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 Modifying Behaviors to Reduce IT Costs Vol 3 Issue 1- Jan 2007 By Mark Robbins In many organizations, the IT department is like a microcosm of the external business environment. Essentially being asked to run itself as a business, IT is under intense pressure to minimize costs, allocate resources for maximum value and ensure spending is well-aligned with business drivers. Computer Associates enterprise architect Steve Sacks points to IT Service Management (ITSM) as one method of achieving efficiencies. The focus of ITSM is on modifying user behaviors by making business units financially accountable for their consumption of services, including labor, asset, support. Sacks identified ten steps to modifying behavior to achieve cost efficiencies: 1. Document the Services You Provide Before you can reduce costs, you first have to identify where the costs are coming from. For IT, these can be broken down into three main categories: services performed directly for individuals in the company, those designed to support line-of-profit application systems, and services that are common to the support of the corporation. A common mistake companies make in this documenting process is to confuse their service level categories (i.e. Gold, Silver, Bronze) with the actual defining of a service. To avoid this, try grouping services under a relevant umbrella. And make sure you choose names for your service offerings that users will understand. 2. Document the Expected Service Levels All of your services‹hosting, critical business systems, provisioning new employees and responding to help desk callsneed to be fully defined. With this in place, it's time to create a service level agreement (SLA) for these services. Ask yourself:
3. Align Services with Business Goals There are three areas you need to focus on: aligning services with financial management, aligning services with corporate goals, and aligning services for increased efficiencies. Aligning Services with Financial Management From a financial management perspective, it's important to define the hard (asset) costs and the soft (support, maintenance) costs in order to effectively price the service. This can serve to influence customer behavior toward the goal of reducing costs. Aligning Services with Corporate Goals Cost reduction is always a goal, both for the IT department and the company as a whole. Look for opportunities to streamline processes. This may include offering self-service capabilities through a service catalog and knowledge bases. Not only can this help to reduce costs, it also empowers users. Streamlining and automating processes for initiating requests and authorization can also reduce time to service, freeing technicians to work on higher-priority issues such as increasing efficiencies or providing additional revenue-generating capabilities. Compliance with government regulations is another major issue for IT, and it may be necessary to produce periodic reports to verify compliance. Aligning Services for Increased Efficiencies Capacity planning is a proactive approach that enables equipment to be replaced before it affects performance. While technologies such as server virtualization and on-demand consulting are possible solutions, each comes with its own challenges. The capability of server virtualization in being able to move the server from one physical location to another provides a level of flexibility. But depending on the size and cost of the new server, it important to evaluate how current SLAs may be affected. And on-demand computing often flies in the face of traditional service definitions. 4. Service Pricing Understanding the rationale for setting a service price is important. It may be that you're executing cash chargebacks for IT services in order to fully allocate all technology costs to departments or lines of business. Alternatively, you may want to keep consumption of services within some defined budget, with departments incurring financial penalties if they exceed specific thresholds. The next step is to determine the financial model for pricing your services. There are three primary approaches you can use/The three primary approaches are:
5. Measure Resource Usage Meterinig items for audit, cost allocation/billing and service level management is another approach companies can apply. This can be done in a number of ways, including:
6. Design a Service Catalog There are two types of service catalogs‹internally focused and public-facing. The former is specific for use by IT and may include services not apparent to the user community, whereas the latter (for self-service subscription) should be designed for ease of use and to support the customer's need to make informed decisions. When designing your service catalog, it's helpful to group service offerings meaningfully for easy navigation and promote informed trade-offs between factors such as price and service levels, size and quantity. To ensure the effectiveness and ease of use of your catalog, take the time and effort to research and defines your services. With your goals clearly in mind, their unique purpose should yield positive results. 7. Provision Services by Automating Workflow The next step is to automate the workflow behind the activation of a request. This is a four-step process, starting with the creation of virtual teams to identify and organize the processes currently in place. Next, evaluate the processes for effectiveness within the organization as well as repeatability and procedural modularization. Step three is to evaluate the tools currently operating in the organization, and determine where and how they can be used for this initiative. And finally, determine which processes work and which to refine or restructure to maximize service improvements. 8. Provide Business Units with Visibility into Service Costs There are four key areas that provide value within the context of ITSM: asset inventory (knowing what has been purchased), asset management (knowing what has been installed), usage metering (knowing what computer-related resources are used), and reporting/cost allocation/billing (knowing the correlation between usage and cost). The ultimate goal is to show users that by changing their usage patterns, they can retain the functionality they want and still reduce costs. This can be accomplished by demonstrating their current usage patterns in a meaningful context. Gather the necessary information and provide business managers with the data indicating all the hardware and software dedicated to their departments so that they can clearly see and understand their current consumption patterns and the potential cost savings of changing their usage behaviors. 9. Provide Self-Service and Self-Help Alternatives Encouraging users to become self-educated self-motivated and self-reliant is key to positive behavior change. Self-help tools that allow individuals to have direct access to information and functionality can be a significant source of cost savings. These tools may include the company's service catalog or knowledge bases attached to web-based support or a help desk. Computer-based training (CBT) is another is another mechanism, providing easy access to e-books, online self-training and video clips. Whichever method or methods you select, steps need to be taken to motivate users to access them. Knowledge bases need to be accurate, up-to-date and easy to use. The organization and presentation of information--as well as the search mechanisms to find the information--are key determinants in usage and effectiveness. 10. Provide the Tools to Support the Services and Measure Customer Satisfaction Implementation without measurement is meaningless, and the following five functions are needed to report on the success and progress of the changes you make to modify behavior.
Additional Guidance A final area to consider is the level and availability of communication between IT and business units. The best approach is to start the communication early, and communicate frequently. Automated feedback processes, focus group, pilots and usability labs are all important tools. |
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