Reducing IT Costs using IT Service Management

The most frequent question of the last few months has been "What are IT organizations doing to reduce costs in a downturned economy?"

With constrained human and financial resources, the answer to this question can be daunting. The business still expects the same level of service with fewer resources. What's an IT department to do?

IT Service Management best practices have always provided guidance for managing or lowering the cost of services without sacrificing quality. Frameworks, such as ITIL, advocate processes that net higher efficiencies and effectiveness, which in turn result in lower costs and higher quality. The better you are at doing something, the lower the cost of doing it. Here are some other ways ITSM can help reduce costs:

• Understand your costs by calculating cost per service, cost per customer and cost per activity. You can't reduce costs if you do not understand what they are in the first place.
• Create and analyze a Service Portfolio of services in the pipeline, in operation and in retirement. A Service Portfolio pinpoints how and where IT is investing it's human and financial resources.
• Reduce reactive, unplanned work by improving the efficiency of incident handling and problem resolution
• Build Process Models that document proven, repeatable procedures for the most common changes, incidents, requests and releases
• Inventory and optimize existing tools before making new purchases. You may be able to turn on functionality to automate tasks
• Use Problem Management to resolve the top recurring incidents. Incidents are very costly to both IT and the business. It is less costly to find a permanent solution than to repeatedly resolve the same or similar incidents.
• Reduce supplier costs by retaining management control of the relationship - a lot of redundant work can result from misalignment between suppliers and customers.
• Combine roles, particularly process roles, such as the Service Portfolio, Service Catalog and Service Level Managers.

The biggest and best advice is to start with baby steps - every dollar saved is a dollar earned, so look for quick wins first. For example, you may be able to leverage Demand Management to identify Patterns of Business Activity that allow you to offload some activities to times of lower system or network demand or lower the cost per service during off peak times.

For more information and detail, you can download the entire whitepaper Five Proven Strategies for Reducing Costs With ITSM

Baseline Magazine says ITIL Managers will be Hot Job #6 for 2009!

Baseline magazine, which is one of my old favorites, (although I don't like the website nearly as well as their magazine) recently published a very interesting article. Entitled 10 Hot IT Jobs for 2009, it lists ITIL Manager as Hot Job #6.

"The job market is brutal, but some IT specializations remain in high demand. Many of the hottest roles and skills address issues specific to survival, such as productivity, efficiency and process improvement.... Governance and standardization are key to getting automation efforts off the ground in an orderly fashion, and companies will be paying a premium for ITIL and business process experts in 2009." -

Read full article

CIO Insight also recently published something I found interesting, 10 Books for Managing in Tough Times. While I have not personally had a chance to read all of these books, I have reviewed their list. Several look to be very interesting and potentially helpful. - Read full article

Knowledge Management and Social Networking

My students often ask about new advances in Knowledge Management. While Knowledge Management is not a new topic, it seems that there are still many challenges in implementing and managing this important process.

I was discussing this topic with an academic colleague last week, Dr. Stuart Diaz Galup of Florida Atlantic University. He explained that "Knowledge Management" is often confused with "Information Management". I thought that was a very astute observation. According to ITIL V3, "information" puts data in context; "knowledge" adds experience, ideas, insights and value to information. So how can organizations evolve into managing "knowledge" instead of "information?

Dr. Galup's observation brought me back to thinking about social networking and Knowledge Management. The introduction and acceptance of Wikis (wikipedia) has encouraged collaborative knowledge in that individuals can contribute their expertise to create or update a topic area. Social networking sites such as Linked-In, Facebook, Twitter and blogs such as ITSM Professor have also provided a comfortable space to post facts, thoughts, observations and experiences.

So, if social networking is now part of our culture, why not capitalize on it in professional environments? How about putting up a Wiki as a front end to your knowledgebase or Service Knowledge Management System (SKMS)? Similarly, what about an "IT Blog" with subject matter expert authors from various IT units or domains? The blog could be made available to the business or used as a technical resource within IT. While the accuracy of entries would need to be verified and controlled, they are good vehicles for capturing the more subjective aspects of knowledge.

My future research will focus on identifying organizations who are using social networking concepts in their Knowledge Management processes.

The Question

One of the most important tools in the toolbox for implementing Service Management is “The Question”. Effective questioning can help make both a new and existing implementation more successful. Good questioning techniques take practice and knowledge like many other skills. It can take years to move questioning from a skill to a talent. But learning how to ask and answer questions is a valuable instrument.

Questions go beyond just the closed (specific answer) and open (subjective or broad answer). Questions can fall into several other categories and each should be approached in different ways:

INDUCTIVE: there are designed to aggregate information and will be used effectively in Incident Management; Problem Management and Change Management.

How do a set of Incidents correlate?

DEDUCTIVE: these are designed to break down or decompose information and will be used effectively in Problem Management and Service Level Management.

What are the elements that make up an existing service?

ABDUCTIVE: these are designed to find the best possible answer and will be used effectively in Financial Management, Portfolio Management and Service Level Management.

What should be our strategy to adjust to changes in the
marketplace?

Questions can help in many ways:

• Gathering data and information

  How many incidents occurred yesterday?

• Comprehending and understanding the data and information

  Did the Request for Change impact the service?

  Analyzing the data to create information

  Does the increase in response times indicate a trend?

• Applying the information to turn it into knowledge

  If we find root cause for Problem A, will that help us fix Problem B?

• Synthesizing knowledge into wisdom

  Can I get greater capacity by combining Service Desks?

• Evaluating information and knowledge in order to gain wisdom through judgments

Is the Portfolio balanced to meet the needs of the customer and the business?

Used correctly, questioning is the basis for good Knowledge Management. By using various types of questioning techniques we can move from data to wisdom. Another benefit of questioning helps us avoid assumptions or to manage perceptions. Perhaps the single most powerful question we can ask in terms of Service Management is “why?”

Say a person asks you to approve a Request for Change. You should ask “why?” They may say it has low risk, no impact and little cost. That should lead to another powerful question: “Is that fact or an assumption?” By asking this question you get people to rethink their assumptions or perceptions. Perhaps it is low cost, risk and impact. But that needs to be proven through data, not through perception or opinion or assumption.

Hopefully you can see that using questions can be a strong tool. The key is to think about questions before you need to ask them. Have a quiver of questions ready at your disposal and do not be afraid to use them.

Calculating ROI on IT Service Management

One of the questions I am often asked is, "How do we calculate the Return on Investment (ROI) of our ITIL Implementation".

This week, a new case study was introduced covering:

• ROI Calculator
• Case Study Synopsis

Traditionally, ROI and TCO are touted by software companies as a means to sell software. Many of us have become hardened to these calculations, as experience has show they were grossly over-inflated. To help combat this, in 2006, ITSM Academy shared a realistic, un-biased ROI calculator which enables users to estimate potential costs savings of:

• Incident Management
• Availability Management
• Unplanned Work

Existing calculations can be easily tailored to produce similar process area calculations.

Case Study Synopsis

The case study also includes a collection of 25 published ROI statements and stories, broken out by industry type. The following is one of the quotes:

"An ITIL program at Capital One resulted in a 30% reduction in system crashes and software-distribution errors, and in a 92% reduction in critical Incidents within 2 years. After the ROI analysis, the implementation of ITIL was estimated to save 10 percent to 20 percent in technology support costs over a five-year period."
~ Computerworld, CIO.com

Download Whitepaper and Case Study - for the whitepaper, choose Check/Money Order - it's complimentary through itsmbookstore.com.

Welcome to ITSM Professor

Allow me to introduce myself - I am Professor Wise, the ITSM Professor. I have committed my academic research to IT Service Management including ITIL, ISO/IEC 20000, Microsoft Operations Framework and other resources.

As I discover interesting and relevant concepts within best practices frameworks and standards, I will highlight them with you through this blog. I will also share insight and practical application from organizations and individuals who are implementing and improving their Service Management processes.

And I also encourage you to join into the conversation. I want this to be a positive place for sharing IT Service Management tips, tricks, challenges and successes. Please email me at itsmprofessor@itsmacademy.com. I will add your question to the blog.

Happy Reading!