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February 9, 2006

Optimizing Business Services

"The more things change, the more they stay the same."

With major transformations of computing foundations happening about every seven years, this phrase doesn't seem to apply to the alignment of business and IT. Some industry writers point out that in many business organizations, by the time the enterprise was sufficiently mobilized to do client-server computing, it was practically too late -- because the internet had already arrived as the new baseline platform. For those organizations, this meant that the difference in computing from old point A to new point B was even more drastic.

But did these organizations do the same old thing with the new technology? Likely not. Executive commitment to new technology is more likely the result of first becoming aware that the right things to do now are different from the earlier things, and can't be done properly with the earlier stuff.

On the other hand, how about the parties that want to do business with the organization? Did they want the same things as before? Over the timespan of the technology transformation, new products and services were envisioned and launched in the markets, in some cases creating new businesses. Some of those new businesses were possible because the new technology made it viable to be a producer or provider of the new product or service. But all of them were possible because a customer, partner or other sponsoring stakeholder made it worthwhile to spend what it takes to create the necessary quality of the product or service. There was always a limit, though, to the amount of spending that is tolerated -- pressured not so much by the level of demand for the product or service as instead by the need for the "investors" to preserve their other ongoing opportunity.

In this scenario, spending on IT has had the very large burden of efficiently and desirably linking the timing and level of production investment to the level of quality delivered on demand.

This investment-versus-quality perspective sounds and feels like "cost-vs.-benefit" but it is primarily sensitive to the idea that both the inputs (investment) and the outputs (quality) are defined as "acceptable" by parties external to the organization. As it turns out, that imposes an excellently sobering discipline on the management of the spending -- and naturally there is then a question of whether management can live up to the discipline.

As an intermediary force between investment and delivered quality, managing the organization of information technology in the enterprise structures the spending allocations around business terms like "effectiveness", "performance" and "compliance" -- major indicators that the use of the investment is reliably headed towards the goal of delivering sufficient quality. For the recipient of the product or service, quality is not an imbedded characteristic of the product or service; instead, it is actually a measure of the compatibility and impact of the product or service under conditions of use. Producers can always aim for "good enough" quality, but they have to be diligently attentive to when and how the user raises, lowers or otherwise changes the standard.

We are generally accustomed now to thinking of IT assets synonymously with "investments", since the assets proxy for the actual original investment inputs. But in that, the inherent problem is the difficulty of assuring that the asset will in fact support outcomes that get measured as positively effective, highly performing, and reasonably compliant regarding the objectives of the associated stakeholders.

Effectiveness

To ensure that the asset does provide appropriate support, it is managed for its availability, its functions and its interactions -- through requisitioning, engineering, deployment and support.

The results of those management approaches are inventories, systems and processes that are used as building blocks for services that the business will provide.

The most general challenge in this management comes from the variability of demand; different users need different things at different times and places, and to produce appropriate responses the organization has to navigate production options that let it stay within the boundaries set by requirements. Management's dual task is to accomplish whatever levels of requisitioning, engineering and deployment are needed to satisfy the customer, but to also satisfy more general operational requirements for net effectiveness, performance and compliance.

Performance

With these potentially competing requirements and constraints facing them, management may employ a wide range of tactics, mixing and matching them in various models of delivery and support. Thus, the objective, by definition, is to leverage complexity for value.

But this can mean that availability, functions and interactions are determined, contributed, or controlled by different parties at different times. The reliability of these parties' participation becomes a dominating risk factor that itself must be addressed through a variety of means including standards, monitoring and agreements -- all of which must be practical, sustainable and enforceable within the period of related demand -- then ultimately changeable when demand itself changes.

When the internet reached its first critical maturity level as a platform, most organizations were suddenly able to see how much the stakeholder's reliance on the business management of IT could drive the IT operational agenda. Enabling customers through the business's IT became a competitive mantra. But malfunctioning IT could disable the service needed by a customer relationship; and at the same time over-engineered IT could languish in underutilization because it was not stimulating, or not connected to, a priority demand.

The twin needs of management to minimize disruption and waste while producing value and opportunity make optimization the most important word in the management strategy. But an inherent problem in optimization is coordinating the management of multiple subjects; they require a common reference for value (from production) and for progress (from execution).

Optimization

Business services, described properly, offer the common reference. As a production, the purpose of a business service is to leverage the functionality of IT for the customer . In execution, the service addresses business requirements, with a predictably acceptable combination of cost and quality.

The full definition of a service always includes the requirements to which it is intentionally exposed. To optimize the service, managers must be able to logically associate the requirements analysis with the characteristics and attributes of the service.

Defining those associations and tracking events related to them generates a description that all managers can share, helping each manager to identify when activities in their respective domain are significant to the state of the service. Monitoring correlations of events across the domains can establish critical factors of success and risk for the service performance.

By definition, "Performance" refers to the level of achievement towards a target responsiveness under demand. For managers, this includes a key distinction that must be maintained. The distinction -- between business service performance and IT service performance -- is important to the understanding of how managing IT creates value in the business.

- The performance of the business service is largely a matter of targets that are defined by the customer's perspective on fulfillment of needs. The customer is a client of the business. Business delivery of tailored fulfillment is a major objective.

- Meanwhile, IT functionality that is organized for the business service is managed as an IT service to the business. IT service performance is based on targets that are defined in terms of the business's perspective on provision of enabling resources. The business is a client of IT. IT provision on demand is a major objective.

Posted by Malcolm Ryder at February 9, 2006 5:18 PM

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