Sesi10 Managing the Supply of IT Service
Zainal A. Hasibuan, Ph.D
zhasibua@cs.ui.ac.id
Magister of Information Technology
Faculty of Computer Science,
University of Indonesia
Context of This Session
External Business Environment
Internal Business Environment
Internal IS/IT environment
Current Applications Portfolio
Strategic IS/IT
Planning Process
External IS/IT Environment
Planning Approaches, Tools and Techniques
We are here …
IS/IT Management Strategy
Business IS Strategies
Applications Portfolio
IT Strategy
Model & Matrices
and here …
Session Objec,ves
• To define the IT capability
• To iden,fy IT services and IT solu,ons
• To understand the management role in IT
supply
• To understand the IT investment versus the
visible return
• To consider aspects in managing infrastructure
• To understand issues on outsourcing versus in‐
house
IT Service Strategies: Change of IS Func,on
•
•
From a produc,on mode to a service mode
Produc,on (or construc,on) implied designing and
developing applica,on soDware and delivering
opera,onal systems
–
•
Combina,ons of hardware and soDware to the business users.
Adop,ng a service orienta,on implies a wider range of
approaches to enabling the business users to obtain
and u,lize informa,on, systems and technology to
meet their needs.
Driving Forces for Change
• Many business deliver their services or
products via IS/IT or service centers
– IT services for internal and external users
– Totally dependent on IS/IT
– Affect the business performance
• More of IT services have been outsourced
– Defining service level agreement
– Integral part of IS management
•
Well define IT contribu,on to business
Factors Influence the Type Of IT Services
• Type of IT services depend on: the nature of IS/IT ac,vi,es
(see table 8.4), how the users u,lize the service
• Different users have different expecta,on.
– User expect high quality of services (availability, respond ,me, problem
resolu,on, etc)
• Uncertainty of user request: services are produced and
consumed simultaneously based on a user request to be
served.
• Percep,ons of the service received—the ‘service experience’.
• The degree of user understanding on the process of services
• There is oDen a difference between the user of the IT service
and who pays for it, implying different percep,ons of service
value.
IT Services Classifica,on
• Based on supply and delivery of IT
components
– HW, SW, Applica,on
– IT‐based ac,vi,es
• Based on technical similari,es of ac,vi,es
– Technology delivery
– Maintenance services
– Applica,on development services
– Strategy and planning
Dimensions of IT Service from Customer View
• The nature and extent of user–provider contact
involved
• The degree to which the service is customized to
each user or user interac,on.
Classifica,on IT Service
• Service Factory: rela,vely low user contact and a low degree of
customiza,on (back office services: security, network adm, SW
upgrade, etc)
• Job Shop: low user contact, but high customiza,on, where much of
the work is again done in the back office, but in response to
par,cular, and possibly one‐off, user needs (back office, SW
development, vendor assessment, etc)
• Mass Service: considerable user contact and interac,on, but low
customiza,on (help desk, training, etc).
• Professional Services: while these are highly customized and involve
considerable user contact, they are also typified by rela,vely few,
but complex, ‘transac,ons’ with any par,cular user (transac,on,
respond to user requirement, etc).
IS/IT Service Quality
• Research has been done to develop approaches to defining service
quality and measuring both the technical and ‘emo,onal’ (i.e. how the
user experiences the service) quality.
• Issues to consider before asking users:
– Availability
– The importance of services
– Responsiveness
• Determine the context within which the user is judging performance
• The overall framework for structuring and developing an IT service is
shown in Figure 11.4.
The Basic Model For Assessment
The causes of the gaps (1–5) are as follows:
1.
Not understanding what users expect or value due to:
– A lack of user needs analysis;
– Ineffec,ve communica,on by either or both par,es;
– Excessive bureaucracy in the IS func,on.
2. Sefng the wrong IT Service Standards due to:
– Lack of commitment to IT services by IS management;
– Percep,ons of infeasibility in mee,ng user demands;
– Inadequate task defini,on and standardiza,on or inadequate
resourcing to standards set;
– Absence of objec,ves for the service to achieve and/or inappropriate
performance measurements
3. Underperformance of the service due to:
– Role ambiguity, including the user’s role in service delivery;
– Lack of resource availability;
– Lack of actual or perceived controls;
– Lack of teamwork and inappropriate resource use, or inappropriate
use of the service.
4. Poor communica,on of what the service is and can deliver due to:
– A propensity to over promise and/or overreact to ‘complaints’;
– Inconsistent communica,on across the user communi,es;
– Lack of visibility of the service process.
5. Expecta8on versus percep8on gap due to:
– Not understanding user requirements and reasons for them;
– Users not understanding the service process and the implica,ons of
their demands;
– User expecta,ons actually being impossible to sa,sfy!
Services delivered versus cost to organization
Applica,on Development and Provisioning
Strategies
• Providing new applica,ons more quickly in response to changing
business demands;
• More cost‐effec,ve produc,on or acquisi,on of more types of
applica,on and reduce ongoing maintenance costs;
• Increasing the quality and reliability of the soDware as it becomes
integral to the business processes;
• Developing more customer‐focused applica,ons that can be used
easily by untrained people;
• Devising more flexible or adaptable applica,ons than can be enhanced
or modified quickly at low incremental cost;
• Providing efficient, seamless integra,on of business ac,vi,es across
different applica,ons from the desktop;
• ensuring maximum value can be gained from the informa,on assets of
the organiza,on.
Key Opera,onal Applica,ons
• Key opera,onal systems need to be efficient and robust, to
deliver cost‐effec,ve and problem‐free use over an extended
period.
• Key opera,onal applica,ons will tend to be func,onally
complex, have integrated interfaces and dependencies and
should sa,sfy requirements with minimum compromise of
the user’s main needs.
Support Applications
Case Of ‘Enterprise Systems’
• Replacement of exis,ng systems to sa,sfy the Y2K requirements, more
cost‐effec,vely than amending all the exis,ng applica,ons;
• Replacement of non‐integrated legacy systems by integrated
applica,ons and data bases to reduce long‐term costs and provide
higher quality systems that incorporate industry ‘best prac,ce’;
• Increasing legisla,on and regula,on in many industries has made
‘compliance’ a major issue, and buying comprehensive ‘compliant’
soDware can help avoid the serious consequences of failure to sa,sfy
the regulators;
• Provision of applica,on architectures and business processes, to
enable quick and effec,ve moves into electronic commerce and
internal adop,on of e‐business prac,ces;
• In mul,na,onal or global organiza,ons, the need to expand the
business by rapid replica,on of exis,ng business models, to use
resources and knowledge flexibly across products, services and
markets as well as to deal consistently and effec,vely with large global
customers.
A ‘Shakedown’ Phase Normally
• How to op,mize performance through further
changes to business prac,ces and soDware
reconfigura,on;
• How further benefits can now be achieved by using
more capabili,es of the soDware and by more radical
or extensive business and organiza,onal changes.
Strategies for Managing The IT
Infrastructure
• Physical infrastructure, which consists of a range of network, hardware
and base soDware products and services, deployed to enable
applica,ons and the general purpose use of technology to func,on
successfully.
• Architectures, which describe the physical infrastructure and show the
current and, where possible, future configura,ons.
• Policies and standards, which cover technology aspects to determine
how the infrastructure, its acquisi,on, deployment and support are
managed.
• Management processes to ensure investments in infrastructure are
coherently planned and jus,fied, and rela,onships with technology
suppliers and outsourcing providers are appropriate for their role in
enabling the business strategy.
Problems of IT Infrastructure Management
• It must be developed as a base for future, uncertain use
of applica,ons rather than merely matching current
business func,onality
• It is difficult to define the value derived from IT
Result From Failure To Invest In Its Development
•
•
•
•
•
•
Linking technology investments to business needs.
Iden,fying technical opportuni,es
IT investments by others
Technical implica,ons and ‘hype’
Business and technical awareness
How to make decisions about IT resources
Dimensions of IT Infrastructure
• Reach—the extent to which the infrastructure must enable
connec,ons across systems and plalorms among internal and external
users;
• Range—the breadth of services, and variety and volume of different
types of informa,on, documents, images, etc. that will be shared
among internal and external par,es.
Infrastructure Investments
• Infrastructure contributes to the delivery of business benefits
in a number of different ways, and the jus,fica,on of
expenditure, either for procurement of capital items or
purchasing soDware licenses or network or hardware capacity
from third‐party suppliers, needs to be presented on the basis
of the par,cular contribu,ons being made.
Five Headings As Depicted
• Applica,on‐specific
• To reduce costs of running and suppor,ng exis,ng
applica,ons, by using more cost‐effec,ve technology
• To enable growth in the volume of business transac,ons
• Changes in working prac,ces
• To create a new business capability
The Main Factors Affec,ng The Technology Strategy
• Degree of intercompany trading;
• Similarity of products and business processes;
• Coherence of markets served, channels of distribu,on used
and main suppliers;
• Similarity in scale of opera,on;
• Industry maturity and compe,,ve situa,on of units;
• Geography, especially in interna,onal companies;
• How corporate management exercises its control over the
units’ business strategies and ac,vi,es;
• The rate of business and organiza,onal change.
IS/IT Supply‐driven Factors
• The economics of processing and procurement;
• Availability of skills and human resources;
• Availability of technologies and vendor services in different
countries and areas;
• The exis,ng IS/IT investments in the different units.
The Risk Factors
• Trea,ng IT as an undifferen,ated commodity to be outsourced
• Incomplete contrac,ng
• Lack of ac,ve management of the supplier on (a) contract and (b)
rela,onship dimensions.
• Power asymmetries developing in favour of the vendor.
• Inexperienced staff.
• Outsourcing for short‐term financial restructuring or cash injec,on
rather than to leverage IT assets for business advantage.
• Hidden costs.
• Managing mul,ple vendors.
• Loss of innova,ve capacity.
• Cultural incompa,bility.
Strategic Intents Driving Outsourcing
• IS improvement—‘Do IS bener’;
• Business impact—‘use IT to achieve bener business results’;
• Commercial exploita,on—‘exploit IT assets externally’.
The Business Opera,ons Dimensions
• Cri:cal differen:ators. IT ac,vi,es that are not only cri,cal to
business opera,ons but also help to dis,nguish the business
from its compe,tors.
• Cri:cal commodi:es. IT ac,vi,es that are cri,cal to business
opera,ons, but fail to dis,nguish the business from
compe,tors (key opera,onal applica,on areas).
• Useful commodi:es. The myriad, mainly support, IT ac,vi,es
that provide incremental benefits to the business, but fail to
dis,nguish it from compe,tors.
The Different Contractual Issues
•
•
•
•
•
•
Length of contract.
Service defini,on
Service‐level requirements specifica,ons
Service‐level measurement and verifica,on
Incen,ves for service‐level anainment
Coordina,on and communica,on mechanisms
Post‐Contract Management
• Collect fines for non‐compliance. Some companies see a
vendor performance shorlall as an opportunity to extract
non‐monetary payback, extrac,ng some free service on the
side in lieu of penalty charges.
• Don’t be afraid to confront the vendor. Many companies fight
hard to win penalty provisions from vendors only to find
themselves averse to levying charges or forcing a dispute of
any kind.
The Primary Categories of Services ASPs
•
•
•
•
Applica:ons provisioning.
Infrastructure opera:ons.
Network connec:vity.
Suppor:ng services.
The Future Benefits of The ASP Model
•
•
•
•
•
Reducing ‘costs of ownership’.
Providing more predictable costs with less financial risk.
Flexibility to exit or radically change opera,ng scale.
Quicker deployment of new applica,ons and IT capabili,es.
Significant reduc,on in technology complexity.
Summary
1.
The theme of the technology strategy should always reflect how it
can be deployed to add value to the business.
2.
The organiza,on must be aware of how technology is being
deployed and for what purpose by others in the industry, and even
in other industries.
3.
It is in the technology that an organiza,on is vulnerable to undue
outside pressure from IT suppliers, whose interests will not always
coincide with those of the business.
4.
The approach, role and skills of the IT specialist need to change, as
the role of technology becomes increasingly ubiquitous and its
control becomes ever more decentralized
zhasibua@cs.ui.ac.id
Magister of Information Technology
Faculty of Computer Science,
University of Indonesia
Context of This Session
External Business Environment
Internal Business Environment
Internal IS/IT environment
Current Applications Portfolio
Strategic IS/IT
Planning Process
External IS/IT Environment
Planning Approaches, Tools and Techniques
We are here …
IS/IT Management Strategy
Business IS Strategies
Applications Portfolio
IT Strategy
Model & Matrices
and here …
Session Objec,ves
• To define the IT capability
• To iden,fy IT services and IT solu,ons
• To understand the management role in IT
supply
• To understand the IT investment versus the
visible return
• To consider aspects in managing infrastructure
• To understand issues on outsourcing versus in‐
house
IT Service Strategies: Change of IS Func,on
•
•
From a produc,on mode to a service mode
Produc,on (or construc,on) implied designing and
developing applica,on soDware and delivering
opera,onal systems
–
•
Combina,ons of hardware and soDware to the business users.
Adop,ng a service orienta,on implies a wider range of
approaches to enabling the business users to obtain
and u,lize informa,on, systems and technology to
meet their needs.
Driving Forces for Change
• Many business deliver their services or
products via IS/IT or service centers
– IT services for internal and external users
– Totally dependent on IS/IT
– Affect the business performance
• More of IT services have been outsourced
– Defining service level agreement
– Integral part of IS management
•
Well define IT contribu,on to business
Factors Influence the Type Of IT Services
• Type of IT services depend on: the nature of IS/IT ac,vi,es
(see table 8.4), how the users u,lize the service
• Different users have different expecta,on.
– User expect high quality of services (availability, respond ,me, problem
resolu,on, etc)
• Uncertainty of user request: services are produced and
consumed simultaneously based on a user request to be
served.
• Percep,ons of the service received—the ‘service experience’.
• The degree of user understanding on the process of services
• There is oDen a difference between the user of the IT service
and who pays for it, implying different percep,ons of service
value.
IT Services Classifica,on
• Based on supply and delivery of IT
components
– HW, SW, Applica,on
– IT‐based ac,vi,es
• Based on technical similari,es of ac,vi,es
– Technology delivery
– Maintenance services
– Applica,on development services
– Strategy and planning
Dimensions of IT Service from Customer View
• The nature and extent of user–provider contact
involved
• The degree to which the service is customized to
each user or user interac,on.
Classifica,on IT Service
• Service Factory: rela,vely low user contact and a low degree of
customiza,on (back office services: security, network adm, SW
upgrade, etc)
• Job Shop: low user contact, but high customiza,on, where much of
the work is again done in the back office, but in response to
par,cular, and possibly one‐off, user needs (back office, SW
development, vendor assessment, etc)
• Mass Service: considerable user contact and interac,on, but low
customiza,on (help desk, training, etc).
• Professional Services: while these are highly customized and involve
considerable user contact, they are also typified by rela,vely few,
but complex, ‘transac,ons’ with any par,cular user (transac,on,
respond to user requirement, etc).
IS/IT Service Quality
• Research has been done to develop approaches to defining service
quality and measuring both the technical and ‘emo,onal’ (i.e. how the
user experiences the service) quality.
• Issues to consider before asking users:
– Availability
– The importance of services
– Responsiveness
• Determine the context within which the user is judging performance
• The overall framework for structuring and developing an IT service is
shown in Figure 11.4.
The Basic Model For Assessment
The causes of the gaps (1–5) are as follows:
1.
Not understanding what users expect or value due to:
– A lack of user needs analysis;
– Ineffec,ve communica,on by either or both par,es;
– Excessive bureaucracy in the IS func,on.
2. Sefng the wrong IT Service Standards due to:
– Lack of commitment to IT services by IS management;
– Percep,ons of infeasibility in mee,ng user demands;
– Inadequate task defini,on and standardiza,on or inadequate
resourcing to standards set;
– Absence of objec,ves for the service to achieve and/or inappropriate
performance measurements
3. Underperformance of the service due to:
– Role ambiguity, including the user’s role in service delivery;
– Lack of resource availability;
– Lack of actual or perceived controls;
– Lack of teamwork and inappropriate resource use, or inappropriate
use of the service.
4. Poor communica,on of what the service is and can deliver due to:
– A propensity to over promise and/or overreact to ‘complaints’;
– Inconsistent communica,on across the user communi,es;
– Lack of visibility of the service process.
5. Expecta8on versus percep8on gap due to:
– Not understanding user requirements and reasons for them;
– Users not understanding the service process and the implica,ons of
their demands;
– User expecta,ons actually being impossible to sa,sfy!
Services delivered versus cost to organization
Applica,on Development and Provisioning
Strategies
• Providing new applica,ons more quickly in response to changing
business demands;
• More cost‐effec,ve produc,on or acquisi,on of more types of
applica,on and reduce ongoing maintenance costs;
• Increasing the quality and reliability of the soDware as it becomes
integral to the business processes;
• Developing more customer‐focused applica,ons that can be used
easily by untrained people;
• Devising more flexible or adaptable applica,ons than can be enhanced
or modified quickly at low incremental cost;
• Providing efficient, seamless integra,on of business ac,vi,es across
different applica,ons from the desktop;
• ensuring maximum value can be gained from the informa,on assets of
the organiza,on.
Key Opera,onal Applica,ons
• Key opera,onal systems need to be efficient and robust, to
deliver cost‐effec,ve and problem‐free use over an extended
period.
• Key opera,onal applica,ons will tend to be func,onally
complex, have integrated interfaces and dependencies and
should sa,sfy requirements with minimum compromise of
the user’s main needs.
Support Applications
Case Of ‘Enterprise Systems’
• Replacement of exis,ng systems to sa,sfy the Y2K requirements, more
cost‐effec,vely than amending all the exis,ng applica,ons;
• Replacement of non‐integrated legacy systems by integrated
applica,ons and data bases to reduce long‐term costs and provide
higher quality systems that incorporate industry ‘best prac,ce’;
• Increasing legisla,on and regula,on in many industries has made
‘compliance’ a major issue, and buying comprehensive ‘compliant’
soDware can help avoid the serious consequences of failure to sa,sfy
the regulators;
• Provision of applica,on architectures and business processes, to
enable quick and effec,ve moves into electronic commerce and
internal adop,on of e‐business prac,ces;
• In mul,na,onal or global organiza,ons, the need to expand the
business by rapid replica,on of exis,ng business models, to use
resources and knowledge flexibly across products, services and
markets as well as to deal consistently and effec,vely with large global
customers.
A ‘Shakedown’ Phase Normally
• How to op,mize performance through further
changes to business prac,ces and soDware
reconfigura,on;
• How further benefits can now be achieved by using
more capabili,es of the soDware and by more radical
or extensive business and organiza,onal changes.
Strategies for Managing The IT
Infrastructure
• Physical infrastructure, which consists of a range of network, hardware
and base soDware products and services, deployed to enable
applica,ons and the general purpose use of technology to func,on
successfully.
• Architectures, which describe the physical infrastructure and show the
current and, where possible, future configura,ons.
• Policies and standards, which cover technology aspects to determine
how the infrastructure, its acquisi,on, deployment and support are
managed.
• Management processes to ensure investments in infrastructure are
coherently planned and jus,fied, and rela,onships with technology
suppliers and outsourcing providers are appropriate for their role in
enabling the business strategy.
Problems of IT Infrastructure Management
• It must be developed as a base for future, uncertain use
of applica,ons rather than merely matching current
business func,onality
• It is difficult to define the value derived from IT
Result From Failure To Invest In Its Development
•
•
•
•
•
•
Linking technology investments to business needs.
Iden,fying technical opportuni,es
IT investments by others
Technical implica,ons and ‘hype’
Business and technical awareness
How to make decisions about IT resources
Dimensions of IT Infrastructure
• Reach—the extent to which the infrastructure must enable
connec,ons across systems and plalorms among internal and external
users;
• Range—the breadth of services, and variety and volume of different
types of informa,on, documents, images, etc. that will be shared
among internal and external par,es.
Infrastructure Investments
• Infrastructure contributes to the delivery of business benefits
in a number of different ways, and the jus,fica,on of
expenditure, either for procurement of capital items or
purchasing soDware licenses or network or hardware capacity
from third‐party suppliers, needs to be presented on the basis
of the par,cular contribu,ons being made.
Five Headings As Depicted
• Applica,on‐specific
• To reduce costs of running and suppor,ng exis,ng
applica,ons, by using more cost‐effec,ve technology
• To enable growth in the volume of business transac,ons
• Changes in working prac,ces
• To create a new business capability
The Main Factors Affec,ng The Technology Strategy
• Degree of intercompany trading;
• Similarity of products and business processes;
• Coherence of markets served, channels of distribu,on used
and main suppliers;
• Similarity in scale of opera,on;
• Industry maturity and compe,,ve situa,on of units;
• Geography, especially in interna,onal companies;
• How corporate management exercises its control over the
units’ business strategies and ac,vi,es;
• The rate of business and organiza,onal change.
IS/IT Supply‐driven Factors
• The economics of processing and procurement;
• Availability of skills and human resources;
• Availability of technologies and vendor services in different
countries and areas;
• The exis,ng IS/IT investments in the different units.
The Risk Factors
• Trea,ng IT as an undifferen,ated commodity to be outsourced
• Incomplete contrac,ng
• Lack of ac,ve management of the supplier on (a) contract and (b)
rela,onship dimensions.
• Power asymmetries developing in favour of the vendor.
• Inexperienced staff.
• Outsourcing for short‐term financial restructuring or cash injec,on
rather than to leverage IT assets for business advantage.
• Hidden costs.
• Managing mul,ple vendors.
• Loss of innova,ve capacity.
• Cultural incompa,bility.
Strategic Intents Driving Outsourcing
• IS improvement—‘Do IS bener’;
• Business impact—‘use IT to achieve bener business results’;
• Commercial exploita,on—‘exploit IT assets externally’.
The Business Opera,ons Dimensions
• Cri:cal differen:ators. IT ac,vi,es that are not only cri,cal to
business opera,ons but also help to dis,nguish the business
from its compe,tors.
• Cri:cal commodi:es. IT ac,vi,es that are cri,cal to business
opera,ons, but fail to dis,nguish the business from
compe,tors (key opera,onal applica,on areas).
• Useful commodi:es. The myriad, mainly support, IT ac,vi,es
that provide incremental benefits to the business, but fail to
dis,nguish it from compe,tors.
The Different Contractual Issues
•
•
•
•
•
•
Length of contract.
Service defini,on
Service‐level requirements specifica,ons
Service‐level measurement and verifica,on
Incen,ves for service‐level anainment
Coordina,on and communica,on mechanisms
Post‐Contract Management
• Collect fines for non‐compliance. Some companies see a
vendor performance shorlall as an opportunity to extract
non‐monetary payback, extrac,ng some free service on the
side in lieu of penalty charges.
• Don’t be afraid to confront the vendor. Many companies fight
hard to win penalty provisions from vendors only to find
themselves averse to levying charges or forcing a dispute of
any kind.
The Primary Categories of Services ASPs
•
•
•
•
Applica:ons provisioning.
Infrastructure opera:ons.
Network connec:vity.
Suppor:ng services.
The Future Benefits of The ASP Model
•
•
•
•
•
Reducing ‘costs of ownership’.
Providing more predictable costs with less financial risk.
Flexibility to exit or radically change opera,ng scale.
Quicker deployment of new applica,ons and IT capabili,es.
Significant reduc,on in technology complexity.
Summary
1.
The theme of the technology strategy should always reflect how it
can be deployed to add value to the business.
2.
The organiza,on must be aware of how technology is being
deployed and for what purpose by others in the industry, and even
in other industries.
3.
It is in the technology that an organiza,on is vulnerable to undue
outside pressure from IT suppliers, whose interests will not always
coincide with those of the business.
4.
The approach, role and skills of the IT specialist need to change, as
the role of technology becomes increasingly ubiquitous and its
control becomes ever more decentralized