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Events Presentation Services TBM

When your world changes , how do you cope?

In Business, everything changes eventually.
If you have modeled your Service costs, there are lots of changes that require an update or change to the model.

    Things in your company/service can change:

  1. Has your company undergone a re-org?
  2. Are you using a new technology to deliver the service?
  3. Did you outsource all or part of the service?
  4. Did you change vendors? Are you changing the billing model for your customers?

    Your general philosophy toward service costing may have changed– perhaps you are maturing from a flat allocation to the business to a service consumption model.

    You may be changing tools that you use to model the Service costs. – is it time to put an automated model in place?

    Whatever the change, there is a likely impact to the actual cost of service and you will need to be able to explain why and how the service costing will change so that the business can be prepared. There is nothing worse that getting a bill and seeing a rate change in the bill for the first time.

    Recently at the ITFMA conference in Atlanta, we presented and had great discussion with the group on things to consider to rationalize and socialize a service costing change. It includes things to avoid (all of which are mistakes we have seen real customers make before we start with them) as well as things to be certain to include in your planning.

    Enjoy!

    If you are getting ready to embark on a project that impacts your services costs, please reach out to us for some deeper advice and engagement:



Categories
Services TBM

The Service Portfolio Management Maturity Curve

ServicePortfoliomaturity We often hear organizations convincing themselves that they couldn’t possibly get the data needed to do comprehensive Service Portfolio Management. The truth is that every organization has the data they need to start their journey to maturity. Many companies start with a basic cost/consumption dashboard and then grow that as they mature the internal data sources that provide metrics on project investment, SLA performance, risk and SVA (Service Value Agreements) performance. Starting the journey is the first step toward maturity- contact us for more information on how to get started today.

Categories
Services TBM

ServiceNow’s Service Costing vs ITFM Modules

iStock_000005703253_LargeAt the recent ServiceNow Knowledge15 conference, there was growing buzz around the new ITFM module, but some confusion around how the new module would compare with the already existing Service Costing module. Once you understand how they both work,the difference becomes clear and the possibilities for how they can work together are exciting.

The Service Costing module has been around for a bit, and is based on each service having a set “cost”. The confusion enters because ServiceNow calls this a “cost”, when it is really a “rate” or “price”. It is a set, fixed amount that a customer would have to pay for the Service. This is very useful for companies who are fairly mature in their TBM journey and are ready to use a P*Q methodology for either Showback or Chargeback to the business. In this case the P (Price) is the rate or “Cost” that is set in the Service Costing module and the Q (Quantity) is the quantity of the service being requested by the customer. Using this module assumes that you understand the cost composition of your services in order to set a reasonable price (cost to the consumer) and that the business is ordering services in specific quantities.
Most companies get stuck on knowing what rate to set for their services, because they do not understand the cost composition of their services. This is where the new ITFM module comes into play.
The new ITFM module is the newest entry in a landscape of tools that includes Apptio, VMWare’s ITBM, and Upland Software’s ComSci, among others. This new ServiceNow module allows you to model the cost composition of services using your financial data combined with the operational data already in ServiceNow or other IT Operational Systems. For companies who have little insight in the cost composition of their services,we recommend implementing a modeling tool like this so that they can measure and monitor their actual costs ( internal to IT) as well as variance to Budget, and learn enough to be able to set a reasonable rate.
With both modules in place, Service Owners as well as IT executives get the transparency and insight they need to manage the cost of services to the rate ( or price) they are charging.

Categories
Services TBM

Service Portfolio Management Dashboard- a Sneak Peek

ServicePortfolioDashboard1ServicePortfolioDashboard2 We have had a lot of excitement this week, previewing our Service Portfolio Management Dashboard built in ServiceNow on top of the ITFM module and wanted to share with a wider audience here. This dashboard will at first only be available to our ServiceNow ITFM customers and leverages the power of Explore Analytics Visualization platform to bring together the Cost, Consumption, Performance, Risk and Value metrics into one convenient dashboard. The quad bubble chart leverages a Thavron algorithm to calculate Business Value and Business Prioritization of Services so that execcutives can quickly and easily see where to focus resources. Contact us for demos and more information.

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Services TBM

What are your terms of Service?

Hardworking man eating at his desk I wanted to shatter one of the biggest myths about Enterprise Business Services today.

Just because you bill( or showback) a service price (cost) monthly or quarterly, that number does not have to be driven by direct consumption of that service for the previous period.

How can I say this when it seems contrary to the Holy Grail of Service Consumption tracking?

At both ITFMA and ITFM Week this month ( is there something about tax month that drives finance folks to put conferences in April?) I have heard people struggle with customers who are grumpy when a change in consumption does not impact the bottom line directly.  Inevitably, as I talked with them I found out that they had forgotten to include a term (length) of the Service.

This is so common sense, it gets overlooked.

Every month, you likely pay for at least two kinds of services at home- bills driven by monthly consumption ( your utility bills are a perfect example of this) and a bill for items with large sunk costs that are a monthly amortization of those costs and have a minimum  time commitment ( your mortgage or your car payment).  If you stop living in your house, or stop driving your car you still have to pay those monthly charges, unless you transfer ownership to someone else.

When you have an Enterprise service that requires a large sunk cost, it is OK to design it so that there is a minimum time commitment that the consumer has to make.

Of course, it is true that your Enterprise may force you to think outside the box and find a way to provide that same service WITHOUT the sunk costs so they can be more flexible, but that is a topic for another post.

Categories
Opinion TBM

Demand Budgeting in a Service Enterprise

Demand budgeting.  Once the discussion with customers has begun around services, this is the essential next step. Imagine working with a  restaurant for meal delivery. Service discussions mean that we offer and want customers to  order things like “ lasagna and side salad”. But if  demand planning continues the “GL Account” way, then the conversation would go like this:  “Today for lunch I want lasagna and a side salad. Tomorrow I am expecting company, so I will want 3lbs of ground beef, a pound of noodles, a head of lettuce, two tomatoes and 2 cups of ricotta. *“ You can see that this is not only MORE awkward than 100% component discussions, it  works against the enterprise making the shift.  In order to become a service based organization, services need to be the unit of discussion at all phases of the conversation. This means creating a shift in process and tools so that you can have a relationship and ongoing conversation with customers about how  the value they are getting out of your current services are shifting. Demand should not just be a conversation around adding or decreasing heads in the organization, but should be a discussion about the bottom line business value of services and how shifting business goals may impact the demand for those services.

*yes, I know this is not the real recipe for lasagna

Categories
Opinion TBM

What about the Enterprise Architects?

Google’s ngram viewer shows that the word “architecture”, which had a stable usage from 1800-1980.  It slowly rose through the 80’s then sharply spiked in the 1990’s and remains stable at a rate double it’s previous usage since about 1998 ( you can see the architecture ngram here).  That rise was interestingly co-incident with the rise of computers( and computer architecture) and the birth and growth in the 1990’s of that beast known as an Enterprise Architect. In the 90’s, enterprise architects went on a search for the computer systems equivalent of physic’s Grand Unified Theory. Creatures such as TOGAF, DODAF and other “universal architectures” were born and then failed in their mission.
The biggest problem was that most of the enterprise architectures ended up layering on more overhead, processes and paperwork than they actually supplied solutions. At the same time that enterprise architects were looking to create massive universal guidelines, developers were moving to Xtreme programming, becoming Agile and sitting side by side wth their customers.
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With the shift to a services mentality, the need for enteprise architects is stronger than ever, but only if they learn some lessons from the Agile approach.
Enterprise architects should not be looking at how they can design and dictate global, universal frameworks, but should use their deep technical knowledge and ability to abstract to patch some of the biggest gaps in the services lifecycle for most companies. Here are the top opportunities for enterprise architects to make a difference in the business bottom line:
1) IT Departments struggle to translate Business Services into technical requirements. This impacts cost, value and risk for the business and creates lots of unhappy phone calls to the CIO. Enterprise Architects wondering what their role is in all of this “service stuff” should be working with the service owners to design and build small frameworks and tools that translate business demand into IT requirements.
2) Someone with an Enterprise Architecture background and training is perfect for the vendor evaluation process. Using their translational skills, they can easily help the business talk with vendors and understand if the product being pitched actually meets business requirements while meeting corporate security restrictions.
3) Working for a large corporation with large purchasing power?  Now is the perfect time to partneer with a service owner, help them abstract out the critical business features missing in the market place and work with vendors to shape the future to your company’s advantage.
The new Enterprise Architecture group is agile and focused on services and service owners. These architects use their powers of abstraction and design to make IT services better for the business.
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