Managing IT as a business for the business

Nov. 2004 — Let’s start with this premise: Practically every large enterprise today is completely dependent on information technology. Whether it’s a financial institution’s online banking portal or a manufacturer’s supply chain linked to key suppliers, the service quality that IT organizations provide is essential to business success.

Now, though, IT organizations are being asked to do more. They’re being asked to become reliable, low-cost IT service providers. They’re also being asked to align strategically with their internal line-of-business customers. Increasingly, the view from the top is that IT should focus on business as well as technology outcomes and should become an enabler of a company’s success.

The challenge is that most IT organizations have evolved as IT-centric cost centres focused more on technology management than on service and on users instead of customers. One study says that nearly 70 percent of IT departments still function as tactical, reactive technology partners rather than as strategic service providers and business enablers.

How then does an IT organization transform itself into a service provider strategically aligned with the business? At HP, we have all the pieces the systems, HP OpenView management software, and the consulting services to help IT organizations make this transition. We also have a robust set of best practices based on our extensive experience working with IT departments around the globe.

The key, we have found, is to integrate process, people, and technology through a combination of management software and IT services best practices.

The Role of IT Service Management
Many IT organizations seeking a roadmap through this transformation have turned to IT Service Management for guidance. IT Service Management is based on the IT Infrastructure Library (ITIL), the most comprehensive and respected source of information about IT processes. To make these best practices even more accessible to our enterprise customers, we developed the HP ITSM Reference Model. This reference model covers such issues as service delivery assurance, continuity and security management, configuration and change management, and much more. Many customers have told us that they have found this reference model to be an invaluable tool for implementing changes to their processes, people, and technology.

Let’s look first at the importance of process in IT transformation and the high cost of process problems. While technology management has been the traditional mainstay of IT, most IT organizations now realize that poor service delivery has little to do with technology and much to do with poorly designed or missing IT processes. According to our estimates, nearly 80 percent of unplanned downtime results from process and people issues. The best technology is not helpful if a service fails because of a process-related problem.

Clearly, improved processes are useless without people. But the people component of IT refers to more than a simple understanding of how process reengineering and process management affect IT staff. It also involves skill sets, attitudes, and the new roles and responsibilities that the staff must assume to be successful. Examples include viewing the consumers of their services as customers and expanding their focus on technology to include a focus on service delivery. Each of these human aspects must be transformed in order for IT organizations to evolve from technology to service providers.

Making new or improved IT processes function smoothly often requires significant changes to existing technologies as well as incorporating new technologies into the existing IT environment. An IT organization needs special tools to automate processes and the collection of information needed to manage IT services across the enterprise This list can include tools that let companies view their Internet infrastructure and simulate and monitor business activity; track the performance of Web sites and improve the customer experience; and provide timely and accurate service reporting.

Stages of IT Evolution Before an IT organization begins this kind of transformation, several key questions should be addressed. For example, where should an IT organization start? Should the team try to transform everything at once? What are the priorities? Do they need to cut costs? Improve service delivery? Or is the goal to comply with regulatory requirements like Sarbanes-Oxley or HIPPA in the U.S. or Basel 2 in Europe?

Some IT departments may know their goals and their desired end-state but are unsure how to get there. For example, one IT organization may need to lower its costs but doesn’t know how to do that without compromising service levels. Another might need to comply with Sarbanes-Oxley requirements but isn’t sure of the best approach to take. In these cases, a services-led assessment is a smart first step so that an IT organization gets a clear picture of its starting point and where it is today.

In addition, we have created a three-stage framework that describes how enterprise IT management evolves and that shows how IT organizations can create greater business value at each stage.

* Managing the Infrastructure Initially, IT organizations evolving from technology providers into service providers focus on improving the management of the enterprise infrastructure. This means maximizing return on computing assets and taking control of the infrastructure, the devices it contains, and the data it generates. Achieving this goal begins with an understanding of all computing elements. The desired outcome is a highly available enterprise IT infrastructure. Tactically, the emphasis during this stage is on implementing technology, such as HP OpenView, which plays a critical role in helping an IT organization become a reliable infrastructure provider. This technology discovers, monitors, and manages all computing elements that critical business applications depend on regardless of where they are located and displays linkages and topology. This comprehensive monitoring and management of computing elements is critical to IT Service Management success. For example, management software automatically detects status changes, such as a failure or subtle performance degradation that might lead to service failure. When problems arise, automated, corrective actions can repair routine problems.
* Managing the services An IT organization that evolves through stage two is actively identifying the services its customers need and focusing on planning and delivering those services to meet availability, performance, and security requirements. In addition, IT is managing service-level agreements, both internally and externally, to meet agreed-upon quality and cost targets. These activities are central to running IT as a business. When a service is disrupted or performance degrades, the IT organization not only knows the devices involved but, more importantly, understands the business implications of the problem and takes effective action. Given its new, business-focused perspective, IT can base its actions on broader business priorities rather than on pressure from users. When implemented properly, an IT Service Management solution combining process, people, and technology will tightly associate every device with the services it supports. As a result, IT organizations can proactively manage that device as part of strategic business services. By measuring the results of these daily activities, an IT organization can manage IT services to meet its business customers’ expectations for reliability, availability, and performance. It also positions the IT organization to deliver and support services that provide real business value.
* Managing the business value of IT At this stage IT organizations have full infrastructure data and can provide services at agreed-upon cost and quality targets. But another crucial change has taken place: The IT organization is now looking for innovative ways to use its intellectual property for business advantage. At HP, for example, we have begun marketing security and supply chain tools that were created by internal IT teams to solve line-of-business challenges. At this point, IT moves from being a cost centre to a profit centre and becomes an enabler of the company’s success. This is managing IT as a business for the business.

Summary IT executives with a broader business-IT perspective realize that the measure of an IT organization’s success is increasingly based on business outcomes as well as technology outcomes. This requires aligning the IT organization with the business’ goals, transforming IT into a trusted service provider for internal customers, and becoming an enabler of the company’s success.

We know that this will require a transformation for many IT organizations. We know this from what customers tell us and from our own experience transforming HP’s internal IT organization. Yet help is available. At HP, we have invested for more than 10 years to develop the tools, methodologies, and best practices to make this transformation a reality for our customers. On November 30, we took another large step forward and introduced more than two dozen new management software solutions and services to make this transformation easier. For more information, visit here. This is the direction to go if you want to realize the benefits of managing IT as a business for the business.

2005 Hewlett-Packard Development Company, L.P.