Engaging the bored board

Why is it so difficult to sell service management and the ITIL framework? After all it’s just about common sense. Michelle Major-Goldsmith, head of service management training at Sysop and head of professional service, David Stephens offer some advice.

Imagine your typical IT manager, he is focused on the IT infrastructure and therefore engages in conversations about IT in a technical way, proudly vocalising about what the hardware and applications do, how they do it, at what speed and for how long.

This is also how the service management piece plays out too. We hear comments such as, “Our team have attended a brilliant set of ITIL courses. They now know how to write and improve processes for Incident Management, Problem, Change, Release, and even how to design a CMDB. It’ll be great, we will do things the right way, we’ll know where to go to find information; we’ll know exactly where our infrastructure is. More than that, we can look at what’s going wrong and know exactly what affects what. Best of all, we can do proper financial management and surely that will please the board?”

However, the board are sitting in their offices, thinking about different things. In short, there are two sets of dialogue, coming from two directions, from the very people who should understand what each other are talking about. Consider the quote in the ITIL books: “IT is at the heart of every business”. It may be so, but then why is it that the focus of IT plays out like this:

We hold review meetings, and what do we talk about? Two things – how good we are or how bad we are. Either way, it is a view of IT, from an IT perspective, talking about IT-focused performance. We’re consistently brilliant at one thing in IT and that is providing endless statistics about how full, empty, fast or slow something is, depending on what we are trying to prove or cover up. However, this doesn’t mean much in terms of communicating with the board. Where are the links between the demands of the organisation and the way the services support them? It tends to be just a pile of statistics showing that more money is needed to prop up IT.

Put yourself in the shoes of a CEO for a moment. She thinks, “I want to grow this business. The recession is on its way out and we can see through the gloom. We need to grow this year by around 10 percent, but we can’t increase the cost base by more than three percent, so everyone will have to get by on a minimum, I especially don’t want that IT manager coming to me with excuses about ‘performance this and terabytes that’. We need to achieve growth at minimum cost.”

If we actually start to have conversations with the CEO about her business rather than IT we might learn something. As we know from our ITIL tomes, effective service management is about providing value to customers without the associated costs, risks and complexity. The CEO isn’t interested in throughput, disk space, transaction rates and CPU. Her focus is on the success of the business and in making sure that it operates effectively, and delivers growth.

What the IT manager really needs to do is ensure two things:

1. That he understands what that business is actually trying to achieve – its objectives;

2. Get the CEO to understand how important IT is in getting fulfilment of the those objectives.

The CEO has demands set by shareholders and customers. She wants to economise where possible and also grow the business. The IT manager needs to be able support this strategy by providing IT services to support the business processes. He knows that he can use service management to enhance the delivery of the services, the processes and the supporting technology. This in turn should lead to a more robust and responsive IT offering, and for the CEO less down time, more productivity, and of course that all important growth.

A business will always need to grow or it will stagnate or worse, die. IT has to help the business grow! But what do we mean by growth? IT may have entered into a dialogue with the CEO, now it’s time to show we really want to understand the business strategy and start questioning the growth.

Establish how the business intends to grow. Depending on the growth strategy chosen, there will be different implications. Simply taking the message of growing the business could lead to all sorts of ill advised projects and purchases, most of which will achieve no more than further denting both the reputation of IT and the already restricted budgets.

In the commercial world, we have three typical definitions for growth:

1. Increasing the value of each sale. This may actually be through increasing the price of the products or increasing the basket of products each customer buys;

2. Increasing the number of customers, so you have more people buying the same things;

3. Increasing the frequency of sales, so people buy the products more often.

Each of these has a subtly different impact on the infrastructure needed to support them. Increasing the cost of products may just mean a simple project to ensure all prices on the web site and in stores are all increased by a percentage. Potentially there are no hardware/software changes.

By increasing the number of customers, there may be a need to expand transaction processing capacity or even integrate IT with another organisation if there was a takeover to increase market share. This is likely to be a major project in either case. Frequency of sales may mean a need to increase current network, processing and storage capacity. These are simplistic views, but demonstrate the ways it can go wrong if there is no real dialogue and understating of objectives and strategy. In the public sector it is expressed in a slightly different way:

1. Increase service take-up. Encouraging your current users to use all the services available to them and use them more often;

2. Provide services to more people. Take the services you have but offer them out to more people. Retire legacy systems, encourage use of your new investments;

3. Provide more services. Do things internally that have typically been done by third parties in the past. Growing and enhancing the portfolio with some cutting edge services.

So when the business talks about growth, they want to know that they have control of the supporting infrastructure. However, the business considerations tend to be:

• The logistical support of what they are doing – how will it be supported and delivered?

• How reliable will the performance be? The first time the infrastructure fails we’ll lose customers to competitors.

• Do we have the right assets to support this?

• How do we market this drive? Do we have the capability to promote it and deliver this growth?

• What about the finance? How do we achieve this growth with the cost restrictions in place?

The IT manager is thinking, “these are very important considerations but I need the business to understand not just logistics and warehousing and market spaces, I also need them to consider the impacts on the IT services. I don’t need the CEO to understand the technical detail. I do need to engage her in how the services are being used.”

Consider the way the role of it has changed. In the ’70s IT was used to replace clerical tasks such as payroll and invoicing. In the ’80s and ’90s focus shifted and it was used to provide essential services to support vital business processes. In the 21st Century the business is increasingly dependent on IT for competitive advantage. Take the low cost airlines as an example. Could they begin to operate without their online booking systems? Consider how they reduced their administration costs by getting us to check in on line and even print out own tickets. Today IT is the business. Most modern businesses simply can’t operate without it!

In reality what the CEO is thinking is now mirrored by the IT manager but from the other direction. The CEO is concerned with how all the parts fit together and are supported to deliver the growth plan and cost containment. The IT manager is now fully conversant with the requirements of the strategy and can consider how IT can adapt to meet these demands.

We need to have a very different conversation. IT can start to engage the CEO in how the business depends on IT. How the way they use IT can be flexed to impact on the overall cost base. IT can use the profile of the way the technology is used to have sensible discussions about creative ways of using the services to get the most from the investment. To reduce demand where we are feeling the strain and utilise the spare capacity more effectively. This is how good IT strategy evolves! After all, sadly most organisations do things the way they do because they always did.

By understanding how and when IT supports business process they can build up profiles of activity and use these to have discussions offering suggestions and alternatives. After all isn’t that how Mr Branson encourages us to use the trains in a particular way or how British Gas entices with bronze, silver or gold boiler maintenance packages? This is about using their resources in the most effective way, only achievable if you know how your business or customers are using the service.

We need to engage the Board. Both talking to them and listening to what they have to say. By listening we can propose services that actually deliver to the needs of the business and demonstrate our ability to keep commitments. From here, we demonstrate the reliability of not only the infrastructure but of the entire IT department through the services we deliver and through how we execute that delivery. We agree what to deliver, under what scope and to what measurements.

This builds us up to be respected by the business for our consistency and commitment to the delivery of service and for us to have respect for the business, as they are now treating us as an integral part of their strategy. This leads ultimately to trust, a ‘service culture’ where a true partnership status exists. Now all we need to do is maintain that trust through continual service improvement and dialogue.

There must be some ITIL guidance, something to tell us how to align our IT and business strategies; something that tells us how to establish a service culture and achieve shared strategy, vision and objectives; and here it is:

1. In 1937, British born economist Ronald Coase concluded that the boundaries of firms are determined by transaction costs.

2. The concept of transaction costs used here is not to be confused with the discrete cost of transactions such as requests, payments, trades and updates to databases. What is referred to here are the overall costs of economic exchange between two parties, including but not limited to costs incurred in finding and selecting qualified suppliers for goods or services of required specifications, negotiating an agreement, cost of consuming good or services, governing the relationship with suppliers, to ensuring that commitments are fulfilled as agreed.

3. Policing and enforcement costs are the costs of making sure the other party sticks to the terms of the contract, and taking appropriate action (often through the legal system) if this turns out to be the case.

This is the Introduction to the ITIL Service Strategy book. Here is a guidance that is supposed to support IT in engaging with the business and aligning IT strategy to the business strategy.

Sadly, what we have here is a great big pile of words that do no more that put off even the most hardened and determined and even then they’ll skip it to get to the useful stuff. The reality is that it isn’t that hard to align strategies and engage the board. It’s about creating and maintaining a dialogue to establish common goals.

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