How would you answer the following question?
“How does your IT organization deliver real business value?”
In the October 6, 2016 CIO.com article, “Business value is key to IT success”, Mike Sisco describes business value as including five very specific things:
- Increase revenue
- Decrease cost
- Improve productivity
- Differentiate the company
- Improve client satisfaction
Does your IT organization have a role in delivering business value? Sure, it does. Does your business know what IT does to deliver business value? Unfortunately, in many businesses, the answer is “no”.
Is it the fault of our business colleagues that they don’t know what IT does to deliver value? In my opinion, it is IT’s job to educate the business regarding how it delivers value.
Can your IT organization articulate how it delivers business value? That’s often the challenge with many IT organizations, especially if they’ve not defined services in terms of business value and outcomes.
Services are about “outcomes”, not “things”
Too often, IT organizations will list things like PCs, application access, and password resets as its “services”. Do these things provide (some) value? Yes. But are they services? No.
A service is a means of delivering value for a customer (or business) by facilitating outcomes (or results) the customer wants to achieve. I’m sure you’ve heard or read that definition many times before, but what does it mean? Think about it this way: A PC without application software, network connectivity, and the like does not facilitate an outcome. In fact, in such a scenario, a PC is nothing more than an expensive paperweight. But include the PC as part of a value chain (comprised of software, infrastructure, processes, and people) that results in increased company revenues or improved productivity or client satisfaction, and wham! – you’ve got yourself a service!
Many IT organizations struggle with the critical, fundamental concept of defining its services. The IT organization is unable to identify and map the combinations of people, process, technology, and suppliers – or value chains – that work together to deliver business value and outcomes. Because these value chains aren’t identified or defined, the IT organization struggles to articulate how it delivers value. As a result, IT is often left out of strategic business discussions.
Instead, many IT organizations list the things they do as its “services”. But when an IT organization lists “things” as services, it sends a distinct message to the business it serves. The message? “Welcome to IT – we are here to take your order”.
Is that how you want IT to be known within your company – just as “order takers”? If so, prepare to be outsourced – because by only listing “things” as “services”, you are describing IT as ‘cost’, and not as ‘value’. And your business will look to increase value by reducing cost – in this case, the cost of its internal IT – because it can get those “things” cheaper elsewhere.
Six PDG reasons to define services
Why define your IT services? Here are six PDG (pretty darn good) reasons:
- Provide transparency into IT – Demystify what IT does, while at the same time, relate IT deliverables to business value and outcomes.
- Identify what really needs to be managed – Too often, IT organizations attempt to control everything rather than manage the right things. By defining services, what really needs to managed in a CMDB and controlled through appropriate change management can be identified.
- Enable management of IT as a portfolio, not as a “collection of things” – IT should be viewed as at a strategic investment, and therefore, should be managed as a portfolio. This means that investments in IT should be based on matching those investments to business objectives, developing policies that enable good decision-making, and balancing risk and reward. IT never has an opportunity to be managed as a portfolio if services are not defined.
- Enable cost modeling – By identifying and understanding what makes up each service, needless redundancy and obsolescence can be identified. By eliminating this redundancy and obsolescence, IT reduces its cost – without impacting quality or results. Cost modeling also facilitates “like for like” comparisons of service solutions and “build vs. buy” decisions.
- Enable the business to take advantage of IT services – Services provide value by facilitating outcomes. The more business can take advantage of the outcomes of IT services, the higher the value of IT. Defining services not only articulates the IT solutions available to meet business needs, it also aligns IT to business outcomes and helps lead IT in creating business value.
- Get IT a seat at the table – Defining services helps both business and IT understand the role that IT plays in enabling and delivering business value chains – the activities within a company that result in a product or service that delivers value to a customer. Having the ability to discuss its services in terms of business value will help get IT a seat at the business strategy table.
Define your Services…or else!
So how can you define your services? Start by getting the answers to these questions:
- What does your business do?
- What are the activities within your business that result in a product or service that delivers value?
- How does IT enable or support those business products or services?
- What are the combinations of technology, process, people, and suppliers that enable or support those business products or services?
Getting the answers to these questions not only will help you define your services, it will also help you articulate how IT delivers real business value.
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Image Credit: Olivier Le Moal
 ISO/IEC, (2011). ISO/IEC 20000-1:2011 Information technology – Service Management – Part 1: Service management system requirements. Geneva, Switzerland: ISO/IEC.Share