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Tuesday, November 08, 2005

Armstrong on IT-Business Alignment

Peter ArmstrongIf you research the business case for SLM on the Web, eventually you're sure find yourself reading something published by NextSLM.org, a site sponsored by BMC Software. One contributor is a former colleague of mine, Peter Armstrong.

Peter and I started our careers at IBM UK in the 70's as SE's supporting IMS customers. Although information technology has evolved a bit since then, our interests apparently have not diverged much. Peter now writes a blog called Adopting a Service (Management) Mentality, which focuses on the increasingly important domain of how business and information technology need to work together -- the area he is responsible for at BMC.

Buried in the archives of the NextSLM site is an essay by Peter entitled Why IT and Business Need to Talk: Two Nations Separated by a Common Language? I will extract some key paragraphs, adding my own emphasis in each section. Written (as best as I can tell) in 2003, it is peppered with stories of IT and business not communicating, for example:
Your IT department has spent days gathering all the information on server availability, and come to the board meeting ready to prove that they have been delivering 99.99% availability for the last week and cannot understand why anybody is complaining. Unfortunately the application is being used by online options traders who need a response time of less than 12 seconds in which to make a trade. Availability is meaningless to them without performance.
Peter sets out to explain why IT and business have to learn a common language. He writes about the cultural and historical reasons for the divide between the two sides, and the challenges they face in achieving the much-desired state of alignment. Being familiar with how IT works, he observes that:

Many IT departments focus on the technology and delivery of availability of platforms, databases and applications. But although all of these are important, it is how these elements interact to provide a business service that is the key issue. It is vital that the IT department understands not only the technology but also the way that the technology interacts to deliver service ...

IT needs to understand that its sole function in life is to enable the business to run better. This means that it is either helping to reduce costs, and/or it is helping you increase revenues ...

However, the IT department is between a rock and a hard place as they are being told to reduce costs, and by far the most important factor is actually quality of service. But when budgets are restricted, it is also the one factor that often gets pushed down the list of selection criteria. Some managers see low cost and high quality of service as being mutually exclusive but this need not to be the case.

This article claims to be the first of two parts, but its link to the second part -- How Good is My Service -- is broken. But Google found me this PDF, which seems to contain the original essay before it was split into parts. In the second half, Peter discusses several aspects of SLM. Looking first at Web sites, Peter highlights how vital it is that companies doing business online understand their customers' point of view. Someone needs to ask:
  • Who is using your IT systems? Why are they using them? What are you trying to sell them?
  • Is it easy to contact you if they have problems? Is the data up-to-date?
  • Are the systems available (and this includes performance)?
  • What are the availability and performance requirements (some systems perform better than required, which is a waste of money)?
  • Do you have Service Level Agreements (SLAs) in place and are you measuring against them?
  • Are you measuring from the end-user point of view or from your own point of view?
  • Turning his attention to service management and the nature of SLA's, Peter writes:
    The cornerstone of any managed services contract is the service level agreement. This is meant to be the yardstick that measures the performance of the service provider, but unless the agreement is written and reported on with measurable and meaningful values it can lead to very difficult situations ...

    I was visiting a major customer last year, whose IT operations are outsourced to one of the major outsourcing companies. The contract is, of course, couched in terms of CPU (processor resources) used, number of housekeeping jobs run, number of tape mounts etc. -- totally and utterly wrong in my opinion. The bank wants a service -- how the outsourcer actually implements it technically should be of no concern as long as it is safe, reliable and conforms to the business SLAs ...

    Reporting is another critical area that can get overlooked. A good IT department will not only provide good service but also prove it by providing meaningful reports. These reports should relate directly to the service being provided to the customer and also show the value that the IT department is bringing to the equation. They should be couched in language that the business people can understand -- Oracle availability is meaningless, ability to print invoices on time is significant.
    Like me, Peter is a strong advocate of measurement tools, which should be deployed within a systematic SLM framework such as ITIL. [Since we work for companies that sell tools and services, you might be inclined to discount our views. But I'm sure Peter would agree with me that this is a "chicken and egg" situation -- we work for tool vendors because we believe in the value of their tools and services, and not vice versa.] Peter writes:
    At a technical level the key issue is how the IT department actually proposes to manage the environment. The use of industry-leading solutions and best-practice methodologies should be common to all good service providers, but they are surprisingly often absent.

    Some IT departments see tools merely as a way of reducing their cost of operation by reducing the number of people required to manage the environment. However, the use of tools to manage technology can greatly increase the availability and performance of the infrastructure. By exploiting the functionality within the toolset and applying that functionality to best-practice standards such as ITIL, the business -- and ultimately the customer -- receives the benefits.

    Through implementation of sensible IT processes, combined with business-related tools and methodologies, the advantage to the business is the true and correct exploitation of the IT investment. This is why the two parties need to learn to talk to one another.
    It is clear that Peter's thinking has subsequently found its way into BMC's more sanitized (and glossier) marketing materials on this topic, like his whitepaper on Seven Strategies for Enabling IT to Activate the Business, and this corporate strategy brochure on Business Service Management. But Peter's original essay reveals better the strength of his personal belief in the importance of SLM to the business.

    I share that belief, and endorse his conclusions.

    1 Comments:

    Anonymous Satnam Singh said...

    Chris,

    Good article; the examples in the PDF were helpful. My belief, that adoption of SLM practices rests on potential users being convinced, by themselves or vendors, of its ROI, still stands.

    I agree with your reply to my comment on the last blog. Adoption depends on customers as well, and those who have been "burned" in the past due to lack of service management tools will be more inclined to buy them.

    This blog though, got me thinking of this issue from a macroscopic (and strategic) level.

    My experience (from the past five companies I have worked for), confirm your and Peter's findings. IT often does not get it. This is not blame, per se, but a factual statement. Business does not get it either.

    But, such situations do not manifest themselves only in SLM arena, but are present wherever two orthogonal schools of thinking such as technology and business come into contact with each other. Each has developed a hard-wired frame of mind over the decades and continues to operate in it.

    To provide a similar example in a different setting, an excellent Customer Analyst is hard to find. Why you ask? Well, because it requires the same person to operate in two modes of thinking. He/she needs to not only think about business goals - revenue optimization through customer segmentation and focus on appropriate segments - but ALSO needs to be technologically adept to mine such details from a host of information available in databases or otherwise.

    Yet, once he/she brings the two worlds together, the benefits are clear and amazing. Ask companies like Amazon, Google, and SAS among others who have built huge businesses on it. So, how can we bridge such gaps in the IT world? In a nutshell, the mentality needs to change on both ends. Discussions regarding ROI of an IT investment have been happening for some time now, but I find a key thought lacking in them. They all seem to point to the ludicrous spending of the "boom years" as their motivation, and rarely present any real strategy for improving the situation going forward, other than being more careful with spending.

    To achieve such changes, and to propagate such thinking, we need an "interface" person. Think of IT and Business as two perpendicular pipes. What we need is an elbow pipe that curves and connects to both ends to keep the flow going. Companies such as Accenture, IBM and Booz Allen, among others, offer exactly this value proposition. And this is the model, I believe, will also be successful for companies in the SLM world.

    I would love to brainstorm to define such "interface" roles, their requirements and benefits. I am surprised that I still find IT roles listed on career sites without such expectations (no, I am not looking for a job! :) )

    - Satnam

    Note : It is not surprising, in fact, to see Keynote’s Professional Services revenue increase quarter after quarter. If anything, more time and technology should be focused to developing custom solutions for bigger customers based on the Keynote data, and hiring/developing intelligent “interface” consultants to deliver them.

    11/08/2005 06:36:00 PM  

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