Creating S.M.A.R.T. IT Services (Part 1 of 2): Determining the Value of IT Services

Creating S.M.A.R.T. IT Services (Part 1 of 2): Determining the Value of IT Services

Today, many IT Service Management (ITSM) vendors offer an integrated Service Catalog within their solution suite.

The focus of the IT Service Catalog is often about the ordering of services, and the handling of requests and incidents. Yet, IT Service design teams too quickly bypass the IT Service Strategy steps described in the ITIL® V3 guidance. (This is appropriately described in the ITIL® Version 3 Framework of ITSM best practices.)

The IT Service Strategy steps are fundamental to creating Strategic, Measurable, Actionable, Relevant, and Transparent (S.M.A.R.T.) IT Services. One of the key steps of the IT Service Strategy is the development of an IT service-utilization-and-cost model to determine the value of IT Services to the business community. (This is a topic addressed in a later part of this blog series.)


Incorporating ITSM best practice, as described in the ITIL® V3 guidance, requires that your IT Services design team develop a rock solid IT Services Strategy that:

  • gains consensus about services and their expected business value,
  • facilitates the cultural shift from a break-fix orientation to a customer-service orientation,
  • kick-starts (or reinvigorates) the creation and publication of a business relevant IT Service Catalog, and
  • establishes critical success factors (CSFs), key performance indicators (KPIs), and identifies service costs.

Why would you wish to bypass the IT Service Strategy steps?

Would you drive down the highway and look only in the rear-view mirror?

The IT Service Strategy steps allow you to focus on the services that deliver the greatest value to the business community, and define their utilization and cost-to-value proposition.

IT organizations that implement any of today’s ITSM tools suites without first addressing the IT Service Strategy steps frequently find that they cannot produce metrics relevant to the business about IT services. They continue to be challenged when asked, “What is the value of IT expenditures to the business?”

This is problematic when one of the primary justifications for the new or upgrade of the ITSM tool suite is to bring a greater alignment and understanding of the value of IT between the IT organization and the business.

Whatever the objectives of the business, the IT organization’s “customers” provide services to their users. Those users may themselves be service providers with their own customers, users, clients, consumers, or even citizens. Each word is synonymous with defining both the receiver of business services and the receiver of technology services from the IT organization. To eliminate confusion that may come up on this topic, in this blog series we use the term “business community” to mean the receiver of technology services from the IT organization.

The value chain is continuous, and from the business community perspective, the IT organization is one of its highly valued suppliers in a chain of suppliers.

Calculating the economic value of business services in financial terms is often straight forward. Calculating the financial value of IT Services is a horse of a different color.

When talking about IT Services, quantifying the value is significantly more complex. Value is defined not only in terms of the customer’s business outcomes. It is also highly dependent upon the customer’s perception of the quality of service, cost (if appropriate), and quantity of service they use.

The value of a service takes on many forms. Customers have preferences influenced by their perceptions. The perception and differentiation of value in the customer’s mind is primarily influenced by:

  • attributes of the IT service that are indications of value,
  • present or prior experiences with similar attributes, and
  • relevant competitors – internal vs. external IT service options.

Defining the value of services as the first step in creating a S.M.A.R.T. Service Catalog is to recognize that the business community follows this simple rule:

“The more ambiguous or intangible the differentiation of services, the lower the value they attribute to it.”

It is incumbent on IT providers to collaborate with the business community to establish IT service value, influence perceptions, and respond to expectations and preferences.

It is important, that the IT Service design team always remembers value is defined in the context of the business community achieved outcomes. The objective of any business community is to coordinate all its capabilities, and control and deploy its resources to create the desired business outcome.

Determining the business value of IT Services requires that the design team carefully analyze and understand the business cycle and key functions and activities. Doing this in a collaborative consensus building manner with business customers results in a clear understanding of the environment in which the business operates. This allows the IT Service design team to create IT Services that the business community recognize as value.

Taking this approach will clearly define the IT alignment to the business community, and the value it creates.

By adopting this approach as an initial step, your design team ensures that your S.M.A.R.T. IT Services and associated improvements are stable, sustainable, and measurable.

Click here to view Part 2 of the two-part series,
IT Service Strategy and Fulfillment.

 

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