January 22, 2010, 6:38 PM — While IT organizations don’t deliver concrete and tangible goods the way manufacturing organizations do, IT and manufacturing executives face many of the same challenges. Both must figure out the right mix of products for their customers, support their products to keep customers happy, and constantly adapt the product mix to accommodate evolving customer interests, tastes, needs and demands. They must also keep customers apprised of what products are available and how much they cost, so people can find and purchase the items they want. As always, there is intense pressure to contain costs so the company stays profitable, and to comply with government mandates so the company avoids fines and penalties.
How can IT managers meet these challenges? By understanding what senior leaders in manufacturing firms learned long ago, that it’s essential to have comprehensive and accurate documentation of a product portfolio.
Manufacturing organizations maintain detailed information on all products — those being planned, those in development, and those in production. Product specifications, along with cost, pricing, and sourcing data for assemblies and subassemblies provide the foundation for informed decision-making and effective product portfolio management. Savvy IT executives do the same thing with their service portfolio that lists and describes all IT services. And they establish effective processes for managing that portfolio.
The IT Infrastructure Library® (ITIL®) is an excellent resource for guidance related to implementing service portfolio management. ITIL Version 3 describes an approach to creating and managing a service portfolio. Business Service Management (BSM) solutions can make the job easier by supporting the ITIL approach and facilitating the creation and management of a service portfolio. BSM is a comprehensive approach and unified platform for running IT from the perspective of the business.
Highlights of Service Portfolio Management
The ITIL approach to service portfolio management comprises four major steps, which are outlined below. (Note: These steps are separate from the five major ITIL service lifecycle phases, which include service strategy, service operation, service design, service transition, and continual service improvement).
• The define step is about establishing the requirements for the requested service and derive the business case for implementing it.
• The analyze step involves assessing the requested service for financial viability, operational capability, technical feasibility, and implementation method.
• In the approval step, the IT staff decides whether or not to implement the requested service.
• Approved services move to the charter step in which IT communicates the necessary action items to the organization to implement the services, including allocation of budget and resources.
By following this define-analyze-approval-charter process you can bring your services into service portfolio management — whether those services are in planning, development, or production:
• Define — Inventory current services and gather the required information on them.
• Analyze — Review long-term business goals and determine which of the services are required to meet those goals.
• Approval — Based on the results of your analysis, decide which services to retain, replace, renew, or retire.
• Charter — Communicate action items to implement the decisions you made in the approve step.
Because business environments are dynamic, you’ll need to evolve your service portfolio over time. By iteratively applying the four steps to your services on a periodic basis, you ensure that your service portfolio continually reflects the demands of your enterprise.
Creating a Service Portfolio
To do a good job of service portfolio management, you need a comprehensive information and knowledge management system describing the services you provide. ITIL calls that foundation the service portfolio. According to ITIL, the portfolio should include service description, business case, value proposition, priority, risks, offerings, packaging, costs, and pricing. These attributes provide the basis for evaluating each service throughout its lifecycle — from strategic analysis of a proposed service through retirement of services that are no longer necessary.
ITIL divides the service portfolio into the service pipeline, the service catalog, and retired services. Services begin their lifecycle in the pipeline, which includes requested services that are under evaluation from a strategic business standpoint.
Approved services move from the pipeline to the service catalog. The catalog includes all approved services that are in design, in development, or deployed. At this point in the lifecycle, you assess the feasibility of the services that come from the service pipeline, and either charter or reject them. Chartered services move to the design and development phases, and you engage the necessary resources to develop them. Developed services are then built, tested, released, and deployed. Once services become operational you engage the necessary resources to support them.
The service catalog has a “business” side and a “technical” side. The business side provides the consumer view, that is, the service descriptions, policies, service level agreements (SLAs), ordering and request procedures, support terms and conditions, and pricing and chargeback information. It also shows the relationships of the services to business units and business processes. The technical side underpins the business side with the IT view. It shows the makeup of the services, including the relationships of the services to the enterprise infrastructure elements that support them. This technical view gives IT an understanding of the makeup of services and enables reuse of services in different applications.
The two sides have parallels in manufacturing. The business side is analogous to the manufacturer’s product catalog. The technical side is analogous to the manufacturer’s product assembly documents, which show the assemblies and subassemblies that make up each product.
Planning and reviewing your service portfolio periodically to identify candidates for retirement is an important part of portfolio management. Services that are no longer needed by the business, that have been superseded by other services, or that are no longer cost-effective, should be moved to the retired services section.
Leveraging Automated Tools
Creating a service portfolio is not a trivial undertaking. BSM solutions, however, can greatly facilitate the task. These solutions automatically gather and maintain much of the data you need. The solutions also support a variety of management functions, such as project portfolio business value and risk analysis, project portfolio prioritization, project management processes and workflow, project financial management, and program management.
If service resource planning (SRP) solutions, for example, are included as part of your overarching BSM strategy, you can gain the visibility and control to better leverage both people-related and financial IT resources. Service resource planning solutions help you overcome obstacles to managing IT as a business. These solutions help you consolidate vendors and pull together fragmented financials. They help you use staff more efficiently, align projects with business objectives, and get greater visibility into compliance issues.
With these solutions, you increase transparency into development projects across the enterprise so you can make more accurate budget forecasts and build collaborative relationships with your clients. You can also determine the return on investment (ROI) or return on value (ROV) of projects. As a result, you optimize the allocation of your resources to deliver maximum business value.
Some BSM solutions leverage the service catalog to provide automated service request management and fulfillment, making it easy for people to request services. The solutions incorporate best practices to help IT process requests in an efficient and timely manner, reducing service desk workload and enforcing company policies and standards.
Imagine the Benefits
Because IT organizations face many of the same challenges as manufacturing organizations, IT executives can benefit from the rich experience of their counterparts in the manufacturing arena. Like the product catalog in manufacturing, the IT service portfolio provides the foundation for efficient, high-quality product delivery and support.
By adopting a service portfolio management approach, you can deliver the right mix of services, support those services effectively, adapt them to the changing needs of the enterprise, and make it simple and straightforward for people to find and request the services they need. In doing so, you’ll cut IT costs, which has a positive impact on the bottom line, and help ensure compliance with government mandates.
Thinking in terms of a service portfolio can also motivate you to start collecting the data and comparative information of the services, which are like the manufactured goods described in this article. As a result, you may realize that one of your services is like an Edsel — a Ford-manufactured car that did so poorly, it was cancelled immediately— and no more investments should be made in that area
You can speed the implementation of comprehensive service portfolio management by leveraging ITIL guidelines and implementing solutions that simplify and automate portfolio creation, data gathering, and management. With a solid service portfolio management strategy and the right tools in place, you will increase IT’s contribution to the business and help improve bottom-line results.
About the Author
Steve O’Connor is vice president of IT transformation at BMC Software. Prior to joining BMC, O’Connor was a founder of ITM Software and was responsible for product management, product development, marketing, and professional services and support. He also served as chief information officer and vice president of information services for Silicon Graphics, Inc (SGI) and held various IT leadership and management positions within Sun Microsystems and Cullinet Software. O’Connor earned a B.S. from Boston College, School of Management, where he majored in computer science. He also holds a J.D. from Suffolk University, School of Law.