Archive for the ‘SLA Management’ Category

This is a guest post by Blair DeSio, Senior Solution Consultant at Digital Fuel.

The demand to reduce cost within IT departments is a key driver to the expanding growth of outsourced services within organizations worldwide. Heck, we at Digital Fuel have seen some organizations reduce IT departments to a bare minimum and outsource almost everything. The potential for cost savings is real and many organizations are seeing this cost savings greatly impact the bottom line of the company.

Unfortunately, all too often the move to outsource does not provide the value or savings that were intended with one glaring root-cause; poor, ineffective or no governance of these outsource providers.

In an earlier post, I briefly wrote about the four governance disciplines (and their associated processes) as the key to effective governance. These disciplines are:
1. Performance – including the process that manages the contractual obligations (aka: service levels) expected from your outsource provider.
2. Financial – including the validation of invoices coming from your provider.
3. Relationship – such as the levels of satisfaction by you and your customer (the business).
4. Contract – including the management of contract changes and contract issues/disputes.

But don’t take my word for it… The leading outsource governance experts in the world (such as TPI) use these disciplines and processes to ensure that their clients get the value they are hoping to achieve from their outsource engagements.

The value and savings realized with an effective outsource governance practice more than make up for the costs associated.

Each governance discipline includes a set of processes intended to ensure the most successful outsourced relationship possible. While each process provides value, the best chance for success comes with the use of all twenty processes. However, in our experience most organizations start with a subset of these processes and see the value immediately. The most common processes are:

- Service Level Management (Performance) – Make sure you manage the business services that are being delivered to YOUR customer (the business), not just the underlying metrics. (See the earlier post covering this topic.)
- Invoice Validation (Financial) – Do the quantity and cost (and quality) of services match your expectations?
- Performance Credits, Earn-backs, etc. (Financial) – This is very much related to the two processes listed above. If a supplier misses on a commitment, how is the penalty assessed?
- Contract Change Management (Contract) – These contracts change over time, how are you tracking and managing this change?
- Customer Satisfaction (Relationship) – It is important to understand if the services provide meet the needs and expectations of the business.

Effectively deploying and managing these governance processes is critical to the success of your outsourced relationships. Poor governance can (and typically does) lead to value leakage and dis-satisfied customers. Effective governance can lead successful delivery of services and tremendous value to the organization… and the cost savings you intended to see.

This is a guest post by Blair DeSio, Senior Solution Consultant at Digital Fuel.

ITIL V3 has gone a long way to help IT organizations go from being a “necessary evil” to being a true enabler to the business.  The underlying processes such as Incident, Problem, Change, Configuration, Release Management, etc. have established a level of professionalism but the real impact to the business comes when IT establishes a Service Level Management discipline to the organization.  Unfortunately, too many organizations that do some form of Service Level Management are really just managing to do underlying metrics, missing the real value this disciple can provide.

There are a number of true benefits that come from an SLM practice, including:
♦Clearly understand how you are meeting your commitments to the business.
♦Improve the performance of services delivered.
♦Lower the costs to serve by identifying the most cost effective alternatives.
♦Prove the value you are delivering to the business… in business terms.
♦Understand the root-cause of potential issues and prioritize actions based on business impact.
♦Allow IT to better communicate expectations to the business.

To truly get this value, it is critical to manage the delivery of the Business Service (thus the term “Service” Level Management) and “manage” the inherent processes to this disciple and not just “monitor” the performance of metrics.  This difference is subtle, but these differences DO impact your customer – the business you are tasked to serve.

Since the year 2000, Digital Fuel has been working with many of the world’s leading IT service providers.  In this time we have seen many best practices for effective and cost-conscience service delivery and we have seen this market mature significantly.  In today’s IT environment, your organization is being compared to these leading IT service providers.  Don’t be left behind by simply monitoring ticket performance – the most common metrics being monitored.

A true Service Level Management practice includes several key items:

♦Agreements with your “customer” detailing your commitments to that customer.  A formal (or at least semi-formal) agreement with your customer goes a long way to establish your reputation with the business.
- Be able to manage the workflow necessary to ensure your customer is in agreement with the “Agreement” (i.e. approval and communication processes).
- The details of these agreements will change over time, so be prepared to handle this change. A historical view of this change is also important – keep that audit trail.

♦A “catalog of services” (not to be confused with the request catalog where end users request laptops, or office moves, etc.) that maintain a structure of a business service (that include service levels, financial details or any other attribute).
- Data to accurately manage service performance will come from many disparate sources (monitoring systems, CMDB, ACD, business applications, etc), not just tickets.  Being able to correlate that data to understand service impact is critical.

♦End of month reporting.  You need to demonstrate to your “customer” how you are performing.
- If you really want to make an impact, include the value added analysis that shows that you have the interests of the business in mind.

♦Ongoing visibility across the organization (Executive level, service delivery level, even to the BU) that includes rolled up service performance with root-cause analysis available.
- The more proactive you can be the better.

Managing the financial aspects of your service delivery is critical in today’s environment, but dollars (or pounds, Euros, etc.) are just one factor in understanding the complete picture of service delivery.  Metrics from tickets only begin to complete this picture.  Only by including a true Service Level Management disciple can you understand the full story and be able to meet your commitments to the business.

This is a guest post by Blair DeSio, Senior Solution Consultant at Digital Fuel.

It is becoming very clear that organizations world-wide understand the importance behind deploying tools to help manage the financial aspects of the services delivered by IT. The pressures to reduce costs and provide better transparency to the business continue to grow and IT departments are responding, but there is still more to do to truly be effective and accountable to the business.

Part of providing better transparency to the business is putting delivery in a context that the business can easily understand, and that context is business services. Through a business service, departments within the organization can better manage demand (ideally reducing overall spend), IT can better manage the delivery of these services and communication between IT and the business will be more effective.

With the costs of business services more visible, and with business users becoming savvier, the business wants to know what they are getting for this cost. And in some cases (a trend that is continuously growing) wants to know if there are better alternatives to these services provided.

Additionally, when faced with cost optimization exercises, dollars is only one aspect of the decision making process. To provide this greater level of detail and to ensure you are meeting the needs of the business, service quality and performance must be factored into this overall transparency and decision making processes.

Service quality and performance is more than just managing tickets (more on this on an upcoming post), it includes delivery processes and business logic stemming from multiple disparate data sources. When handled properly, this service level management process demonstrates that you understand the needs of the business and how the business needs these services delivered.

From this complete visibility the business can make better strategic decisions that drive demand and IT can better manage the strategic decisions that drive delivery.

This strategic decision making is a key driver to the tremendous growth in outsourcing various services or parts of services. The potential to save costs through these alternative delivery methods is clear; the realization of this cost savings is not so clear and all too often misses on its intended goals.

The most common reason for missing these goals is simple (well, not so simple really)… ineffective or no vendor governance.

One very important aspect to effective governance is managing the SLA (or multiple SLA’s) with the vendor (and not just letting the vendor provide reports 2-3 weeks after a reporting period has ended). Seeing the performance of these outsourced services proactively throughout the month ensures that the service is delivered as expected (and you’re getting, at least one major part, of the value you expect).

The other important aspect to effective governance is managing the governance processes associated with outsourcing. These processes fall into four distinct disciplines; performance (with SLA management being one of these processes), financial (such as invoice validation), relationship (such as customer satisfaction) and contract administration (such as contract changes). We will have more on this subject in an upcoming post.

Effective governance of suppliers and proactive management of service performance (both internal and with suppliers) is absolutely critical to ensure that you are providing the best value at the lowest costs to meet the needs of the business.

I have to be honest, after leading the SLA & KPI Management market for years we internally thought it a dead market. We thought that all was said and done in that space and that we had a nice ride on it.

As good, focused businessmen, we focused all our efforts towards the up and coming market of IT Financial Management, in which we played for years but seemed to really pick up only in the last two years.

Guess what? The SLA deals kept on coming and even more importantly, after directing our sales team to not sell both together, they came back with more and more feedback from customers who wanted SLA in tandem with IT Financial Management.

Well that’s a pleasant surprise! But what’s behind it? It’s very simple. Once you know the TCO and Unit Cost of services, and allocations are done accurately, you need to make decisions as to what are you willing to spend money on and how much.

But how do you do that in IT? You set a business SLA and see if you are willing to pay for it. Are you willing to pay 100K more annually so that your response time for non-critical applications is 2 minutes vs. 30? Are you willing to have your expense management system down on average 4 hours per month except for the last week of the month rather than 30 minutes but avoid 200K annually?

And the examples go on and on. Bottom line: If you are planning, showing, charging and optimizing IT cost, you must measure value.

Long live SLA’s!

Never stops surprising me how right we were 10 years ago assuming that as the world shifts to an economy of services, demand for SLA management will grow.

Technisource have started using our SaaS SLM solution the other day. Their Support Services division will manage their performance and SLAs to their customer base, making sure they adhere to their commitments in a cost-effective way.

Technisource joins a long list of commercial service providers, MSP’s and Cloud providers using our solutions to manage SLA’s, including IBM, Cisco, BT, CSC, PWC, SIS, Scisys, O2, Steria, FITS, Telus, Level3, and many others.

It is funny to think about the evolution this market of technology service providers has gone through in the last 10 years.

When we started out, Application Service Providers (ASP’s) were the next big thing. Then came the era of the mega data center providers – Exodus, Digex, UUNet just to name a few. Next came the era of outsourcing. Everyone was outsourcing, off shoring, near shoring. In the years post the 2001 economic crisis, Wipro, Tata, Infosys, IBM Global Services, Accenture and many others all made a good buck. Then came the days of the MSP, the managed service providers and today it is all about cloud providers!

These are all steps in the evolution of enterprises consuming IT and Business Process Services as a utility, like gas, electricity, or water. We are not there yet but we are darn close.

For us this is all good news. The more services and alternatives available, the greater the need for cost and service level management, and that is what we do for a living! Life’s good!