in decision making serves as an indicator in businesses to create change to drive the business.  The requirement to move from technology operator to service manager or broker has been there for almost 20 years.  Now there is competition to force the change.

Rarely is outsourcing cheaper, but it does create change that cannot be achieved easily from within.  Cloud deployment for the sake of it still isn’t the right blanket direction.  Looking at deployment options, commodity services, speed to market to drive competitive advantage whether inside or out are all factors to evaluate and consider.

If one lesson can be learned from these historical ebbs and flows between insourced and outsourced services, it should be that of service enablement in order to make the transition to service manager/broker at the time of deployment rather than an afterthought.  An effective service manager/broker will rely heavily on the federation or integration of data in order to manage the services delivered as mentioned by Gartner in the slides attached to the article.

How will you service enable  your infrastructure to deliver service value that powers your business, regardless of technology platform?

Michele

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It’s human nature to want the newest and best of everything, even if the ramifications are still unknown. Enterprises fall into this trap as well, considering they are built and run by humans. It’s kind of the digital version of shoot first and ask questions later.  (Read Full Article…)

The survey, which was conducted in the first half of this year, measures the maturity of BSM initiatives industry-wide. The report provides unique insight into the working relationship between IT and their business counterparts, across departments and roles. It measures the effectiveness of IT service support and identifies the current use and planned adoption of ITIL v2 and v3.  Read More Here . . .

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Nice set of statistics from large, small, global organizations both from IT professionals and business executives.  In 2011 15% of technology buying decisions were made by the business, in 2012 it is expected to rise to 25% and by 2015, 50% of buying decisions will be in the business.  The level of frustration that IT sees themselves separate from the business they enable is driving this trend.  

In a recent Gartner Forbes Survey of Board of Directors, it was found that “65% of Board Members hold ‘high to very high’ expectations for IT strategic contribution to the business in 2012”.  Your business is counting on you to deliver value, are you ready to take the lead?

Are you “keeping the lights on” or are you powering your business for competitive advantage?

Michele

Mobility and wireless network infrastructures are the big takers when it comes to IT budget planning for 2012, our latest study reveals. Even so, organizations are moving to the next stage of the IT infrastructure build-out across multiple budget areas, and our 2012 IT Investment Patterns Study shows how the strategy trends of innovation, integration and reversion are having a significant impact on 2012 spending patterns.  Read More Here . . .

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In this survey results for spending in IT Operations/Management/Governance are the only area with an increase is Data Center Management. Those that are following the lead of the service providers will see this as the management of the technology to deliver that consistent and stable IT performance for business value from my previous post. Mobile delivery options prevail as a leading technology as the consumerization / BYOD (bring your own device) of IT continues. However, these solutions must perform and be available to drive your organizations competitive advantage in the market.  This is the link to business for 2012 investments requiring the stitching together of data from the many systems and applications that are in place today and turning it into real-time actionable information.

Does your IT just run the business or does it drive the business?

Michele

Is the enterprise ready for the cloud? Companies like Google, Salesforce, IBM and others think so and they’re creating solutions give enterprise customers what they want. Cloud-computing solutions are gaining traction across the market. As a CIO, the value of cloud computing is clear. And chances are, if your company hasn’t already deployed cloud solutions, you’re making plans to do so. However, with budget limitations, unless your CEO finds value in cloud computing, it may be challenging to get the solution you want. How can you educate your CEO and convince him or her that cloud computing will be a boon to your business?  Read More Here . . .

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I am still a little lost on the press convince your CEO of a new technology. Shouldn’t we be driving solutions leveraging the right deployment technology to drive competitive edge into the organization. Technology for the sake of a technology has no real value. While I agree with many of the points in this particular article on 10 Ways to Sell your CEO on Cloud Computing, it is still selling technology versus a business driving solution. We as IT have to change our thinking to that of the service providers that are popping up daily in selling our CEOs solutions leveraging technologies that drive agility and quality performance into the business, just so happens they use things like virtualization and cloud computing.

I’ve been working with many service providers as of late and it is reminiscent of the dot com era. Those that will survive and thrive are not just chasing the latest technology trend for the short term, but are baking in the practice that will sustain them for the long term and what business is asking of its own IT organizations, the ability to answer 3 questions:

(1)    “Am I open for business?”

(2)    ”How are we performing?” ”What is the customer experience?”

(3)    ”What is the risk of an outage?”

all in real time so as to take action, rather than reporting on it after the game is over.  The reason most organizations outsource services is not for cost, but for change that they cannot create from within the organization.  The time for IT to change and become the service provider of choice driving value and competitive advantage into their organizations has come.  Time to manage the business rather than convince someone of an IT technology or process.

What do you think?

Michele

Like many CIOs, you may find yourself struggling to innovate in advance of an anticipated economic recovery, while still striving to keep costs down in a decidedly uncertain business climate. And, even though you’re striving to be seen as a valued, senior member of your management teams, the enterprise perception of how much IT contributes to a competitive edge is decidedly mixed.  Read More Here . . .

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As part of its look to the future CIOInsight highlights the Top 3 initiatives keeping CIOs up at night: cutting costs, operational efficiencies and deliver consistent and stable IT performance to the business. These initiatives are neck and neck with the number of organizations that see IT as their competitive edge in the market. Most IT organizations still spend ~85% of their IT budget “just keeping the lights on”, with minimal focus on supporting and delivering upon stable and consistently performing innovative services aligned with business objectives. This percentage of spend is generally ~ 1 – 2 % of revenue spent annually operating rather than driving.

The cost of not evolving is far greater for IT organizations than the cost of transforming and adding value to their business.  Buying decisions are also migrating to the business because they have more options and they are creating change.  Outsourcing is never done for cost savings, it is to create change in the environment that the organization is unable to create on it’s own.

Time for change may have arrived in 2012.  Good set of insights.

Michele

It’s that time of year when the press is filled with the latest IT predictions for the coming year. A couple of articles and surveys caught my attention as they relate to the unspoken imperative of connecting to the business to drive the business for competitive advantage versus just operate the business. This practice, while not called out, is Business Service Management and is the heart and soul of success for many of these initiatives.

In the Gartner Forbes 2011 Survey of Board of Directors, “65% hold ‘high to very high’ expectations for IT strategic contribution to the business in 2012” and “52% rate ‘maintaining competitive advantage’ of ‘extremely high importance’…”.  It is no longer IT and the business, IT enables and drives the business.  The key question is, “does your IT operate or power your organization?”

As part of its look to the future CIOInsight highlights the Top 3 initiatives keeping CIOs up at night: cutting costs, operational efficiencies and deliver consistent and stable IT performance to the business. These initiatives are neck and neck with the number of organizations that see IT as their competitive edge in the market. Most IT organizations still spend ~85% of their IT budget “just keeping the lights on”, with minimal focus on supporting and delivering upon stable and consistently performing innovative services aligned with business objectives. This percentage of spend is generally ~ 1 – 2 % of revenue spent annually operating rather than driving.

There is also an equal amount of press on new technologies and how to convince your CEO of a new technology. Shouldn’t we be driving solutions leveraging the right deployment technology to drive competitive edge into the organization. Technology for the sake of a technology has no real value. While I agree with many of the points in this particular article on 10 Ways to Sell your CEO on Cloud Computing, it is still selling technology versus a business driving solution. We as IT have to change our thinking to that of the service providers that are popping up daily in selling our CEOs solutions leveraging technologies that drive agility and quality performance into the business, just so happens they use things like virtualization and cloud computing.

I’ve been working with many service providers as of late and it is reminiscent of the dot com era. Those that will survive and thrive are not just chasing the latest technology trend for the short term, but are baking in the practice that will sustain them for the long term and what business is asking of its own IT organizations, the ability to answer 3 questions:

(1)    “Am I open for business?”

(2)    ”How are we performing?” ”What is the customer experience?”

(3)    ”What is the risk of an outage?”

all in real time so as to take action, rather than reporting on it after the game is over.  The reason most organizations outsource services is not for cost, but for change that they cannot create from within the organization.  The time for IT to change and become the service provider of choice driving value and competitive advantage into their organizations has come.

In a recent CIOInsight survey results for spending in IT Operations/Management/Governance, I see the only area with an increase is Data Center Management. Those that are following the lead of the service providers will see this as the management of the technology to deliver that consistent and stable IT performance for business value. Mobile delivery options prevail as a leading technology as the consumerization / BYOD (bring your own device) of IT continues. However, these solutions must perform and be available to drive your organizations competitive advantage in the market.  This is the link to business for 2012 investments requiring the stitching together of data from the many systems and applications that are in place today and turning it into real-time actionable information.  Another Survey illustrating many of these and further results is the BSMReview.com 2011 BSM Maturity Benchmark Study.

In 2003 Nicholas Carr wrote a 28 page article for the Harvard Business Review, “IT Doesn’t Matter”.  In the article he discussed the outsourcing of IT and the changing roles within IT.  Now fast forward 9 years and the advent of the cloud, the explosion of service providers and new buying options.  The business is purchasing on its own and creating “The New IT” for those that are not evolving fast enough.  Leading analyst firms predict that by 2015 50% of all IT buying decisions will be made by the business, not IT.

I have had many conversations with organizations that are replacing their commodity monitoring tools from the Big 4 Vendors with lower cost options and turning that savings back into the investment of turning their IT organization into service providers of choice creating business value.  The investment is in the real time Business Service Views that transform the IT organization into proactive Service Delivery Managers versus reactionary red light / green light monitors turning the sea of data into actionable, intelligent information.  The service providers arealso making the very same investments to illustrate operational capability and market differentiation to capture market share fast during this great period of change.

I’ll quote from a long time customer who has leveraged the Operations Center solution for many years now. Their implementation, while it started technically as a single-pane-of-glass, has evolved into the trusted Business Service view and situational awareness of the environment running the business. Because this customer made the transition to trusted adviser and communicator as to the health of the business, he is trusted with purchasing decisions because as he states, “I provide value”. This is the secret sauce – providing business value and relevance for IT.

2012 will be an interesting year without a doubt with new technologies like mobile and cloud computing entering into leading IT organizations, the risk takers seizing the opportunities to drive their organizations.  The leaders will emerge as those risk takers who also bake in their operational management and efficiencies with controlled risk to deliver consistent, stable performance and value to the business.

Michele

“Data, Data Everywhere — Not a BIT of Intelligence Anywhere”

What is Business Service Management simply and why does it appear to have waned in discussion and answer the question has it failed, is the concept required, what’s new? Yes, the number one complaint in the market is still that IT does not understand the business, the level of frustration is rising and fuels the fire driving cloud computing and hosted services.

Business can buy easily, don’t hear about operational processes, technology and why things don’t work. They hear a service, price and value delivered.  So what is BSM and why did it fail and why is it still the fuel driving the outsourced market.

It is really quite simple, it became an marketecture umbrella for many over a large collection of tools focused on silos of management capabilities, ITIL tools and processes. I recently had the privilege to discuss the topic with my friend Jean-Pierre Garbani of Forrester Research and his recent article:  I&O Execs:  It’s Time to Rediscover BSM JP summed it up well in the opening, “BSM today has morphed into an Information Technology Infrastructure Library (ITIL) support solution,;rather than the pure infrastructure and application management vision that appeared seven years ago.”

As I reviewed many RFPs and spoke to many organizations during this era, the executive overview is always about connecting to the business and the need to manage IT in lock step with the business, but the requirements reviewed and projects are always the same:  ITIL incident, problem, change, configuration, asset management and generally service desk technology.

The second most popular technology during this era were the discovery tools that held the promise of mapping logical services out of physical infrastructure. What was quickly discovered is that it was a lot like drinking water from a fire hose. Tons of data that needed to be reconciled and for what purpose: business service logical mapping or technology configurations for the tuning and management of the physical infrastructure. What was difficult and could not be addressed auto magically with a discovery tool is the logical connection to business services.

So once again the concept is spot on, the implementation goes straight back to an operational focus – what IT knows. However the answer stares us in the face, we have tons of “data”, what we need is intelligent information by which to take the appropriate action at the right time. “Data, Data Everywhere –> Not a BIT of Intelligence Anywhere”. Many tools provide a wealth of fantastic data – performance, availability, configuration, process records (changes, incidents, problems), etc. by which to tune the technology, but it is the aggregation of all this data that transforms the data into intelligent information. There is no one magical tool that will deliver Business Service Management, it is a mindset and the transformation of the data when it will begin to speak to you as service information.

In one article, there were some recent survey results the author found shocking. What I find shocking is that after 20 years IT is still making a grade of a D+. We are in the midst of the usual circle that hinders recognizing the “B” of BSM – the Business. A focus on new technology for what is perceived as cost savings by acquiring technology on demand and not managing the hardware and software to operate the service. However, in the long run without strategy and management focusing on business objectives, what appears cheaper will have higher long term costs. Why are cloud based services and service provider offerings so popular? Under the veneer of the agility it brings organizations is the frustration business has with their technology organization. It is the failure of IT being exposed and outsourced.

Survey results continue to illustrate the number one global concern as the lack of understanding business and the priority and impact of technology on the business. The number one reason cited for lack of ITIL adoption/success was lack of management commitment. Those 2 citings alone speak volumes to me. I ask why there should be a focus on ITIL and why the number one focus isn’t driving business growth? This upside down focus is the fiery failure of the marketecture of first generation BSM.

Why aren’t we talking more about new and unique services driving business growth? Business moving to the cloud removes the requirement for operationally focused projects (ITIL) that have not delivered business value. In a recent Harvard Business Review survey, an observation was noted that the role of IT is shifting from “constructing and operating” to that of “acquiring and deploying”. I’m not so sure I agree that it is so much about deploying as it is about “service managing” and management of the suppliers. This will require very different skills and the transformation of roles within IT and will force the focus on the Business value.

The time has come for the Business Service Management imperative and Transforming Data into Intelligent Information focusing on driving business value. This does not require more monitoring tools and IT processes as much as it requires the following:

• Service Identification, Classification, Business Prioritization (see previous post)
• Integration and Aggregation of Data Sources
• Service Mapping based upon Data Sources
• Service Rules Weighting Data and Thresholding Data
• Service Visualization
• Service Trending Over Time
• Service Intelligence in Real Time

IT organizations already have a wealth of data from their multitude of management tools. While I often hear, “we don’t know what our services are or we cannot map our services”. Generally, the data from several data sources currently in place can get to a 70% + service view with an aggregating, reconciling and visualizing approach and technology transforming the wealth of data into intelligent information. What is the value of this Transforming Visualizer of Intelligent Information or rather what is the cost of not having the Transforming Visualizer:

• A single service impacting event costs your organization 1-2% of revenue
• 85% of the time IT is Bulb Monitoring and reacting costing your organization 1-2% of revenue annually, every year
• >80% of service impacting events are caused by poor process, lack of impact visibility and business correlation

Millions of dollars are spent annually maintaining, bulb monitoring and reacting. What if just 25% of what is currently spent is applied to the Transforming Visualizer? A 75% cost savings and the ability to monitoring revenue growth instead. This is what I still find shocking as I continue to read and speak about the same D+ grade after 20+ years.

The environment is getting more complex, the roles are being forced to change with the outsourcing of operations to the cloud and the requirement to drive business growth is an imperative today more than ever. The Perfect Storm of technology, service providers and business requirements to drive service value is in full force.

As JP points out in his recent paper, availability of services and the proactive service impact knowledge in controlling change in the environment both require the connection to business priority and objectives and plainly, knowing your services. I had the opportunity to speak with Thomas Mendel, previously of Forrester research on just these two topics in these two podcasts: BSM in the Cloud: Managing and End-to-End View Made Simple and BSM in the Cloud: Configuration Complexity Made Simple.

BSM is an imperative and will transform in focus to the aggregation of data, making the connection to the business to manage with priority in mind both for availability of services and the compliance of change to services in controlling the infrastructure. Transform your data into Intelligent Information with a business focus and a BSM 2.0 approach.

Business Service Management – Imperative or Not?

Michele

The Hub Commentary_

I stumbled upon a great article written by an old friend of mine, Kevin Cunningham, from a previous software life.  Now more than ever the alignment of IT and business as I posted from an article regarding IT roles yesterday is a requirement.  The thought that IT is separate from the business is an antiquity.

I agree with Kevin, just illustrating that you can pass an audit knowing that things have changed, who changed them and were they approved is not enough.  Managing and mitigating risk while providing flexibility to apply the right technologies to drive the business forward.  New technologies and customers are driving shifts in how they expect to do business, when, where and from many devices.

As Kevin states, no one technology addresses all aspects and it will be key to bring the data together from each of the supporting technologies into a live view of the services of the business, assessing performance, availability and security.  Dynamic and mixed environments will continue to push IT organizations and will be led by the customer’s expectation of how they want to do business.  Those that embrace these technologies and put the management intelligence in place without restricting the desired flexibility will lead their markets.

How do you see the convergence and management of infrastructure and security as services to your business?

Michele

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One of the consequences of the global recession two years ago is a significant increase in IT risk facing global companies.

IT risk – the threat of negative consequences resulting from the operation of information systems – has spiraled upward for multiple reasons: large-scale mergers, acquisitions and divestitures and the resulting need to consolidate people and systems; greater use of IT hosting and outsourcing; the shift to replace full-time employees with temps and contractors; and new technologies like cloud and mobile computing. As a result, CIOs face a massive challenge: how do they balance the need for flexible and open access to their company’s IT infrastructure (so business can be conducted) with the need to mitigate IT risks associated with that access (so bad things don’t happen)?  (Read Full Article…)

The Hub Commentary_

The number of IT jobs is on the rise, however, the roles in hot demand are new roles illustrating the transformation of IT.  “The notion that IT is separate from the business has faded into antiquity.” This is a refreshing trend in terms of driving revenue and growth for the business and economy.

“Business architecture is about making sure the whole business holds together,” says Forrester Research analyst Alex Cullen, who researches IT strategy and organizational planning. “It’s a role built around business planning, pointing out opportunities to utilize IT more effectively” in sales, customer service, and other key areas.

The catalyst to mimic the service providers and drive revenue is taking hold and those that adopt the business service management practice and the emerging roles in IT versus continuing to “keep the lights on” will take their business forward to lead their industry.

The remaining roles include:  Data Scientist, Social Media Architect, Mobile Technology Expert, Enterprise Mobile Developer and Cloud Architect.

Technology is evolving, the way we interact with customers and drive business is changing and the roles to support it and drive the transformation of the new data center and IT are evolving as well.  The manner in which we will monitor and manage technology is evolving as well from bulb monitors to service performance managers and business analysts in using technology to drive revenue first and cut cost second.

Are you driving change and transforming your IT organization?

Michele

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IT job seekers have real reason to hope.  No fewer than 10,000 IT jobs were added to payrolls in May alone, according to the Bureau of Labor statistics, reflecting a steady month-over-month increase since January. And in a June survey by the IT jobs site Dice.com, 65 percent of hiring managers and recruiters said they will hire more tech professionals in the second half of 2011 than in the previous six months.  (Read Full Article…)

A friend of mine, Richard Whitehead, recently posted two blogs (Two Lawyers and Shakin Up) on the topic of service level agreements, contracts and lawyers for cloud based services.  My favorite quote in these posts, “Send lawyers, guns and money”.   All I can say is, if it comes to lawyers, guns and money, it just ain’t worth it.  Far too much time is spent on the negotiation and perceived service missteps than is put into the quality of service and driving revenue.

This is a topic near to my heart as I embark this week to draft my own presentation on the topic, Cloud Service Contract Get Stormy, for the upcoming Data Center World Conference in Orlando later this year.  As an analyst, I would review many outsourced service level agreements against industry best practices, reasonableness and guidance regarding how to manage services.  There are a few common pieces of advice I suggest:

• Service Accountability – you as the IT organization maintain ultimate accountability for the service to the business and your customers.
• Operational Processes – you as IT no longer own “how” the service is delivered only that it is delivered in a manner that is acceptable.
• Operational Tools – you as IT no longer own the management tools and technology that monitors the delivery of service.
• Service Levels – accept the standard service levels, drive toward economies of scale and standardization.
• Penalties – protect for gross negligence and harm to the business, not perfection for the sake of perfection.
• End of Contract – data, who owns it, how is it transitioned – be sure the transition is covered to avoid hidden costs.

The first thing I suggest that organizations review are their services – not all services are created equal.  Some drive revenue, others drive out costs from the organization.  I’ve covered this categorization in another post Finding Your Services.  Classify your services and source the commodity services that are not unique to your organization.  The more unique, the more mission critical, the less appropriate it is to outsource unless you are early to market and do not have the talent in-house and need to buy it.  There is risk and reward to buying talent to deliver a market changing service and there is some forgiveness in the market for hiccups in this scenario.   Source with clear objectives and manage as such.

The second thing I usually end up discussing is “how” the service is delivered and “managed”.  Do you tell your electricity provider how to deliver electricity to you home or business?  Do you tell them the proper management practices and tools to use to deliver electricity?  And yet having adequate power is a piece of delivering IT services.  I believe what makes the sourcing of IT services different is that we as IT organizations have some expertise in delivering the commodity services and while we want to insure quality service, we need to step back and define the service and performance objectives and manage to those shifting our role from service deliverer to service manager.  It is up to the service provider to deliver the service and meet the agreed upon objectives.  The role of IT is shifting in these mixed environments to a service manager and communicator of service to the business as it drives revenue.  This is illustrated as the hottest growing job in IT is a Business Architect according to a recent article in InfoWorld translating technology as service performance to the business.

The next thing that comes up is the viability of the service provider.  This takes us slightly back to the previous paragraph to insure the provider has processes, practices and tools in place to reasonable manage the service without mandating how the service is delivered.  There are other points of reference here as well regarding their financial viability, duration in business, other customers, references not just for the good service, but references when service failed and how the provider responded.

Service levels and penalties is another topic of discussion and where visions of guns and lawyers dance around.  Go back to step 1 and remind yourself of the value of the service, don’t demand unreasonable service levels as they will come at a premium price and thus don’t impose high penalties also raising the risk of the service to the provider and thus cost to you.  Understand reasonable levels of performance, availability, responsiveness and security.  The more custom and imposing your SLAs and penalties, the higher the cost of the service and thus the higher the cost to manage the service.

Finally, do not overlook the end of contract transition.  Insure there are no surprises or hidden costs in transitioning systems, data, etc.

The final, final discussion is monitoring the performance of the service.  Budget 7% of the contract value to manage the vendor and service.  This includes the monitoring of the service to avoid those perception versus reality discussion of the health of the service.  It is still ITs responsibility to manage the service and know how it is performing to take appropriate proactive action in the event there is a hiccup whether that be to deploy additional resources, re-direct resources, etc. for services delivered in-house, by providers or in the growing mixed environment.

In the end, the choice comes down to “pay now or pay later”.  I find it money better spent to monitor, manage and nurture the service provider relationship in the delivery of quality service over paying a lot more to bring out the guns and lawyers at the end.  The first drives revenue growth, the second illustrates failure and lost revenue to lynch a scapegoat.

I too listened to the customer speak that Richard references in his second blog post that does business with a handshake and works toward driving revenue.  Lawyers and Government are not the answer to regulating cloud service providers – drive your own destiny and revenue.  Ok….back to my presentation, come to Data Center World and hear more!

Michele

The Hub Commentary_

This is a topic I lean a little less toward IT driving than I do marketing as a technology to reach customers and prospects.  Most social media tools are external to an organization and not really something I believe IT should own and more the realm of the marketeers to use to reach out to their customers and prospects.

Now as a rogue marketeer in my own organization, I will say that there are a couple of tools and items that some technical assistance would be nice.  This comes in the forms of blogs and websites you might use in your social media strategy.  It is true, as a rogue, you can set-up your own blog and website hosted by others with a mild amount of technical expertise, however, I’m sure there are others who could have moved me faster.

The other item I’ll mention is that when these rogue efforts happen, who owns the domain, who keeps it going after the employee leaves, etc.?  These are items where the IT organization could come in handy to negotiate contracts, insure domains are with the company, etc.

I believe the social media strategy is a marketing strategy, however, I do believe there is a supporting role where IT should be involved and with Service Managers in place marrying IT and business objectives, this could be well managed.

How does your IT organization work with Marketing on Social Media, customer outreach?

Michele

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Social technology is coming into every organization whether IT wants it or not. The adoption of social technologies to support business and customer needs has been fastest outside of IT — often with IT playing catch-up and struggling to provide value. CIOs are at a crossroads where they can either choose to lead IT toward social business maturity or sit back and watch as the rest of the organization pushes ahead, leaving IT in social business obscurity. The choice is easy, but the execution is difficult.  (Read Full Article…)

The Hub Commentary_

Another nice piece from Forrester regarding business transformation and the roles of CIOs due to the ability for the business to buy their own technology.  The real message is that the budget is being controlled by the business and less by the IT organization forcing IT to better communicate the value of underlying technologies and how they will help in growing the business.  The focus has to always be on the business even when it is internally focused projects.

In order for this transformation to be successful, there is the emerging role of  Service Managers requiring tools and management as services rather than technologies measuring services in real time as to their value to the business and how they are performing.  Thus this incorporates the measuring of the mixed environment of internally provided services and those that are coming from external service providers.

The service providers create competitive pressures for IT to begin this transformation sooner rather than later in working with the business to begin driving growth of the business with technology.  IT must become agents change and take the leadership role in driving this transformation.

Are you are driver or rider?

Michele

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As you may know, I recently was named the Research Director for our CIO team — a team of highly accomplished and experienced analysts at Forrester. One of our first tasks as a team was to define the current changes in the technology and business landscape and develop a cohesive view of what this means for the role of CIO.   (Read Full Article…)