© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Using an IT Service Management Lifecycle to Drive Value David Cannon, FISM ITSM Practice Principal

Agenda Part 1 – A discussion about value Part 2 – IT as a Value Add supplier? Part 3 – Driving value with an ITSM Lifecycle

© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Part 1 A Discussion about Value

What is Value?

Value is in the eye of the beholder Value is variable Value has to be negotiated Value changes over time and context Value can be managed Value is not always financial

Experiencing Value

Value in Supply Chains R&DEngineer Manufactur e Market and Sell Value Added Value Realised Money Spent

Value in Supply Chains Lessons Learned 1.If value is not realised, ‘value added’ is equal to ‘money spent’ 2.Value Realised must be greater than money spent 3.Value added internally is not value until it is realised

What does this mean for IT? If IT wants to demonstrate value it has to link its services to where value is realised, not where value is added If IT can not do this it will always be viewed as ‘money spent’ not ‘value added’

Value Networks – a Simple Example Source: Verna Allee

Value Networks More than one supply chain Multiple places where value is added Multiple opportunities to realise value And they’re all happening at the same time!

© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Part 2 IT as a Value Add Supplier

IT Value – an Example Enterprise IT BU1 ITBU2 IT Business Unit 1Business Unit 2 Outsourcer 1Vendor A Other Suppliers Dept ADept BDept CDept D Commodities Money Spent Value Added

What is the Customer’s Role? To understand their objectives (i.e. where is value realised?) Accurate statement of requirements To pay for the service To report exceptions To tell the supplier how the service can be changed or improved

What is the Supplier’s Role? To quantify the service To set a fair price To ensure that the service is delivered as promised To measure the level of satisfaction To look for better ways of delivering service

Return on Investment Cost based models −Payback period −Savings −Business savings = IT Increases? Value based models −Information Economics −Strategic contribution −Affect on Profitability

© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Part 3 Using the ITSM Lifecycle to Drive Value

Process Orientated Working Problem Management Change Management Service Level Management

The Problems with Processes Processes help to organise work better They are aligned to activity and output, not necessarily to value You have to know what you want to achieve, or else assume that the customer does Processes are not strategic

Improvement Business Strategies Business Plans & Requirements Design Strategy Transition Operation The ITSM Lifecycle Business Change Management Business Operations

Using the Lifecycle Lessons learned: 1. Differentiate between value add and value realisation at the early stages of the lifecycle 2. Ensure that the business has the opportunity to influence money spent using potential value recognition as a criterion

Using the Lifecycle Lessons learned: 1. Use Service Design processes to map money spent activities to value realisation 2. Use Continual Service Improvement activities to evaluate whether value is being realised and whether money spent can be optimised

Using the Lifecycle Lessons learned: 5. Good design means that operations will automatically add value 6. Service Transition should be used to: 1.Test whether money spent will be greater than value realisation 2.Communicate how changes influence money spent, value add and value realisation

Conclusion Remember this is strategy…it takes time Define value Identify where it’s realised Align existing processes and activities Design new processes and activities using the lifecycle

© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Questions?