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Cloud Services Definition

Part 3 of the Cloud Business Management Series

By Khalid Hakim, Kai Holthaus and Bill Irvine

Services DefinitionIn our last cloud operations business transformation blog, we talked about the cloud business strategy and its importance in formulating the vision and the plan as to how you want to run your cloud as a business. In today’s blog, the focus begins to shift to executing the strategy and laying out the foundations of a service-oriented and business-driven “operating model”.

There is a saying: you can’t manage what you can’t control, and you can’t control what you can’t define.  Imagine that you are planning to open a new business. The first step is to define what services/products you want to offer your consumers and what distinguishes your market value among the others. Similarly, cloud business management starts at this point. IT should identify and define what cloud services would be offered to its consumers in order to truly drive a services-oriented and value-driven organization.

Key Areas of Services Definition

VMware recommends a unique approach for defining cloud services, through which a service owner defines a 360-degree view of how the cloud services would be established, managed and delivered effectively and efficiently to meet or exceed the expected value. To paint this panoramic view, cloud service owners should consider the following areas:

  • Service Overview – describe the service in terms of its purpose, goals, consumers, criticality, availability criteria and rhythm of business.
  • Virtual Service Team – organize your team members around the services you deliver. Team up as a virtual service team.
  • Services Definition ChartService Chart – map out the end-to-end cloud service in a graphical representation that is easy to consume. The service chart helps to visually understand the core components of a service and contributes when costing services.
  • Service Portfolio and Consumer Management – the service portfolio answers the questions, who are our customers and why should they buy the service from us. It contains all of the service categories and the business units that consume them and aids with making informed “service” and “business” based investment decisions.
  • Service Design and Development – provide high level information about how the services will be designed and developed, especially if the service isn’t yet in production. This helps with understanding the customer business need and developing the most valuable solution possible.
  • Service Catalog Management – identify service catalog structure parameters and possible blueprints. Also, define what columns or key fields should be included in service catalog entries.
  • Service Level Management – define key SLA/OLA targets to ensure provisioning time and quality meets specific business needs.
  • Service Desk Management – describe how the service will be supported. Draft a plan for service-desk requirements, skills needed and required knowledge transfer.
  • Proactive Operations Management – define the service operation requirements for support and reliability from the event and performance monitoring to availability, demand, capacity, continuity and security management.
  • Provisioning and Change Management – define the service provisioning lifecycle and associated change management policies including how the service will be pre-approved and auto-provisioned (for maximum efficiency). New leaner change management workflow needs to defined / refined (i.e. standard changes).
  • Service Financial Management – define the service cost and charge back/ show back model along with pricing and connections to the service catalog.
  • Service Performance and KPIs – define any applicable service related strategic, tactical and operational performance indicators (KPIs), and the metrics that will be collected to demonstrate that required performance was achieved. Also define how and when the KPIs and metrics will be reported, and to whom.
  • Service Reviews – define service-based review meetings to discuss and remediate any operational or consumer related topics. Follow a standard cadence for all services. Discuss potential changes in demand for services. Capture new or enhanced service requirements.
  • Service Marketing – define the key applicable service marketing elements for a successful service promotion and value realization within different company cultures.

Now, how long do you think this exercise will take? In most of our engagements, defining a service takes between 1 to 2 weeks. It is never intended to fully document all the areas above immediately, or establish all of the processes, as many organizations don’t have this all of this information available. Think of the Service Definition as a living and breathing document. The service owner should establish a working draft, develop it to the point of release and then maintain in for its life as an active service offering. All undefined services are treated as areas for improvement.

In our next blog, we will take this to the next level as we learn to establish a cloud service-based cost model and cost out cloud services end-to-end.  This will enable you to understand the cost of a unit of a cloud and provide the required level of cost transparency internally and to consumers.

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Khalid Hakim is an IT Business/Financial Management Lead with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

Kai Holthaus is a Sr. Transformation Consultant with VMware Operations Transformation Services and is based in Oregon.

Bill Irvine is a Principal Strategist with VMware Accelerate Advisory Services and is based in Colorado.

Cloud Business Strategy

Part Two of the Cloud Business Management Series

Cloud Business Strategy

By Khalid Hakim, Charlie McVeigh and Reg Lo

At VMware we have the good fortune of working with many different customers on driving and implementing a Cloud Business Strategy.  As we have discussed in some of our prior Cloud Business Management blogs, there is a full spectrum of issues to be considered when considering Cloud Business Management.  This spectrum of issues include:

  • Cloud Strategy
  • Cloud Costing
  • Cloud Marketing
  • Service Level Management & Contracts Management
  • Budgeting & Forecasting
  • Services Definition
  • Cloud Pricing
  • Consumption & Charge-back
  • Cost Optimization

Today we are going to look specifically at the role of Cloud Business Strategy and our time tested workshop approach that we use with our customers to derive a road map to success.

CBM_workshop

Our Cloud Business Management (CBM) Workshops always start by asking our customers what their definition of “success” is when looking forward 18-24 months into the future.  While every customer is unique, the common success criteria that we hear from our customers include the following items:

  • Full transparency for IT consumers as to what they consume and what are the costs for what they are consuming, i.e. who consumes what and at what cost
  • Reclamation and recovery of unused or underutilized infrastructure.
  • Establishment of services definitions for “patterns” (repeatable services in the service catalog) and “snowflakes”  (services that are unique and require engineering to stand the service up.)
  • Reduced time of deployment of services especially “patterns”
  • Understanding from an economic and technical perspective of where is the best place to run cloud workloads. Is it private cloud, public cloud or a hybrid cloud environment? Maybe it is more cost efficient to run temporary workloads in the public cloud than the private one.
  • Incentivizing users to “do the right thing” due to understanding of economics and transparency of costs.
  • Incentivizing users to “do the right thing” due to vastly improved day 0, day 1 and day 2 operations automation.

Once we have an understanding of what “success” will look like in the future, we then drive into a deeper discussion of the following items:

  1. We start by asking for current pain points across the CBM spectrum listed after the first paragraph above. For example: Do you have service definitions? Do you know your costs for services?  Do you engage in pricing strategies?  Are you marketing cloud services to incent user behavior?  Do your users know what they are consuming?  What are you doing for cost optimization?, etc.
  2. We then engage our customers in a discussion of what they would like to see in the future across the CBM spectrum and what tangible improvements that they can anticipate as they mature across each of these disciplines.
  3. Discussions then dive into the current level of maturity across the CBM Spectrum. The key here being that more mature organizations provides higher levels of value to the IT organization and the business consumers of IT resources.
  4. Lastly, a deep dive into data sources that can be used for setting up automated cost modeling are investigated. We are looking to understand what are some of the foundational data sources for Cloud Management (such as vRA, vROPs), Foundation sources for costs (G/L, A/P, Organization, Budgets), Operational Data (Labor rates, Headcount, Compute capacity and metering, Storage capacity and metering, Network capacity and metering, Reporting requirements, Financial practices, etc.)

The workshop and the discussions that occur require a significant discovery effort and detailed listening to our customers.   From this effort we are able to derive a detailed deliverable that results in a tangible Cloud Business Strategy deliverable.   The strategy includes a road map with definitive success points at 6 months, 12 months and 18 – 24 months.

Cloud Business StrategyEmbedded within the Cloud Business Strategy document, is an illustration of what will happen to the organizations maturity across the CBM spectrum if the road map is followed.  Maturity gains will be followed and realized by direct and quantifiable improvements in value provided by the Cloud management team to the business that they are supporting.

For more information and to schedule a Cloud Business Management Workshop for your organization, please contact your local VMware representative.

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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

Charlie McVeigh is an IT business management strategic advisor for VMware. You can follow him on Twitter @cbmcveigh.

Reg Lo is the Director of VMware Accelerate Advisory Services and is based in San Diego, CA.  You can connect with him on LinkedIn.

The Cloud Business Manager Role

Part One of the Cloud Business Management Series

Khalid HakimCharlie McVeighBy Khalid Hakim and Charlie McVeigh

Business leaders look at the cloud model and see new ways to accelerate innovation, create competitive advantage, and drive new business models. IT executives look at private, public and hybrid cloud models and see a host of new possibilities for positive IT outcomes, including among others:

  • Optimizing CapEx
  • Lowering OpEx
  • Shifting focus to optimize the “run IT” budget thus freeing funding for the “grow IT” budget
  • Improved service delivery times through app and infrastructure delivery automation
  • Improved asset utilization by understanding consumption and usage patterns in the cloud

Never forget your history lessons.   Have you ever participated in a successful transformation project that didn’t factor in People, Process and Technology? We still find that all too often, a critical aspect of harnessing the cloud is overlooked: the organizational impact of moving to the cloud model. The fact is, the transition to the cloud model requires an evolution in roles, skills, processes, and organizational structure.

Organizing for the cloud cannot be an afterthought in the formulation of an effective IT transformation strategy. When IT is in transition, roles and responsibilities are more important than ever. The right people, with the right skills, have to be in the right places and serve the right roles.

Chief among these critical organizational shifts is establishing a Cloud Business Management discipline. This blog is the first in a four part series recommending specific Cloud Business Management roles and processes to consider.

Cloud Business Manager Role:  Run Cloud Like a Business

The Cloud Business Manager role  drives a new business management discipline within IT to lead a comprehensive cloud business management practice, leveraging investments in vRealize Business. The Cloud Business Manager supports Cloud Infrastructure and Tenant Operations to help the business better manage:

  • Cloud spend
  • Rate cards
  • Showback and chargeback
  • Reporting of consumption and wastage
  • Service tier options
  • Fair recovery of IT costs
  • Incentives driving the right economic usage patterns by cloud consumers.

Cloud Business Management

Responsibilities of the Cloud Business Manager are in the following 4 categories:

  • Financial
    • The focus here is primarily to develop the cloud service-based cost model along with a repeatable service costing process for Cloud consumption. Among other responsibilities, this includes service-based cost allocation and classification strategy, tracking and management of cloud costs, cloud services rates settings, and defining consumption and showback/chargeback reports from both the provider and consumer perspective.
  • Business
    • Included here are responsibilities for developing a cloud strategy roadmap, a cloud services marketing program, and liaison work among IT, Corporate Marketing, and Business Unit consumers of the cloud.
  • IT/Cloud
    • Here the responsibilities include defining SLA’s, ensuring delivery, and making cloud workload placement decisions based on the right economic factors to avoid shadow-IT situations.
  •  Value
    • Responsibilities here include defining value metrics, continuous improvement reporting, and regular business performance reporting for key stakeholders. This enables the business consumers of the cloud to make the right economic decisions about where and how to run their workloads.
  • Corporate/IT Marketing
    • Develop a Cloud Services marketing strategy; offers and promotions to ensures cloud services consumption and value. Once you understand the economics of cloud workload placement, cloud marketing will drive users to that desired behavior.

What does the Cloud Business Manager contribute to the business?

The Cloud Business Manager helps IT deliver on cloud promises for the desired quality at the right cost, by ensuring tighter alignment and accountability between IT, Business and Finance.  This roles makes a significant contribution in the workload placement decision-making process, as well as hybrid cloud, cost takeout, application rationalization and bill-of-cloud.

Let us know if we can help you further define this role in your company.  And keep a look out for Part Two in this Cloud Business Management Series next month, where I cover the Cloud Business Strategy topic.

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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

Charlie McVeigh is an IT business management strategic advisor for VMware. You can follow him on Twitter @cbmcveigh

Building Service-based Cost Models to Accelerate Your IT Transformation

By Khalid Hakim

“Why is this so expensive?”

As IT moves towards a service-based model, this is the refrain that IT financial managers often hear. It’s a difficult question to answer if you don’t have the data and structure that you need to clearly and accurately defend the numbers. Fighting this perception, and building trust with the line of business, requires a change in how IT approaches cost management that will match the new IT-as-a-service format.

The first and most important step in building service-based cost models is defining what exactly a service is, and what it is not. For example, the onboarding process: is this a service, a process, or an application? Drawing the lines of what service means within your organization, and making it consistent and scalable, will allow you to calculate unit costs. Businesses are already doing cost management by department, by product, by technology, but what about the base costs, such as labor, facilities, or technology within a software-defined data center? Your final service cost should include all these components in a transparent way, so that other parts of the business can understand what exactly they are getting for their money.

Building these base costs into your service cost requires an in-depth look into how service-to-service allocation will work. For example, how do you allocate the cost of the network, which is delivered to desktops, client environments, wireless, VPN, and data centers? Before you can start to bring in a tool to automate costing out your services, map out how each service affects another, and define units and cost points for them. While it’s often tempting to jump straight into service pricing and consider yourself done once it’s complete, it’s important to start with a well defined service catalog, including costs for each service, then to continue to manage and optimize once the pricing has been implemented. Service costing helps to classify your costs, to understand what is fixed, what is variable, direct, indirect, and so forth.

So we’ve allocated the shared cost (indirect cost in accounting language) of services across the catalog. Now it’s time to bring in the service managers—the people who really understand what is being delivered. Just as a manufacturing company would expect a product manager to understand their product end to end, service managers should understand their entire service holistically. Once you’ve built a costing process, the service manager should be able to apply that process to their service.

In the past, service managers have really only been required to understand the technology involved. Bringing them into this process may require them to understand new elements of their service, such as how to sell the service, what it costs, and how to market it. It helps to map out the service in a visual way, which helps the service managers understand their own service better, and also identifies the points at which new costs should be built into the pricing model. Once you understand the service itself, then decide how you want to package it, the SLAs around it, and what the cost of a single unit will be. When relevant, create pre-defined packages that customers will be able to choose from.

SCP white paper coverOnce the costing has been implemented, you can circle back and use the data you’re gathering to help optimize the costs. This is where automation can offer a lot of value. VMware Realize Business (formerly IT Business Management Suite) helps you align IT spending with business priorities by getting full transparency of infrastructure and application cost and service quality. At a high level, it helps you build “what if” cost models, which automatically identify potential areas for cost reduction through virtualization or consolidation. The dashboard view offers the transparency needed to quickly understand cost by service and to be able to justify your costs across the business.

Service-based cost models are a major component of full IT transformation, which requires more than just new technology. You need an integrated approach that includes modernization of people, process, and technology. In this short video below, I share some basic steps that you need to jumpstart your business acumen and deliver your IT services like a business.

For more in-depth guidance, you can also access my white paper: Real IT Transformation Requires a Real IT Service Costing Process, as a resource on your journey to IT as a service.

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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice and is based in Dallas. You can follow him on Twitter @KhalidHakim47.

 

The Missing Link of IT: An Effective Service Costing Process

By Khalid Hakim

For years now, there has been much discussion about the urgent need for tighter alignment between business and IT. Why are we still talking about the “need for” alignment and not the “results of” better alignment? Because all too often, IT cannot answer one of the key questions business leaders ask: “What exactly does this service cost?”

In many cases IT does not have an adequate service costing process, which means it does not have a fast, accurate, consistent, fair way to provide cost information about IT services to constituents. And the lack of an effective service costing process is costing both IT and the business—big time.

Cost transparency is important not only because IT service users want to know what they’re paying for, but also because it provides an opportunity for IT to quantify its value to the business.

If IT can provide accurate cost information, both business and IT leaders can make better decisions about IT investments, outsourcing, cost cutting, business strategy, and competitive differentiation.

We’ve all heard the mantra “Minimize IT costs while maximizing business value,” or its short form: “Do more with less.” It’s a core principle of IT business management (ITBM). But without an accurate, transparent service costing process, how can IT leaders truly deliver IT as a service (ITaaS) and run IT like a business?

Take a closer look at your existing service costing process and ask yourself a few tough questions:

  • Is it accurate? Does it take into account all of the CapEx and OpEx elements of delivering an IT service?
  • Is it equitable? Does it charge the right constituents the right amounts for IT services, based on their actual consumption—or does it simply charge a lump sum based on voodoo economics?
  • Is it transparent? Can constituents get an accurate breakdown of what’s included in the final price tag and what isn’t?
  • Is it improving IT investment planning? Your service costing process should enable business and IT leaders to create more finely honed investment strategies that cut costs while creating new competitive advantages. Is it?

If you can look in the mirror and answer “yes” to all those questions, congratulations—you’re a member of a small minority of enterprise IT departments with an effective service costing process. If not, ask yourself the next logical question: How can you develop a better service costing process?

I’ll address that question in my next blog post. So stay tuned.
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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

VMworld-graphicAnd if you’re heading to VMworld, don’t miss Khalid’s session!

Accelerate Your IT Transformation — How to Build Service-based Cost Models with VMware IT Business Management (ITBM)
A recent VMware survey showed 75% of IT decision makers list the number one challenge in IT financial management as lack of understanding of the true cost of IT services. ITBM experts and VMware Operations Transformation Architects Khalid Hakim and Gary Roos shed light on this alarming figure, and give practical advice for obtaining in-depth knowledge of the cost of IT services so you can provide cost transparency back to the business.

When you visit the VMworld 2014 Schedule Builder, be sure to check out the SDDC > Operations Transformation track for these and other sessions to help you focus on all the aspects of IT transformation.

Does IT Financial and Business Management Matter When Implementing Your Cloud?

 By Khalid Hakim

This is one of the common questions that I keep getting from my clients when building IT operations transformation roadmaps. In fact, one of the key considerations of a transformation roadmap is the business management side of your cloud, which often gets deprioritized by key stakeholders.

Let’s think it through: Can you tell me on the spot what your total cloud spend is, and, what that spend is comprised of? Here’s another one:  What’s the cost for you to deliver a unit of infrastructure as a service (IaaS)? And what about your consumers: Who consumes what service and at what cost?

Can you identify the services used and the cost allocation for each service? How is your cost efficiency compared to that of other public cloud infrastructures? How can you use that type of information to optimize the cost of your existing and future operations? How can you create a showback report to each of your stakeholders?

Let’s say that you’re the VP of Cloud Infrastructure — think through how you would justify your data center investments. Have you proactively analyzed demand vs. capacity along with operations cost of your cloud services?  How can you scale dynamically to fulfill your consumer needs? Have you thought about your goal to optimize the cost of delivering cloud services? Don’t you need closer monitoring to the quality of your delivery, such as continuous analysis and improvement?

(I can hear you thinking, enough with the questions already…)

If you are the IT financial manager, imagine how you can reduce your long-term commitments by moving from CAPEX to OPEX if appropriate. With financial and business management capabilities, your planning and IT budgeting would be based on actual cloud service demand and consumption practices. You would also be able to leverage benchmarking and “what if” scenarios for your cloud service costing optimization opportunities.

What keeps CIOs awake at night during a cloud implementation is the challenge of how they will demonstrate and deliver value for the cloud investment, as well as contribute as an innovator to the business by dynamically supporting growth and transformation as a result of their cloud cost optimization.

In fact, your ability to respond at the speed of business through fact-based decision making and responsiveness to changing needs in a dynamic environment is key to your success. The transparency of your cloud delivery value in context of demand, supply, cost, and quality will help improve your alignment with business goals to cloud services delivered.

In my next blog, I’ll cover some of the built-in functionality and business disciplines of the VMware IT Business Management Suite that can help you succeed in your cloud delivery and accelerate time to value.

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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

VMworld-graphicCheck out the VMworld 2014 Operations Transformation track for opportunities to hear from experienced VMware experts, practitioners, and the real-world experiences of customers transforming their IT infrastructure and operational processes.

 

Provide Transparency with an ITBM Service Costing Process

By Khalid Hakim

Last week I wrote about the growing need for IT to provide cost transparency to the business, especially to support its transition to a service provider or broker model. I also outlined some of the problems caused by opaque, decentralized costing strategies.

At VMware, we rely on an IT Business Management (ITBM) Service Costing Process (SCP) to help customers run IT like a business. Behind the acronyms lies a powerful tool that allows IT to validate its expenditures and solidify its role as a business leader. Here are four areas where our ITBM SCP solution helps address the challenges I outlined last week.

1. Service-based cost models
The ITBM SCP helps your organization establish a well-defined, repeatable, and consistent service-costing process with clear roles and responsibilities. This includes engaging the IT and finance teams to create and possibly mature your service-based cost model to encapsulate both technical and business services. Once developed, a service-based cost allocation strategy is signed off on by all involved departments to ensure standardization across the IT organization.

Using the SCP methodology also helps standardize how costs should be classified based on IT Financial Management (ITFM) and ITBM management principles, along with finance department policies. By implementing a full-service cost model, IT helps explain the cost of its services and deliverables, eliminates random cost allocation, and ensures more effective cost optimization efforts.

2. True cost transparency
An ITBM SCP approach encourages service-based cost models to be built in a collaborative way that provides IT with internal cost transparency which can be shared externally (with your executive and line of business stakeholders, and customers). A series of workshops help cost an end-to-end service using a number of use cases and alternative scenarios to come up with a service-specific cost structure that best fits your organization and business needs. This in turn helps avoid any over- or under-costed services. The SCP empowers service managers/owners to defend their numbers more confidently and helps shift IT’s image from “always expensive” to “always valuable.”

3. Value-driven approach
Our SCP methodology is supported by an Agile approach, which provides coverage to all IT services, along with more reliable data sources and processes. The iterative, phased approach delivers quick wins, ensuring that value is immediately recognized by all your stakeholders. This in turn helps you rebrand IT as a value creator rather than a cost center.

4. Improved ITBM maturity
The SCP solution targets service managers and owners (in addition to IT financial managers) via a series of knowledge transfers, educational workshops, and discussions to provide the background needed to manage IT as a business and optimize ITFM processes. It also raises the awareness of the finance team, since their view is typically limited to non-service management accounting. All together this helps elevate the investment planning process to a more service-oriented approach that drives higher IT and business value. Moreover, it helps define the success metrics required to sustain the SCP process and ensure strategy continuity.

In all these ways, the ITBM Service Costing Process can help your IT organization understand its costs, increase efficiency, identify areas of improvement, and provide the transparency necessary to help the business continue to see IT as a value creator.

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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.

An ITBM Service Costing Process is Key to IT Transformation

By Khalid Hakim

KHALID-cropAs more businesses recognize the integral role IT plays in the overall success of the enterprise, executive and business stakeholders have higher expectations of IT’s performance and its ability to prove its value. Providing cost transparency back to the business is key to meeting those expectations.

That is why today’s IT organization needs to have an in-depth understanding of the costs associated with delivering IT services, enabling each service manager/owner to defend his or her numbers from a service angle (not from an expense code or department/project budget) and hence improve the overall IT service value perception.

This highlights the need for a new management discipline that provides a framework to deliver IT as a service and manage the business of IT: IT Business Management (ITBM). Yet many IT leaders do not have the support, knowledge, or bandwidth needed to implement an effective ITBM practice, with its core focus on minimizing IT costs while maximizing business value.

When I’m working with customers, I use VMware’s ITBM Service Costing Process (SCP) to facilitate a modular service-based costing approach that offers ease in manageability and operability. In my next post I’ll dig into the details of how the SCP solution is used as well as the benefits and business value it addresses. But first, I want to clarify the far-reaching repercussions of failing to implement these processes.

Common challenges facing IT
The biggest problem for today’s IT organizations is not insufficient funds or financial management people skills, but rather IT planning, budgeting, costing, allocating, and pricing, all of which are based on by-department cost management.

Traditional IT costing methods don’t explicitly call out value-service based structures and bills. They are more focused on costs associated with technology component purchases, projects implemented, cost code totals, department costs, and customer allocations of these non-value-add cost elements.

These situations create a host of business issues for IT:

Failure to understand the costs of IT deliverables Not all service managers are able to understand their end-to-end service costs and defend their expenses due to the lack of true service views, including service catalogs and definitions, as well as service-based cost models.

  • Arbitrary cost cutting and budget shrinking decisions — Management often looks at expense lists from cost-codes or a totals view, not from a service-based view that enables top management to see a holistic path to savings.
  • Random cost allocation — IT’s cost allocation is typically based on policies and guidelines set by the finance management department that are usually technically driven and don’t reflect the full value of IT.
  • Overstated or understated service costs — IT service cost calculations may include superfluous cost elements or exclude key cost elements. This is all caused by lack of a well-defined service-based costing process standard across IT, which results in services that can’t be compared “apples-to-apples” with outside service providers.

The “IT is always expensive” perception — Service managers and owners can’t confidently defend their numbers, which results in a common perception that IT is expensive.

Lack of trust and value realization — Due to the lack of value-centric conversations and full service-based cost transparency, talks tend to focus on numbers instead of the true value delivered to the business. As long as services are not being managed as business, then customers will continue to question what their money is buying.

Data does not support making meaningful decisions — One of the biggest challenges IT faces without an ITBM SCP is unreliable and inaccurate financial data related to IT assets.

Poor budget processes or lack of budget clarity —The traditional IT budgeting process follows a limited approach that limits IT’s capabilities view and creates uncertainties and inefficiencies in day-to-day operations.  Running IT like a business requires budgets to be based on services demands, rather than expense codes.

Limited financial and business management background — Financial management is not stressed across the IT organization, instead seen as a specialized role important for ITFM managers only. Service managers and IT generally lack basic financial management background that could provide them important insights.

But there is good news for the IT organization. Check back, and I’ll share more details about the ITBM SCP solution and the four key areas in which it addresses these challenges.
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Khalid Hakim is an operations architect with the VMware Operations Transformation global practice. You can follow him on Twitter @KhalidHakim47.