1. 1. Tracking and oversight 2. Costing and Charging Assessment & Improvement of IT Services / IT Service Management Nynke de Vries

2. 2 Tracking and oversight

3. 3 Statement You can not manage what you can not measure (Informatie, IT-governance special, march 2004)

4. 4 Why T & O? Stakeholders Customer: performance ICT services and Service delivery: is it according the SLA? Supplier: performance service process management prevent exceeding SLA Output: –Reports for evaluation with customer Changes in specifications service or service delivery Changes in service process  costing / charging –Reports for evaluation with supplier  changes infrastructure, processes and / or organisation –Warning to the supplier while working  pro-active management

5. 5 Benefit or trouble T & O as trouble –spend money –negative control –reduce expances or T & O = instrument for improvement –SLM (service level management) –SPM (service process management)

6. 6 Measure trouble or usefull? Measuring is spending money Measuring presses performance Measuring is annoying, has no use Rule 1 Only measure what is usefull with regards to –Reports to customers –Reports to suppliers –Monitoring on behalf of quality agreed Rule 2 If possible automate!

7. 7 You cannot measure of you do not manage… Conditions –SLA = SMART –ConfM and IncM do exist –Procedures for measuring and monitoring are clear and standardized –Clear definitions and specifications Example: –Don’t count downtime outside working hours customers but inside working hours suppliers when calculating the availability to customers –Do count downtime outside working hours customers but inside working hours suppliers when calculating the repair time to improve IT service delivery

8. 8 Measuring plan (1) Define the systems to be measured or monitored (stakeholder = customer) Define underlying resources (ci’s) to be measured or monitored (stakeholder = supplier) Remember the BSW model (business / service / work processes)

9. 9 Measuring plan (2) Per measurement –Which entity will be measured –How will it be measured (automated, non-stop?) –In what unity is the measurement recorded –Which norms are used intern (in IT department) –Which norms are used extern (agreed with customer) –How to react while exceeding standard

10. 10 Example monitoring e-mail service SLA: –Availability e-mail 7x24 –Acceptable 95% monthly availability –Maximum downtime 15 minutes Measuring plan –Entity: non availability of e-mail –Unity: minutes –Norm internal: 10 minutes –Norm external: 15 minutes –How: while recording incident automated recording of date/time and date/time solution –Reaction: Exceeding 10 minutes solution time: urgent call to ….. (IT manager) Exceeding 15 minutes non availability: urgent call to ….. (business manager, SLA – partner)

11. 11 Example monitoring e-mail underlying infrastructure Monitor mailserver memory utilization –Norm: … –Warning to: … Monitor internal network utilization –Norm: … –Warning to: … Monitor server uptime ….

12. 12 Example reporting e-mail service Every month report to customer (SLA partner) on e-mail service Availilability in pct Amount in minutes of non-availibility per failure Time of day of failures Amount of users affected per failure

13. 13 Example reporting e-mail service underlying infrastructure Every month report to IT manager on Availability mailservice in pct Utilization mailserver Utilization network Downtime mailserver Repair time failures Respons time failures …

14. 14 Trouble with measuring Known problems –Drawing conclusions from reports –Evaluating has no consequencies –Action: Who is to blame In stead of –adjusting SLA –adjusting SPM

15. 2. Charging for IT services

16. 16 IT Service Management Deliver and support IT services to satisfy the needs of the customer in a predictable, cost efficient way Combine and integrate various (sub)services to a consistent whole Improve services continuously in the interest of the customer

17. 17 Costing Cost management and ICT: hot item –TCO: Total Cost of Ownership –ABC: activity based costing –BSC: balanced score card –IT benchmarking –Performance management Steering by charging Understanding and awareness of ICT costs –Price quality rate

18. 18 Costs Investment costs and exploitation costs Costs ICT services determined by –Quality: SLA requirements –Quantity: how often, how many Negotiations supplier and customer (SLM): –Demand influences costs –Costs influence demand 2/2

19. 19 Perspective supplier Production factors ICT services –Staff –Resources –Services Staff Resources Services –Staff –Resources –Services Steering by costs: service catalogue Setting up the ICT service department Determine costs per ICT service

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21. 21 SLA - OLA - UC ContractClientSupplier Service Level Agreement CustomerService integrator Operational level agreement Service IntegratorSupplier ‘internal basic service’ Underpinning contract Service IntegratorSupplier ‘external basic service’

22. 22 Annual account Insight in assembling components ICT service Per component annual costs –Staff (salary, training, recruitment) –Resources Hardware (amortisation, maintenance, interest payments) Software (amortisation, maintenance, development costs, licence costs, interest payments) –Miscellaneous (housing, office equipment, insurance and the like) –Supporting and facilitating services in- and external (Cantine? Public utilities? Computer fall back center?…)

23. 23 TCO and charging TCO per service combined with % usage of a service per customer gives costs per customer See copy Ruijs (page 363-365) Conclusion: charging per customer is now possible

24. 24 Estimate and calculate Begin of the year: estimate required budget End of the year: calculate real costs –Fixed costs: no calculation review –Variable costs: more or less? Total Cost of Ownership (TCO) –Mean costs of a desk (in a specific department) –Benchmarking

25. 25 Charging ICT services Charging per customer or just one ICT budget? What is charging? –Every department pays the real costs of used ICT services Why charging? –Better understanding, what is the price of our ICT? –Efficiënt use (scarse) resources –ICT costs are part of production costs –Steering on costs is possible

26. 26 Charging ICT service delivery Way of charging? –Workload –ABC method –Apportion method Account unity –Service –User –Desk –Combination of unities

27. 27 Customer perspective Based on business process –Weigh out benefit and necessity ICT service Steer on costs –Negociate the service (delivery) –SLA-specification Knowledge and skill of own staff Determine costs ICT service –Profits and losses –Annual account –Choose supplier?

28. 28 Understanding … End user computing 65% total sum of ICT costs –Training time –Helping others (hidden costs) –Games and other private affairs … Ability for customer to steer on ICT costs! –Governance discussion –Sourcing issue –Duty of ICT staff to make ICT costs understandible

29. 29 Chapter 6 T & O Tracking & Oversight –Based on (SL Requirements) SL Agreement –Required reports for customer –Required reports for supplier Availability of the IT service IT service as delivered to the customer Sub services (hw & sw); sub sub services etc. Per (sub)service: entity, unity, way of measuring, norm internal, norm external, action

30. 30 Chapter 7 Costs Specify IT Service –Direct costs (hw, sw, hr) Specify infrastructure components –Direct costs (hw, sw, hr) Specify percentage used by IT Service per infrastructure component Calculate TCO of the IT Service (Specify percentage IT Service for each customer Charge each customer with real costs)