The Business Value of ITIL - The Instrumental Value of the Service Culture

Last time I wrote about the “Displacement of Goals” which is turning things from what were once intended to provide instrumental value into things that merely provide terminal value.  Our IT Service Management Culture (or “Service Culture”) has done the same thing.  We struggle to justify the business value of ITIL and in many cases rely on metrics related to the terminal value of our IT Enterprise rather than devote critical thought to instrumental value we provide to the business.  Too often we measure success in classic terms: time between failures, time to recovery, reducing the time to process changes, or mitigating the incidents related to change.  These may be instrumental for IT, but they are terminal for the Business.  We must be more concerned with IT Business alignment: being a line of business in support of organizational strategy and goals.

Notwithstanding the possible inconsistencies among business units which can be a challenge, IT should focus on the delivery of services and not products and how those services contribute to business goals rather than measuring availability of components such as servers, networks and applications.  As ITIL has matured and grown there is now evidence that support its benefits and value to the business, such as achieving good governance.  Additionally, the benefits of implementing ITIL best practices include consistent and repeatable processes for business continuity/risk management; controlling IT costs; improving internal user satisfaction; and ensuring regulatory compliance.  We are now in the “post-industrial society” where the knowledge worker is becoming more important than the service worker.  In the knowledge based economy, the ability to exploit and automate intangible assets, such as knowledge and business processes, has become far more decisive than simply managing static physical assets.  So ITSM practitioners can and need to make a clear case for the business value beyond mere cost savings, improved “processes,” and component availability.  The information is there.  The message needs to be delivered.

So, what does that business value look like?  Clearly, IT’s role as an equal partner in determining the most appropriate business strategy has increased as a result of ITIL, but business value falls generally into two categories: development and delivery of the proper IT Services to support the organizational business strategy; and more efficient and effective running of those services.  Let’s look at two examples of each starting with the most tangible: efficient and effective services.

For this tangible value of ITIL, the following assumptions are made for an organization:

 

·         All employees cost $50 an hour

·         Your organization comprises 500 Users

·         The total number of Incidents is 5,000 per year

·         The average time to fix an Incident is ten minutes

·         A working year has 200 days

 

Following the implementation of Configuration Management, the Service Desk has a much greater insight into the relationship between users, configuration items and incidents. The three people assigned to incident can be reduced to two, resulting in a savings of $80,000. 

The less tangible is showing the value of development and delivery of the right services at the right time to support the organizational strategy.  This comes through the more business-value focused ITIL version 3.  Where ITIL version 2 focused on processes, version 3 focuses on business value. This shift attempts to improve the linkage between the business needs of the organization and the IT operational processes that enable them. Hence, version 3 has a more strategic approach than the tactical approach of version 2.  For example, Service Portfolio Management, as described in ITIL V3, is responsible for the investment IT makes in its Services across the Services’ entire lifecycle.  It forces IT to answer questions like:

·         Who is the customer

·         What is the market space

·         What are the opportunities that IT can support the business to exploit

The business value here is to focus IT to think as a business partner and service provider rather than just an IT technology shop.  ITIL v3 and the IT Service Management service culture provides business value by providing the paradigm through which IT uses technology and processes as a means rather than an end.  IT can support and compliment (and sometimes drive) business strategy by designing and deploying the right services.  The business value is being a business partner rather than merely a technology provider.

We need to make this message clear and ensure the business understands this value and the Service Culture understands their role in providing that value.

 

 

 

 

Works Cited

Doherty, P. (2009).  Service Portfolio Management: Optimizing the Business Value of IT. White Paper Service Portfolio Management.  Computer Associates.

Harris, M. D. & Herron, D. E. & Iwanicki, S. (2008). The business value of it: managing risks, optimizing performance and measuring results. [Books24x7 version]

Šimková, E. and Basl, F. (2006).  Business value of IT.  Systems Integration.

The benefits of ITIL, (2008).  Pink Elephant

What is IT-business alignment? (2012).  Pink Elephant

The Cover Sheet on the TPS Report - The Dysfunctions of Bureaucracy

If you are a fan of the movie Office Space (and who isn't?), then the "Cover Sheet" reference is almost legend.  This sub-plot to the story portrays a funny but all-too-real example of the dysfunctions of bureaucracy: the displacement of goals (Merton, 1957).  A rule or process orginally implemented to provide instrumental value now becomes merely followed to provide terminal value.

Without knowing the entire back story, let's assume the cover sheet originally had instrumental value.  It could have been for identification or routing purposes; or perhaps for some other practical reason.  The movie shows the overwhelming need to use the cover sheet, but the players really don't know why.  In fact the viewer gets the impression the cover sheet is an end in itself that has no practical value. Indeed, by now the cover sheet has ceased to have the instrumental value intended.  The measure of success is the mere presence of the cover sheet, not whether the cover sheet fulfilled its original purpose.

So, let's look at a real world example.  A present-day organization has implemented a training program.  The instrumental value is bring awareness to security: secure information systems and prevent unauthorized access.  In an environment growing in cyber-attacks, this is critical to business continuity.  At first, the metrics collected on this effort focused on the number of employees trained.  This is a relative measure of the instrumental value since we will assume the more employees trained means more awareness and thus more security.  This is arguable.  Over time, the organization has stressed completing training "early," that is before the required annual deadline.  The organization has lost the instrumental value and has focused on the terminal value: a competition and rewards system has been put in place to foster early training.  Click through the Powerpoints and check the box....success.  Just give me the numbers. 

I'm not sure whether the senior leadership who is stressing this effort actually knows, or can know, the actual effectiveness of the training.  Success is measured in only in the completion of training....and early.  Have incidents decreased?  Are employees more aware?  What of those numbers?  Here, the displacement of goals has led to the dysfunction of bureaucracy.  The employees are aware of the training, but they may not be aware of security.

We can have a good discussion about the instrumental value versus terminal value of Organizational and Process Maturity.  Sounds like a good topic for a future Channel entry as it relates to IT Service Management.

Did you put the cover sheet on the security training metrics report?

FG






Merton, R.K., (1957).  Social theory and social structure.  New York Free Press. Simon & Schuster.

Organizational Change and Transformation - Overcoming the "Mark Twain Dilemma"

Mark Twain lived through some of the most profound changes in America: from the Civil War; to the closing of the West; to the advent of Industrialization.  He summed up his feelings about change in his typical pithy fashion, "You know I'm all for progress.  It's change I object to."  Twain's dilemma is we all recognize the need for progress and innovation; and that involves change.  But change is risky and can hurt.  However, the best time to undertake organizational change is when you don't have to (Pietersen, 2002). 

This leads to FUD: Fear, uncertainty, and doubt.  To change involves loss of control, certainty, and the feelings of competency in the existing order of things as they are.  The driving forces in support of change must be greater than the restraining forces of fear, uncertainty, and doubt.

So, how do we overcome Mr. Twain's dilemma?  Pietersen offers 6 rules:

• Rule 1 – Create a simple and compelling case for change
• Rule 2 – Communicate Constantly and Honestly

• Rule 3 – Maximize Participation

• Rule 4 – Remove those who resist

• Rule 5 – Generate Short Term Successes

• Rule 6 – Set a shining Example

If we accept Edgar Schein's (1990) definition of organizational culture, we can see the challenge in affecting change:

“A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think, and feel in relation to those problems."

In my recent experience, I have witnessed the application of these six rules. 

Rule 1 -  A CTO of a federal agency declared several years ago that he wanted to create a "World Class IT Organization."  One does not specifically know what that means, but it is "simple and compelling."

Rule 2 - Organizations must start using information to make fact-based decisions.  Process improvements and organizational change should be measured for value and not just because Service Management is "good."  We should know we are doing better because we can measure it against how bad we were before.  The data and information doesn't lie; it is honest.

Rule 3 - Sometimes process improvements collapse under their own weight.  Let them proceed organically.  Guide strategically and not tactically at first.  The organic growth will maximize participation and the organization will begin to own the change rather than change because senior leaders "said so."

Rule 4 - Part of the strategic guidance is to build process improvements into senior leadership goals and commitments.  Removing those who resist will become a natural outcome of performance.  Take a look at "Reinforcement Systems" in the Channel's The "psychology" of organizational culture entry from a couple of weeks ago.

Rule 5 - Using the information from Rule 2, short term successes can be realized because there is objective evidence of their existence.  Of equal importance, one starts to see more "process-oriented" successes rather than "organizational-oriented" successes. 

Rule 6 - Successful organizations pick a project or initiative that is working and nuture it and use it as a the bedrock of the change effort.  Advocates reside here and momentum can be built.  It becomes the "Shining Example."  Over time, those who resist gradually become part of the organization that is not in step with the changing culture. 

We also must guard against improving and being satisfied with just the improvement.  We must add value and show the customer that value.  Otherwise, they are not going to buy your stuff simply because you are CMMI Level 3 Certified.  This is the difference between "terminal value" and "functional value."  Look for this discussion in an upcoming Channel entry.

FG

Pietersen, W. (2002). The Mark Twain dilemma: The theory and practice of change leadership. The Journal of Business Strategy, 23(5), 32-37. (Document ID: 179186281).

The IT Service Management "Service Culture" Defined

In the last entry, we discussed the "Service Culture" as the skillset required to achieve organizational maturity - specifically in the realm of IT Service Management.  That discussion resulted in this question: what exactly is meant by "Service Culture."  There are many opinions, but none that can be called "scholarly," which means it is a result of research and peer review.

Perhaps now there is an answer; or at least a scholarly approach to the answer.  The Organizational Culture Domain ©  (Granito, 2011) has been developed as an add on to existing maturity models to extend and compliment those models and answer the question: "What is meant by Service Culture."

The Organizational Culture Domain (OCD) ©  consists of eight components:

• Organizational Tension - The basic trust in a change or upheaval and the amount of "mourning" the organization requires for the old way
• Coordination and Communication - The need for or extent to which key departments and individuals work together to improve the organization
• Organizational Commitment - Convincing those in the organization to be committed to the new vision and their roles in achieving it
• Organizational Competency - Learning the analytical and interpersonal skills managers and employees will use in the Change effort
• Organizational Leadership - The demonstration by top management of visible and consistent support for change
• Management Innovation - Management support for the business application of creativity
• Organizational Innovation - A culture of continual service improvement
• Organizational Continuity - Retention of cultural fundamentals important to organizational change, such as purpose or mission, core technologies, and key resources and skills.

Each one of these components can be measured in the OCD Organizational Culture Assessment instrument © (Granito, 2011) and then assessed for "maturity" as any other domain in maturity models such as CMMI and maturity frameworks such as ITIL and CobiT.

The OCD ©  adds to CobiT:

• Delivery and Support
• Monitoring
• Planning & Organisation 
• Acquisition & Implementation
• Organizational Culture

The OCD ©  adds to IT Service Management:

• Service Strategy
• Service Design
• Service Support
• Service Operation
• Service Culture
• Continual Service Improvement

The OCD ©  also fits into CMMI - SVC as Organizational Culture Management.  All models have frameworks for assessing each domain and associated components.  So too with the OCD.  We will discuss the assessment instrument in a future post.

FG

Copyright © 2011 by Granito & Associates.  All rights reserved

Granito, F.A. (2011).  Organizational Resilience and Culture: A Model for Information Technology Service Management (ITSM).  (Doctoral Dissertation).

The "psychology" of organizational culture

According to Lawson, E., & Price, C. (2003), CEOs are starting to apply traditional psychology to affect organizational culture change.  Specifically, four things: A purpose to believe in; Reinforcement systems; The skills required for change; and Consistent role models.

A Purpose to believe in - This is based on the theory of cognitive dissonance, the distressing mental state that arises when people find that their beliefs are inconsistent with their actions.  Festinger (1957) observed in the subjects of his experimentation a deep-seated need to eliminate cognitive dissonance by changing either their actions or their beliefs.  The implication at the organizational level is that people would be inclined to change their behavior IF they believe in overall purpose.  It is not enough to simply TELL employees they must follow a new process or behavior.

Reinforement Systems - This is based on Skinner's theories of conditioning and positive reinforcement.  The implication at the organizational level is reporting, operational, and measurement processes must be consistent with behavior the organization is asking its people to embrace.  An organizational policy for executives to mentor employees should have a reward embeded in the executive's performance to encourage them to actually do it.

The skills required for change - Change of behavior requires the necessary skills, support, and training to be successful.  A recovering alchoholic attends meetings and has a support group of people who emphathize with the recovering behavior.  The IT organization moving to more "mature" processes like ITIL/ITSM or CMMI asks employees to exhibit a "service culture."  But what is that?  I have developed an Organizational Culture Domain in my Doctoral Disseration that attempts to answer that.  More on that in a later post.

Consistent role models - This is based on Dr. Benjamin Spock and the decisive impact role models have in the development of children. An organization that encourages innovation and entrepreneurship should NOT be micro-managing its employees and should be able to tolerate risk taking.  If employees fear the organizational consequences of failure, they will not be motivated to innovate.....or even give constructive feedback.

FG

Lawson, E., & Price, C. (2003). The psychology of change management. Mckinsey Quarterly, (2), 30-41.

The Organization that's always late

Recently, I had the opportunity to deliver an onsite training class to a large Federal Agency.  Since all students were from the same agency, I was able to notice a pattern to their comings and goings - they were always late to class.  I mean really late.  Like up to 30 minutes.

At first I attributed this to being on site and the students were distracted by their regular jobs.  This seemed reasonable since the one person from out-of-town was always on time.  But I had to know.  So I asked. 

It seems it was accepted practice to be late!  A meeting at 1:00 means that the participants should start assembling rather than being there ready to start.  Digging deeper I learned the employees take the lead from managers and executives who regularly practice this behavior. 

Except this one time when a high level executive happened to get to a meeting on time only to find not everyone had yet assembled because they expected the executive to be late.  That was the "culture."  The result was to then "solve the wrong problem" as I am want to say.

Rather than set an example and ask that folks be on time, the executive began to send a "runner" to the meeting to see if anyone was there.  If no one was there, he wouldn't show up!  This "blew my mind."

If anyone has run into this, I would welcome hearing from you to help extend my research.

FG

Welcome!

Greetings and welcome!

After spending several years examining organizational and corporate culture as part of my Doctoral Dissertation, I feel compelled to keep a "diary" of real life observations of the Information Technology Organization.  The "Service Culture" is the basis for innovation and real organizational change and transformation.  But it is illusive and difficult to attain.

The writings here will be both scholarly and non-scholarly.  Scholarly in that they may be related to Organizational Culture writers such as Edgar Schein and non-scholarly where they are just observations and opinions. 

I welcome your constructive discussions with me.

FG