By Reginald Lo
IT departments continue to face aggressive cost saving targets. During the recent recessions, many IT departments did not just “cut the fat” but they have also “cut into the bone.” How can IT cut more? Every stone must overturned to find even more cost saving opportunities. A legitimate question is, “how does Service Management help achieve the cost saving targets?”
To answer this question, there are a number of perspectives that will help:
- How does Service Management directly save costs?
- How do we reduce the cost of Service Management?
- How do we change the conversation around Service Management so the Business becomes more interested in maximizing the value of IT Services as opposed to minimizing the cost of IT services?
This discussion is focused on cost savings so we will investigate the first two perspectives.
How does Service Management directly save costs?
The adoption of mature Service Management processes can improve productivity and (let’s be honest as to what Executives are looking for) opportunities for reducing head-count:
- Reducing the re-work. The biggest cause of re-work is failed changes. Better Change Management, Release and Deployment Management, and Testing and Validation, can reduce this largest contribution to waste. Configuration Management can enable Change Management and make it more effective.
- Reducing the fire-fighting. Many organizations do not realize the high cost of constantly fire-fighting. Fire-fighting pulls resources from strategic project work so there are the direct costs to fight the fire as well as the indirect opportunity costs that the projects must bear. In contrast, a proactive approach, giving people time to think strategically and plan reduces the number of fires and frees the resources that were fighting fires. Being proactive means emphasizing, among many other things, the Service Design processes, Event Management, Problem Management and Continual Service Improvement. Another not well recognized cost of fire-fighting is the impact on the Business. Fires, by its very nature, do not just create costs and inefficiencies within IT but also create costs (real and opportunity costs) for the Business. So a reduction in fire-fighting will help IT as well as the Business.
- Consistent adoption of efficient and effective processes. Too often, processes vary across the organization: different teams follow different processes, different individuals perform processes differently, there are differences between geographic regions, between different legacy organizations (due to the history of mergers and acquisitions), and between different services that IT provides. If an organization identifies/defines the best practices for its organization and ensures consistent adoption, the organizations as a whole will experience a productivity boost.
How do we reduce the cost of Service Management?
Many of the cost saving arguments for Service Management have been discussed before. However, a “dirty little secret” is that Service Management is sometimes the cause of “non-value-added” cost to the organization. This is not the fault of Service Management framework but of an adoption that does not focus on business value.
If you hear comments like “I spend more time writing up a Change record then implementing the Change,” there are probably many cost saving opportunities within Service Management to:
- Streamline processes and make the more efficient
- Remove bureaucracy and administrative “busy work”
- Remove overlapping controls, e.g., between Change and Release
- More efficient use of tools that support Service Management
Another way of finding to reduce the cost of Service Management is to analyze who is doing what activity within each process. For example:
- Can the activity be performed by a less expensive resource? What training and tools can we provide the less expensive resource so they can be successful at the same tasks as the more experienced / more expensive resources?
- Can the activity be off-shored (again to a less expensive resource) in a way that we can still keep the process coherent?
To ensure Service Management is not causing a burden to the organization, you need metrics to measure the cost and value of each process.
Reginald Lo is Director of Service Management Transformation with VMware Accelerate Advisory Services and is based in California.