Recently in Business Strategy Category

Sorry, I have been very quiet on here for a while. Combination of a big birthday (numbers wise), and the fact that I am writing a book for BMC - more about that when it is ready to be published.

Reading through the articles on BSMReview.com, I started to wonder: "what is the problem?". Is IT really thàt disconnected from the business? Looking around in my living room and at the office, I can harldy imagine how life would be without any Information Technology to support me. And all of this is provided to me by companies in the form of products and/or services. Would I buy and/or use them if I didn't know what value they bring to me? No, of course not. Given that IT has penetrated already so much into my life, these "IT companies" must be connected to (or better say integrated within) "my business".

Interestingly some time ago I delivered an ITIL v3 based Service Portfolio Management workshop within a large Financial Institution. In preparing for this workshop we agreed to first focus on the question: "what is a service?". So I started by presenting the ITIL v3 definition of a service: "A means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks.". So far, so good. Then we looked at how to define a service and -more specifically- on how to define the business value of a service. Now when I asked the question "what is the busines value of your e-mail service?" the answer I got is "The e-mail service provides message traffic and storage of e-mail and e-calendaring". Does this describe a business value? Don't think so.

Looking at this sample, one might see it as a proof point that IT is really disconnected from the business and use it to justify a Business Service Management approach. Personally I wouldn't go that far. The only thing that it shows to me in this particular case is that IT is not able to articulate the business value of a service, but that doesn't mean the service doesn't have value or is not being used. On the contrary, the e-mail service sample above is one of the most used and appreciated service in the Financial Institute with an implicit value. Nevertheless and ultimately as one of the results of the workshop we came up with the following definition:

E-mail services provide value to the business when cooperative business communications are conducted without the constraints of location, device or time-zone. Value is created when IT operates for the business a store-and-forward messaging system, so that business employees can compose, send, store and receive e-mails with peers both inside as well as outside the business and in a manner that

• Is accessible 24 x 7 x 365 across the globe
• Allows only one outage of max. 5 min per 3 months
• Enables messages up to 45Mb and mailboxes up to 100Mb
• Supports protection of business confidential information
• Ensures data availability and archiving within business policies

Similarly and on a bigger scale, I recently met with another customer (read: a service catalog manager within IT) who asked me to review his service catalog and provide feedback. Of course I accepted this and then found myself reading through a 193 pages thick service catalog printed on paper. When the guy returned after a few days and asked me for my opinion, I said: "Imagine that you are entering a restaurant and ask for a menu card. And when the waiter returns he delivers to you the cookbook of the chef. How would you feel?". He immediately got the point that the service catalog contained way too much information for their business customers. In addition I showed him that there was also information missing in the service catalog. And you probably have guessed this one already: it contained no descriptions of business value whatsoever.

Again also in this situation the reality was that all services in the catalog already existed and were actively being used by the business customers. So why then create a service catalog? Good question. In this particular case the main driver for producing a service catalog was IT's desire to explain what they deliver, however the business didn't ask for a service catalog and also was not involved in the creation. And like Bill Keyworth rightfully stated in The Why & What of Business Service Management: "BSM success is entirely dependent upon the willingness and skill of both IT and business to have an effective two way conversation ...one party without the other is doomed to failure.".

Reading through my samples above and several articles on BSMReview.com, I see a number of very specific issues and symptoms, but am still not sure what the main problem or need is for which we are trying to find a solution under the name of Business Service Management. When we define BSM as "the discipline that aligns the deliverables of IT to the enterprise's business goals" then I wonder what's the value in doing this? And isn't this already happening implicitly ? Is it really possible to define the package of whatever it takes to deliver the expected service to the business community ...in a way that they can understand and appreciate that delivery? To me this sounds a little bit similar like designing the perfect organizational structure, while we all know that this does not exist (otherwise everybody would have it by now...).

I realize that my statements are provocative, however I believe that a good understanding of and interactive discussion around the fundamental problem we are trying to solve should be the starting point for (m)any article(s) on BSM(Review.com). So let's first address the question: "Business Service Management: what's the problem?".

Looking forward to your comments.

Richard L. Ptak, Bill Keyworth and Audrey Rasmussen believe that IBM's strategic focus on Integrated Service Management (ISM) and the application of IBM solutions under the Smarter Planet theme marks a milestone achievement in linking business and IT resources and assets for business success. Not the least because Integrated Service Management, in our opinion, leads directly to the broader message of how IT can effectively leverage and link together all enterprise assets and resources to achieve the goals of the business. ISM closely aligns with the Business Service Management (BSM) concepts that are being unnecessarily limited to discussions of just leveraging IT infrastructure. 

Learn how IBM illustrates and documents enterprise-wide benefits to be realized from BSM.  Read the article »

IT leaders must learn the necessity, value and process behind the development of a "Business Impact Statement" and the importance of crafting this statement in terms and metrics that are meaningful to the business community. Bob Multhaup & Ken Turbitt highlight its critical role in initiating business-oriented service management.

Read the article »

Why would a business executive be interested in Agile software development? 

Why is Agile a topic of interest to the Business-oriented Service Management community? The answer involves strengthening the connection between the developer (...who provides software capabilities for business use) and the business entity (...who uses software technology for critical business functions.)  These two groups are frequently bridged (...successfully or unsuccessfully) by IT operations, adding complexity and increased business frustration to the BSM process of aligning business with IT (...both operations and development or DevOps.)

Read Bill Keyworth's book review >>

Well, here it is: "Why Doesn't the Business Drive BSM? A Value-Driven Business Service Management Maturity Model" >>

BSMReview's Bill Keyworth and Rick Berzle evaluate the management of IT services from the perspective of the business, a.k.a. "business service management."

The negative impact of IT organizations being culturally and functionally disconnected from their business community is escalating, explain the authors.  As evidenced by the push to bypass traditional IT options through Cloud and SaaS initiatives, IT must enhance how technology is provisioned for the business.

The BSM Maturity Model described in this ground-breaking paper covers 5 levels:

You can download it here for free (registration required) and let us know what you think >>

Every once in awhile, something nice happens.  I was referred to Jeff Cerny of TechRepublic for an interview re: my passion and background for business service management.  Jeff did a great job of capturing the core of why I believe the time for BSM has arrived, and why it is a critical consideration in moving IT out of the geek house and into the business partner role.  He's added a few things associated with high tech marketing and presentation skills, but the essence of this interview deals with the importance of BSM moving forward.

For those of you who live on another planet, e.g. Venus, or in another country, which has no interest in what goes on here in the UK, e.g. most of you, we are going to have a General Election soon. This means we get to choose who is going to make a complete hash of running the place for the next five years, whilst they line their pockets with our hard-earned cash. (If you think that's cynical, you should have seen my initial version!)

I recently had the pleasure of interviewing Robert Urwiler, the SVP and CIO at Vail Resorts Inc.  Yes, this is the Vail ski resport in Colorado. They also own and manage 5 other mountains, resort hotels and more. It is rougly a $1 billion business. As a side note, I would highly recommend visiting a few of their websites for the experience alone -- I wouldn't be surprised if they win a few design awards. In particular, drop by the Keystone Resort site and check out the immersive video of Prospector run.

I wanted to share a project that was driven by IT initially which resulted in a BSM initiative that has become a significant differentiator for their highly competitive business. The approach landed Vail Reports on the list of CIO's 22nd annual CIO Awards and resulted with Robert on the cover of CIO Magazine.

Tactically Vail Inc. needed to replace an old fleet of bar code scanners that are used to validate guests at lift gates on the mountain. RFID was the natural replacement technology for bar codes and had been used successfully in Europe. It would have been easy to just use what others had already done. But the leadership at Vail wanted to differentiate the guest experience and learn more about guest patterns on the mountain.

The CIO made the case for investing in UHF RFID, which was higher risk and more costly, but met the requirements of the business. What looked like a tactical move to replace older technology resulted in a strategic decision for the business. This is a great example of how BSM principles lead to strategic business advantage. 

Utilizing UHF RFID and Wi-Fi infrastructure, Vail has been able to deliver a unique guest experience at the lift gate and can track guest patterns across the mountain which was not possible before. Knowing where the guests are skiing allows them to execute highly targeted marketing programs to promote offers on and off the mountain. 

For the details on the story see the article in the RFID Journal. 

A February 2nd 8-K filing by BMC http://tinyurl.com/yax23u3 indicates the Dev Ittycheria is out. Bob Beauchamp will again take up the task of leading the Enterprise Service Management (ESM) side of the business, i.e. all non-mainframe-focused products. We're assuming Dev will return to the entrepreneurial roots where he performed so well.

There are a number of conclusions that could be drawn from this change ranging from the fate of the Cisco partnership to, well, just think of the rumors that have swirled around BMC over the last 2 years. Speculation on internal politics is risky and ultimately pointless. We'll stick to conclusions based on our own experiences with and knowledge of the company.

For our part, we anticipate a return to aggressive support and advancement of BSM. We think that BMC will move away from concentrating on BSM as strictly a marketing concept. It presages a return to the aggressive thought and product leadership in defining and implementing BSM that has been historically demonstrated by BMC. The result will be increased competition that will benefit both customers and IT.

Personally, we're happy to see this change. We think the coming year will prove to be much more interesting and action filled as a result. 

Register for our monthly newsletter, and download "Creating Strategic Differentiation with Information Technology" - a diagnostic for IT executives - by John Hagel III.

Here's what John says to frame the discussion:

IT alone cannot create strategic differentiation - it is only an enabler. IT creates options that must be effectively exploited through focused business initiatives.

Nick Carr is right: competitors can copy virtually any individual business initiative leveraging information technology. This has three implications:

1. Companies must aggressively measure return on IT investment - companies often over-estimate the differentiation available from IT investment and under-estimate the investment
required

2. Building institutional capability for continued initiatives is the only real source of sustainable advantage

3. Since individual initiatives provide only fleeting advantage at best, it is helpful to define a longer-term strategic direction that can provide a context for waves of initiatives that reinforce each other and accelerate movement towards longer-term areas of opportunity

The document is made up of diagnostic questions in four key sections, to help you think through how to create strategic differentiation with IT:

I. Do you know where you are going?

II. Are you achieving as much impact as possible?

III. How do you define success?

IV. What is required to move even faster?

Don't just sit there - sign up for our newsletter, and download your copy now. >>

By Bill Keyworth and Annie Shum

A fantastic BSM article appeared last week (1/18) in InfoWorld entitled "Run IT As a Business - Why That's a Train Wreck Waiting to Happen."  The author, Bob Lewis, identified the futility of IT organizations continuing down the same broken path that is not connecting IT with their business counterparts ...yet he sees too few IT executives who are willing to initiate the necessary BSM changes.  One of Bob's central messages to IT is that "no one inside your company is your customer."  Fairly basic principle ...but highly compelling to initiate change in the way IT performs their labors.

Bob provides some outstanding examples of IT executives that struggle with providing the "same old ...same old" IT services to business people who can't see the benefit of paying what they perceive as premium prices for products and services that they see advertised elsewhere for a fraction of the cost; or who fixate on short term deliverables that are "good enough" but don't address the company's strategic business opportunity for the longer term; or who won't document requirements in a way that ensures IT can deliver on expectations.   In these cases, IT consistently finds itself in a defeatist catch-up mode.

The article provides some common-sense advocacy that running "IT as a business" ensures that IT doesn't satisfy corporate business needs.  It's an interesting twist to the dichotomy of how BSM is perceived by IT versus how BSM should be positioned and executed by IT.  Bob concludes with a vision on what an IT organization actually does and looks like when it is integral to the business community, and not an add-on cost center that depletes profits.  Again... great BSM article!

With the British economy haemorrhaging £180 billion this year, mostly caused by the banking bailout, but not just the Banks are causing the problem. The National Health Service (NHS), the 3rd largest employer on the planet and an annual spend of £100 billion (that is 100 thousand million pounds to you and I, or £1,666 per Man, women and child in the UK per annum !). Just to add to this budget the UK government decided back in 2002 (and it's not due to complete until 2014) to create a "central spine" of IT for the entire NHS for:

• Patients' records to be electronically available to any GP or hospital in England, thereby replacing local NHS computer systems
• Other services include electronic prescriptions, an e-mail and directory service for all NHS staff, computer accessible X-rays and a facility for patients to book outpatient appointments online
• It is the largest single IT investment in UK - costs are expected to hit £12.4bn over 10 years to 2013-14
  

Can you a) believe the costs involved here, and b) believe that the 3rd largest employer on the planet does not have email services across all its employees?

I'm sure Microsoft or Google would have provided a stand-alone secure service to them if they'd asked! Tell me one other major business that does not have their employees reachable via Email? No wonder changes in policy and efficiencies are rare if they cannot quickly communicate to their staff. But just this week they have announced that because of the budget deficit they will need to cut this £12.4 billion budget down by £600 million.

My view is that no commercial business could afford this kind of project and more importantly if they did, it would have to be delivered well within 12 years. Now the saying goes that a week is a long time in politics, but 12 years is a really long time for an IT project, especially considering how quickly this industry evolves and progresses. I imagine that if this plan were to be considered today, cloud computing would be considered, which, again in my opinion, would speed the roll out and connectivity of all the major suppliers and NHS divisions.
 
Whilst I agree all this access to connected data across the NH Service makes sense to avoid the slow paper trial and minimise errors in typing and re-tying, it also raises the issue of privacy of data. Abuse of this information could be rife, with pharmaceutical companies willing to pay vast sums to access the data for analysis to determine which drugs they sell should be targeted at what audience. Insurance companies wanting access to determine risk and exclusions whereas today most people are entitled to medical insurance without even a check-up.

Would the Police Service  gain access for DNA matching, thus circumventing the debate over a central Police DNA database? The list goes on.

Some "selling" of the data if approved by the NHS client (the public) could actually go some way to recovering the cost of the project, a business (nasty word in Government circles!) plan.

Now, I believe, that we in the IT Service industry should get involved in these debates, perhaps through bodies like the ITSMF, British Computer Society etc . we have a lot to offer in terms of experience and insight. These large multi-year projects need to be reviewed and revised annually to ensure that they keep up with technological advances and prevent the completed project being outdated and almost inoperable.  IBM's market capitisation today on the Nasdaq is around $166billion, approximately the size of the NHS annual budget and with less employees. Perhaps they could provide infrastructure and service advise based on their own internal connectivity and I'm sure they did not spend 12years to obtain it at a cost of £12.4 billion!

Government really do live in a world of their own with no concept of business acumen or reality, if only they were held accountable by the people to the same extent that shareholders hold businesses accountable, we may actually achieve value for money, in a timely, cost effective manner. Look out America, if you go for Health reforms, consider who will run it, and those hidden costs and data debates!

Is your company’s IT department passionate about their work?

If not, then perhaps you’re not letting them solve problems…  Passionate IT solves problems - not just for IT, but for the business.

More from John Hagel on pursuing passion »