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Using an IT Service Management Lifecycle to Drive Value. David Cannon, FISM ITSM Practice Principal. Agenda. Part 1 – A discussion about value Part 2 – IT as a Value Add supplier? Part 3 – Driving value with an ITSM Lifecycle. Part 1. A Discussion about Value. What is Value?. Benefit
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Using an IT Service Management Lifecycle to Drive Value David Cannon, FISM ITSM Practice Principal
Agenda • Part 1 – A discussion about value • Part 2 – IT as a Value Add supplier? • Part 3 – Driving value with an ITSM Lifecycle
Part 1 A Discussion about Value
What is Value? Benefit Price Value = Quality Received Expectations Value =
What is Value? • Value is in the eye of the beholder • Value is variable • Value has to be negotiated • Value changes over time and context • Value can be managed • Value is not always financial
Total Generous Expected Generic Experiencing Value
Value Realised Money Spent Value Added Value in Supply Chains R&D Engineer Manufacture Market and Sell
Value in Supply Chains • Lessons Learned • If value is not realised, ‘value added’ is equal to ‘money spent’ • Value Realised must be greater than money spent • Value added internally is not value until it is realised
What does this mean for IT? • If IT wants to demonstrate value it has to link its services to where value is realised, not where value is added • If IT can not do this it will always be viewed as ‘money spent’ not ‘value added’
Value Networks – a Simple Example Source: Verna Allee
Value Networks • More than one supply chain • Multiple places where value is added • Multiple opportunities to realise value • And they’re all happening at the same time!
Part 2 IT as a Value Add Supplier
IT Value – an Example Other Suppliers Other Suppliers Outsourcer 1 Vendor A Other Suppliers Other Suppliers Other Suppliers Commodities Enterprise IT Dept A Dept B Dept C Dept D Money Spent Value Added BU1 IT BU2 IT Money Spent Value Added Business Unit 1 Business Unit 2
What is the Customer’s Role? • To understand their objectives (i.e. where is value realised?) • Accurate statement of requirements • To pay for the service • To report exceptions • To tell the supplier how the service can be changed or improved
What is the Supplier’s Role? • To quantify the service • To set a fair price • To ensure that the service is delivered as promised • To measure the level of satisfaction • To look for better ways of delivering service
Return on Investment • Cost based models • Payback period • Savings • Business savings = IT Increases? • Value based models • Information Economics • Strategic contribution • Affect on Profitability
Part 3 Using the ITSM Lifecycle to Drive Value
Process Orientated Working Service Level Management Change Management Problem Management
The Problems with Processes • Processes help to organise work better • They are aligned to activity and output, not necessarily to value • You have to know what you want to achieve, or else assume that the customer does • Processes are not strategic
Improvement Design Strategy Transition Operation The ITSM Lifecycle Business Plans & Requirements BusinessStrategies Business Change Management Business Operations
Using the Lifecycle Lessons learned: • Differentiate between value add and value realisation at the early stages of the lifecycle • Ensure that the business has the opportunity to influence money spent using potential value recognitionas a criterion
Using the Lifecycle Lessons learned: • Use Service Design processes to map money spent activities to value realisation • Use Continual Service Improvement activities to evaluate whether value is being realised and whether money spent can be optimised
Using the Lifecycle Lessons learned: • Good design means that operations will automatically add value • Service Transition should be used to: • Test whether money spent will be greater than value realisation • Communicate how changes influence money spent, value add and value realisation
Conclusion • Remember this is strategy…it takes time • Define value • Identify where it’s realised • Align existing processes and activities • Design new processes and activities using the lifecycle