Service management integration (SMI)
Sean Harapko, Principal, Ernst & Young LLP
Agenda
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What is service management integration (SMI)?
►
Building and implementing the right SMI model
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SMI benefits and lessons learned
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Global reach and operations
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countries
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professionals
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revenue
What is service management
integration (SMI)?
►
Approach for managing and governing the delivery of services across
the enterprise
►
Critical in an increasingly complex ecosystem, including various
outsourced providers and functions and a shared delivery
►
Integrated service and process management, supplier management,
governance, and program/change management
►
Rigorous structure to drive innovation and compliance, and manage
risk while optimizing total cost of the delivery model
Performance Reporting (KPIs)
SLA Measurement Innovat ion / Cont inuous Improvement Client
Sat isfact ion Vendor Sat isfact ion Process Compliance Tot al Operat ing
Cost s Financial Measurement
SMI Tools and Reporting (Service Now, SMI dashboard) Service Management Integration (SMI)
P ro je c t D e liv e ry
Service and Process
Lifecycle Management
Service Catalog Service/ Process Design Service Transition Service Operations Service Improvement
Program and Change Management
Services Demand Services Demand Services Demand S er v ic e P ro v id er s F ina nc e IT HR P roc ur e m ent S oft w ar e/ Inf ra str uc tur e R e ta ine d O rga ni z a ti on Integrated Services
Int egrat ed SLA Monit oring and Opt imizat ion Int egrat ed TCO Monit oring and Opt imizat ion
Cont inuous Improvement and Innovat ion
O u tc o m e s B us ine s s F unc ti on s IT HR Legal Procurement Finance Supply Chain Operations Business Units Integrated Demand Supplier Management
Portfolio Management & Supplier rat ionalizat ion Contract Mgmt Commercial Mgmt Supplier Performance Mgmt Continuous Improvement & Innovation S er v ic e D el iv er y S o ft w ar e as a Se rv ic e Pl a tf o rm as a Se rv ic e Inf ra s tr uc tur e as a S er vic e R et ai n ed F unc ti on M an ag ed Se rv ic e BPO Project Portfolio Management Project Management Benefits realization Project Planning Financial management Business Value management Risk and Compliance Mgmt
Change Management
SMI enables technology and sourcing innovation
SMI is an integrated service management framework that allows organizations to:
►
Optimize source of supply (best of breed)
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Increase cost transparency and lower costs using service costing
►
Simplify management oversight and control via centralized accountability
►
Mitigate risk and standardize service delivery through effectively implemented SLAs
Benefits of the approach
►
Ability to seize benefits in technology
breakthroughs to reduce costs while
delivering superior service
►
Single point of accountability for end-to-end
service delivery to the business
►
Effective framework for managing
vendor performance
►
Enterprise-wide capability for managing risks
and compliance across environments of
service providers
►
A mechanism to better align priorities with
business objectives
Future business service HR Legal Provider interface Customer Finance ProcureWorkflow Forms KPIs Approvals
Data Security SLAs Access
Core SMI and IT service management (ITSM)
The need for SMI is growing
IT cost optimization (moving from capex to opex)
Business planning/performance management (moving to
multiple SLA management)
Portfolio planning/apps rationalization (commodity versus
business differentiation)
IT strategy (moving more from doing to governing)
IT security (moving to more and more federation)
IT risk management and compliance (introduction of
compliance clouds)
Business continuity and resiliency (early type 3 off-site)
Yesterday – a world where you were
expected to cover and do everything
yourself
Today – a changing world that is
becoming a grey mix of internal and
external IT services
Database management to MDM to
information services (new revenue stream)
IT sustainability (including third parties)
Enterprise intelligence (from periodic to
real-time into predictive plus more aggregation)
Tomorrow – a clearer black-and-white world where many
services will be provisioned externally, with your core closely
aligned to strategic value and new, more formal integration
layers being defined
From ITIL to wider service management and
integration
Moving from business process management
into service orchestration
Systems integration (new peer-to-Peer ways
now automatic)
Core services (CRM) – SaaS
Core services (ERP/HR) – SaaS + BPO
Core services (supply chain)
Client/desktop services (moving to zero
client)
Intra/collab/email (becoming merged)
Network services
Managed print services
Innovation networks
From internal teaming to external and
internal collaborations
Systems development/maintenance
(“D” clouds and off-site testing)
Surface computing
Location-based services
Sense and respond
Industry trends for outsourcing are evolving, but
questions around benefits realization remain
1
2
3
4
5
6
7
8
9
Contract compliance without value
Poor performance visibility
Impotent governance
Lack of data/information access
Poor architectural and system integration
Convoluted and labor-intensive reporting and analytics
Unclear delineation of responsibilities and accountability
Insufficient collaboration across suppliers
Ineffective and tactical contract terms/SLAs
Incompatible delivery culture
10
Outsourcing has its own set of issues, but effectively managing an increasingly complex and specialized supplier
landscape is fraught with challenges. Many of these apply to both the suppliers and the retained organization. Without
effective control of these areas, delivery costs can spiral out of control.
Companies that take a strategic and service-focused approach to service
management can reduce delivery costs by as much as 30% and the
application footprint for service management by as much as 33%.
10 challenges facing the multi-sourced technology environment
Business implications
High-profile service outages
Low customer satisfaction
Damage to brand reputation
Lack of direction
and innovation
Understanding current maturity is critical to
build the future-state road map
To effectively make the transition, companies need to understand and identify where to increase maturity to drive the most benefits.
Supplier governance ►Integrated performance/SLA
reporting dashboard across key vendors
►Individual vendor scorecards
►Operating level agreements (OLAs) established between key vendors
Service life cycle management
►Match SOWs and
roles/responsibilities with current and future service catalog
►Interact with performance and demand mgmt. functions to promote service-level alignment with business
►Real-time performance data/tools
Talent management
►Career paths and human capital programs aligned with the sourcing strategy
►Proactively forecast, monitor and report workforce strategy to key stakeholders
Strategy
►Sourcing strategy aligned with business strategy and outcomes
►Broad base of business
stakeholders involved in sourcing decisions
►Dynamic process of re-evaluating and updating sourcing strategy
Financial benefits management ►Metrics aligned to business
objectives
►Benefits tracked against original sourcing business case
►Benchmarking against best-in-class
►Balanced scorecard approach
Continuous improvement and innovation
►Documented and adopted processes for capturing service gaps and improvement opportunities and developing continuous improvement/innovation plan
►Gain-sharing and outcome-based pricing models
Risk and compliance management ►Single risk register with risk,
probability, impact and mitigation plan
►Clear mapping of risk categories with staffing levels and regulatory agencies
Contract and legal management ►Central contract and service
provider database for managing all contract life cycle activities
►Proactive process for educating stakeholders on contracts and for triggering escalations/clarifications
1. Informal
2. Documented
3. Adopted
4. Collaborative
5. Leading
0.00
1.00
2.00
3.00
4.00
5.00
Strategy InnovationSerivce Life Cyle Mgt
Financial
Talent Mgt Supplier Governance
Legal/Contracts Risk & Compliance
Current
Desired
Illustrative maturity model and
characteristics of leading practices
Risk and compliance
Legal/contracts
Supplier governance
Talent management
Building the SMI framework
It’s important to build an integrated and structured framework to drive business results that span
the service life cycle.
Building the right SMI framework will provide a robust interface for service integration and accountability, spanning the breadth of the service
experience, from demand through delivery/consumption. Effective application of this model, along with effective oversight of the five focus areas
mentioned earlier, allows organizations to optimize the source of supply, increase transparency, lower costs, simplify accountability and minimize
delivery risk.
Service Bus architecture
HR IT Procurement Finance Supply chain Operations Business units Legal BPO Saas PaaS IaaS Managed services Internal function Service management integration (SMI) Service supply Service consumption Supplier A Supplier B Supplier C Supplier D Supplier E Supplier F Change management Retained organization TCO measurement Customer
satisfaction satisfaction Supplier measurement Innovation
Process
compliance measurement SLA
Financial measurement
Delivery Workflow Performance Management
Integrated demand Individualized service Integrated delivery Individualized demand D em an d i nt er fa c e V al ue i n te rfac e Performance interface
Value and risk management Portfolio management
Project management
Service management integration
Building a functional framework
Performance reporting (KPIs)
SLA measurement Innovation/ continuous improvement Client satisfaction Vendor satisfaction
Process compliance Total operating
costs Financial
measurement
SMI tools and reporting
(e.g., ServiceNow
®, Apptio
TM, SMI dashboard)
Service management integration (SMI)
P ro ject d eli v er y
Service and process
Life cycle management
►Service catalog
►Service/process design
►Service transition
►Service operations
►Service improvement
Program and change management
Services Demand Services Demand Services DemandSe
rv
ic
e
prov
ide
rs
F inanc e IT HR P roc ur em ent S of tw ar e/ inf ras tr uc tur eR
e
ta
ine
d
orga
ni
z
a
tion
Integrated
services
Integrated SLA monitoring and optimization Integrated TCO monitoring and optimization Continuous improvement and innovationO
u
tco
m
es
B
u
s
in
e
ss
func
tions
IT HR Legal Procurement Finance Supply chain Operations Business unitsIntegrated
demand
Supplier management
►Portfolio management and supplier rationalization ►Contract management ►Commercial management ►Supplier performance management S er v ic e d eli v er y S of tw ar e a s a s e rv ic e Pla tf orm a s a s e rv ic e In fr a str u ctu re a s a s e rv ic e R et ai ne d fun c ti on M an a ge d s e rv ic e BPO
►Project portfolio management
►Transformation/transition management
►Benefits realization
►Project planning
►Financial management
►Business value management
►Risk and compliance mgmt.
Change management
Continuous improvement
Key components of a robust service
management framework
Key activities to be managed through the SMI framework and organization:
Function
Summary description
S
er
v
ice
l
if
e
cy
cl
e
m
a
na
ge
m
e
nt
Strategy management
Aligns outsourcing strategy with business goals so that service delivery follows and enables the defined business;
manages overarching service or process catalog
Service and process
management
Oversees and integrates the delivery of services from internal and external suppliers for seamless, end-to-end service
delivery; validates the right processes, integration points and hand-offs are in place, as well as transformation
management
Demand management
Oversees and promotes the prioritization and timely fulfillment of business services and requirements based on
budget and funding constraints
P
rogra
m
a
nd
c
ha
nge
m
a
na
ge
m
e
nt
Risk management
Provides processes and controls to prevent, detect and mitigate business and sourcing risks associated with the
delivery of services
Financial management
Develops, administers and optimizes the financial aspects for sourcing initiatives in line with the business and
sourcing targets
Program/transformation
management
Provides and executes a structured approach to manage projects and programs against agreed-upon business
outcomes, transformation projects and the sourcing strategy
Dashboard and reporting
Provides end-to-end dashboard across competencies (financial management, SLA management, performance
management)
S
uppl
ie
r
m
a
na
ge
m
e
nt
Supplier performance
management
Establishes the approach and establishes and executes the processes to oversee and optimize service delivery
performance in alignment with business and service-level requirements; validates performance against contracts
Supplier relationship
management
Aligns service providers with the business organization to optimize the understanding of, and collaboration in,
realizing sourcing and business targets and business reviews
Contract management
Establishes and oversees all sourcing-related contract development and contract administration activities
Scaling the framework
An integrated framework becomes more critical as organizations move into
multi-tower outsourcing arrangements
Outsourcing program example
Source to pay
Source to
contract
Vendor 1
Procure to pay
Vendor 2
IT
Tower 3
Tower …
Procurement
function
Additional towers will grow the vendor
base and scope of services, increasing
the complexity of service delivery.
►
Lower costs and end-to-end benefits realization: best-of-breed pricing and contracting, outcome-based pricing
►
End-to-end transparency: end-to-end transparency across process (SLAs, costs, benefits, FTE)
►
FTE rationalization: elimination, simplification, automation and optimization of activities, FTE rationalization and
re-deployment
►
Clarity of accountabilities and responsibilities among providers, shared services and stakeholders
►
Vendor management: unified service and vendor management across processes, vendors and the business
►
Improved customer service: integration of multiple service desks and applications for catch and dispatch
Challenges
Benefits and value of SMI
►
Short- and long-term cost
savings through optimization
and ability to “plug and play”
new vendors as needed
►
Increased cost transparency
for IT services to the business
►
A mechanism to quantify the
value IT provides to the
business in measurable
results and metrics
►
Ability to drive cost down
within the business and IT as
technology breakthroughs
mature and cost-saving
opportunities arise
►
Easier to allocate costs
across the organization
►
Ability to seize benefits in
technology breakthroughs to
reduce IT costs while
delivering superior
functionality to the business
►
Single point of accountability
for end-to-end service delivery
to the business
►
Consistent service framework
globally with incentives for
service improvement and
innovation
►
Enterprise-wide capability for
managing IT risks and
compliance across complex
environments of IT service
providers
►
A mechanism to increase
alignment of IT priorities with
business objectives
Value to CIO
Value to CFO
►
Greater ability for IT to support the
business strategy
►
Increased independence from suppliers, leading
to lower switching costs and greater
agility/flexibility in the supply base
►
Scalable and extendable solution so new
suppliers can provide more capacity
►
Ability to leverage emerging technologies and
technology innovation
►
An established, centralized framework with
standardized mechanisms to evaluate
processes, vendors and activities
►
Integration of business objectives with IT
support through an enterprise-wide view of IT,
risk and vendor management
►
Post-transition vendor management, including
key metrics analysis and critical knowledge of
end-to-end processes
What can you take away from
our experiences?
►
Define a strategy that can scale across functional towers
►
Treat the program as a transformation, gain buy-in at all levels and separate
transformation from operations to achieve end state more quickly
►
Establish a credible business case and, where possible, show how the
program can be self-funding
►
Build an achievable plan that builds upon quick wins and initial success
stories, using a phased approach
►
Leverage a third party to help accelerate and/or maximize the benefits of
transformation early in the process
►
Define the end-to-end processes, service catalog, integration points, RACI
and OLAs prior to finalizing the service provider contracts
►
Don’t underestimate the strategic sourcing, contracting, negotiating and
program management skills needed to achieve the cost savings
EY’s approach to SMI
Core focus areas
Avoiding the pitfalls of a multi-vendor sourcing model requires discipline well beyond the stewardship of
individual contracts and commitments. Cross-discipline and cross-functional coordination of the
multi-sourced environment is imperative, or benefits will not be realized.
Approaching SMI in this fashion addresses whether
that performance management is measured against
defined business value and not just SLA conformance.
EY has a long history of maximizing benefits and
minimizing risks for our clients. Our model for
SMI planning, transition and steady-state
operations is strategic and effective, and it
manages the convergence of five core focus
areas for the business.
1. Demand and value management
2. Financial management and analytics
3. Application management and
cloud convergence
4. Supplier management and oversight
5. Service delivery and support convergence
EY
SMI
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and and
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anagem
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Service
catalog
Questions?
Sean Harapko
Ernst & Young LLP
+1 703 505 2246
[email protected]
Aristide Toundzi
Ernst & Young LLP
+1 917 488 4158
[email protected]
Steven Decker
EY | Assurance | Tax | Transactions | Advisory
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