The Benefits of IT Service Management: Availability, Service Levels, and Financial Management
Question 1. – Availability Management
1A (8p)
MEMO
From: External Consultant
To: Administration Department Heads
Subject: The Case for the Introduction of G. CTI Availability
Date: 01/01/2011
Heads of Administration:
Even with the announced cuts (10% more for 10% less), the availability of systems for end users will not be affected because, when implementing the process of Availability Management properly and effectively:
- The attitude of the IT organization shifts from being focused on correcting errors (firefighting) to building on the improvement of services. It changes from a reactive to a proactive approach. For example, corrective maintenance and reactive tasks of the User Services Center (CSU) and Problem Management can be reduced, resulting in fewer calls from users/customers to the Customer Services Center. This will help potential customers have a positive image of CTI as a company that leverages technology for efficiency and effectiveness.
- It adopts a perspective based on the business and the users of the availability of services to ensure the required availability and maximize business benefits. Therefore, economic losses due to systems not being available to end users are reduced, which aligns with the Governing Council’s objective to “improve the provision of services to existing customers.”
Moreover, during the implementation process of Availability Management, you can achieve quick successes (Quick Wins) for CTI, including:
- Shortfalls in the provision of required availability levels are recognized, and appropriate corrective measures are identified and implemented. This involves checking for Single Points of Failure (SPOFs) in the IT infrastructure and taking action to remove them.
- Through the effective implementation of the Availability Management process, you obtain more accurate statistics. This involves identifying times of low activity in the business (off-peak hours), which can lead to better and cheaper maintenance contracts, aligning with the Board of Directors’ motto of “10% more for 10% less.”
- CTI relies on third parties to ensure the availability of some important components, such as the management of the WAN, which is contracted with third parties. Through the effective implementation of the Availability Management process, established or agreed contracts (UCs) are aligned with business requirements.
I remain yours,
Signed: External Consultant.
Jonathan, I have one more Quick Win to discuss with you regarding what we should remove.
1B (6p)
Some potential challenges that may arise when developing business-oriented Access Reports are:
- Selection of metrics that reflect the different perspectives of IT service and component availability.
The following are examples of the different service elements to be measured:
- Applications
- Business-critical functions:
- Data
- Key Components
- Platforms
- Linking business experience with incidents, especially if there is no “end-to-end” monitoring tool available.
- Using an absolute figure, such as the number of business transactions affected, may show a negative trend for a rapidly growing IT service, even if the overall availability percentage improves.
- Identify the person responsible for the measures and data on business-critical functions (VBF). GOOD
- The integration and structuring of these data with data on the availability of components.
- Integrating and strengthening the vital functions of business data on the availability of components. GOOD
Jonathan, I was asked to describe two possible challenges. What would you choose? I’ve included everything from the book (page 328), but the response is a bit terse. Let’s discuss it.
The true measure of availability must be based on the positive and negative impact on vital functions upon which the business operates.
1C (6p)
- Plan to improve the availability of business processes: IT services are designed to meet the availability requirements determined by the business.
- SPOFs identified before they cause disruptions: It is crucial that the IT infrastructure design eliminates any untraceable single points of failure. We recommend using the “Component Failure Impact Analysis” (CFIA) as a technique to identify single points of failure. When one is found, the CFIA can be used to identify the impact on business and users and to help determine what alternatives can be studied to overcome this design weakness.
- Minimize the negative impact on business: Shortfalls in the provision of required availability levels are recognized, and appropriate corrective measures are identified and implemented to minimize the negative impact on business.
- CFIA: The result of a component failure impact assessment can identify areas where implementing additional resilience would be considered to prevent or minimize the impact of component failure on business and user operations.
- FTA: The Fault Tree Analysis, with calculation methods, can provide detailed availability models. This can be used to evaluate the availability improvement that can be achieved by each individual design option for the IT infrastructure.
Jonathan, this is what I copied from the book while reviewing the exam in Madrid. The problem is that I failed to develop it further. I’ve looked into Objectives, Activities, Advantages of the process, but I couldn’t develop it. Let’s discuss it together.
Question 2. – Service Level Management
2A (10p)
Argument 1
The heads of the Administration Department were requested to develop an automation policy that can contribute to the goals set by the Board of Directors. Therefore, if these IT automation projects are carried out (connecting regional offices to multiple networks for the exchange of electronic messages, establishing a communication system with drivers for reporting delays and weather information, etc.), it is necessary for the Board to know that through the Service Level Management process, the IT effort is focused on key areas for the business. The main objective of Service Level Management is to maintain and improve the quality of IT services through a continuous cycle of agreements, monitoring, and reporting on the achievements of the services, promoting actions to eradicate poor service – in line with cost and business justification.
Argument 2
There was dissatisfaction with service levels and the quality of some applications or systems, for example, the WAN. Service Level Management monitors the services and identifies areas of weakness and bottlenecks to undertake the necessary remedial actions to improve the quality of services to CTI’s customers/users.
Argument 3
CTI intends to involve third parties more often to help meet project plans. The existence of a Service Level Management process ensures alignment with supplier contracts (UCs) in accordance with CTI’s business needs.
Argument 4
Monitoring services also reveals when the fault is due to user or client action, allowing for improvements in their training and/or work efficiency. This aligns with CTI’s goal to increase efficiency.
The recommended method for the Department Heads to explain these arguments to the Board of Directors is a presentation. The advantages of this choice are:
- The presenter can encourage audience members to interact during the presentation by asking questions or delving into the most interesting points.
- The results can be lasting impressions and greater retention of the message.
- The presenter can take the audience on electronic tours of websites, catalogs, and databases.
2B (4p)
Argument 1 (Service-Based)
This structure is suitable when specific customer requirements are the same. However, it may not be appropriate when this is not the case. For example, when members of one department within the organization require a faster response time to incidents/requests than those of other departments.
Argument 2 (Service-Based)
When the characteristics of the IT infrastructure are homogeneous for all customers, this SLA structure (service-based) could be implemented. However, if there was a part of the corporate network with lower bandwidth, this SLA structure might not be feasible because, in that case (due to the limited network), the same service level could not be provided in another location.
Argument 1 (Customer-Based)
When customers’ specific requirements are not equal, a customer-based SLA structure would be advisable. For example, when members of one department within the organization require a faster response time to incidents/requests than those of other departments, this scenario would warrant a customer-based SLA.
Argument 2 (Customer-Based)
Where there is a significant difference in the IT used by different departments or offices, this SLA structure would be highly recommended. It allows for the customization of service levels, taking into account the technological differences between departments.
2C (6p)
Argument 1
The ADMIN system is the most diverse among regional offices, as legislation differs between countries, and this system must comply with the local laws of each country.
Argument 2
The IT resources of the various regional offices are not alike. For example, Orange has the most obsolete hardware. Moreover, Utrecht only has a test server.
Question 3. – IT Service Financial Management
3A (8p)
Argument 1
The elimination of cost allocation would undermine STI’s policy objective of holding each regional office accountable for its own results. Without cost allocation, this goal is unattainable because each office cannot have autonomy.
Argument 2
The Board of Directors of CTI has set increasing efficiency as one of its short-to-medium-term objectives. Cost allocation controls the costs of IT services and influences the efficient use of IT resources, fostering a culture of efficient IT usage. For example, reprinting lengthy reports and scheduling lower-priority tasks during periods of low demand to allow for high capacity when it is most needed.
Argument 3
The Board of Directors of CTI has acknowledged that it does not possess sufficient skills and competence to carry out all IT projects independently. Therefore, they frequently seek to involve third parties (suppliers) to help meet the planned projects (e.g., a courier service website that allows customers to track their packages). Cost allocation enables financial comparisons with the market if outsourced, allowing for comparisons among the services offered by outside vendors.
Argument 4
The Board of Directors wants to ensure that its customers perceive ITC as an organization that utilizes IT for efficiency and effectiveness. Cost allocation assists the General Directorate of CTI in recognizing the value that IT brings to the organization. At the same time, it helps to adequately justify the costs of new IT developments and investment plans.
3B (6p)
Cost per Customer: This model automatically calculates costs as the sum of direct and indirect costs that can be assigned to a client, along with a prorated amount of indirect costs not passed on.
Cost per Service: This model first determines the costs that can be directly charged to the IT service, such as an application or hardware. Then, the indirect costs of the infrastructure are determined by dividing them among the different IT users using an apportionment formula. Finally, any hidden costs and outputs (buildings, address, etc.) are distributed to IT services through a premium allowance.
Cost per Location: This model determines the costs assigned to a geographic location (software, hardware, local IT staff). Then, the common costs for the various sites (e.g., WAN) are considered. Indirect costs, such as corporate overhead, are divided between locations.
3C (6p)
Argument 1
Because the organization seeks to give more autonomy to regional offices by making them directly responsible for their own financial results, it would be challenging for the other two heads of the Administration Department to prioritize Orange’s interests effectively (it could cause a conflict of interest).
Argument 2
The Management Information System Department is responsible for paying ADMIN (liquidating/settling obligations) related to accounts with creditors, debtors, and payroll. ADMIN is the information system that varies the most between the countries where branches are located. If the other two heads of Directors are unaware of these differences, it will be difficult for them to interpret the financial records for which they are responsible.
Argument 3
The department heads are responsible for automation policy and IT (50% of their time) according to CTI’s objectives. Since ADMIN is different in each country, there is a risk that changes and deliveries in the IT infrastructure will be required due to changes in Orange’s local legislation. It is possible that this requirement could be overlooked by the other two department heads if they are not actively informed about this legislation. Consequently, financial records may not comply with current legislation, leading to penalties and/or fines for CTI.
Question 4. – IT Service Continuity Management
4A (10p)
The advantages of IT Service Continuity Management include:
- Potentially cheaper insurance premiums: The IT organization can help the business demonstrate to insurers that it can proactively manage its business risks. Therefore, the risk borne by the insurer is lower, and premiums should reflect this fact. Alternatively, the organization may choose to reduce insurance coverage in certain areas as a result of limiting potential losses.
- Legal requirements: In some industries, resilience is becoming a mandatory requirement (for example, regulators expect financial organizations to have security controls and business continuity measures in place to meet their business needs). Failure to demonstrate “proven business” and facilities and equipment for IT Service Continuity Management could result in significant fines or loss of trading licenses. Within the service sector, there is an obligation to provide services continuously, for example, in hospitals, emergency services, prisons, etc.
- External business: The need to collaborate with the business to develop and maintain continuity fosters close working relationships between the IT organization and other business units. This can help create a better understanding of the business’s needs and the IT organization’s ability to support those needs.
- Positive publicity for the ability to meet contingencies: Being able to demonstrate an ability to manage Business Continuity allows the organization to effectively provide high levels of service to customers and users, potentially attracting more business.
- Credibility of the organization: The organization’s directors have a responsibility to protect the interests of shareholders and customers. A strong ability to cope with contingencies enhances the credibility and reputation of the organization among its customers, partners, shareholders, etc. For example, establishing customer service centers in many organizations highlights the importance of maintaining good communication with customers at all times, which is vital for maintaining customer trust and loyalty.
- Competitive advantage: Customers, partners, and stakeholders are increasingly demanding that organizations demonstrate service facilities available to address contingencies and may not engage in business unless they can demonstrate appropriate recovery capabilities. In many cases, this encourages customers to continue the business relationship and becomes a competitive advantage that can be used to retain or gain customers.
4B (10p)
Once implementation and planning are complete, it is necessary to ensure that the process is maintained as a regular part of business operations. This is achieved through operational management, which includes:
- Education and Awareness: This should cover the entire organization, particularly the IT organization, for specific elements of service continuity. This will ensure that all staff are aware of the implications of business continuity and consider it part of the budget and normal work routine.
- Training: The IT organization can arrange training for business members to ensure they have sufficient knowledge about recovery.
- Review: Regular reviews of all IT Service Continuity Management process outputs are required to ensure they remain effective. Regarding IT, reviews are necessary whenever significant changes are made to the IT infrastructure, assets, or IT organizational units, such as new systems or networks, or a change in service providers, as well as when there are changes in the direction or business strategy of IT. As organizations experience a high rate of change, it is necessary to invest in a program of continuous review and incorporate IT Service Continuity Management processes into business justification. New requirements will be implemented in accordance with the change control process.
- Testing: After initial testing, it is necessary to establish a regular testing program to ensure that essential components of the strategy are tested at least once a year, or as decided by the board or audit. It is important to include any changes in IT infrastructure services in the strategy, implement them as appropriate, and ensure they function correctly within the overall provision of IT services.
- Track Changes: After testing and review, and to respond to daily changes, it will be necessary to update the IT Service Continuity Management plans. IT Service Continuity Management should be included as part of the Change Management process to ensure that any infrastructure changes are reflected in contingency preparations, whether provided by the IT organization or an external provider. Inaccurate plans or inappropriate recovery capabilities can lead to the failure of IT Service Continuity Management.
- Assurance: The final process of the IT Service Continuity Management lifecycle involves ensuring that the results of IT Service Continuity Management are acceptable to the business policy and that the operational management processes are working satisfactorily.
Question 5. – Benefits of IT Service Management
5A (8p)
- Increased service quality: This enhances the company’s reputation, leading to greater realization of business opportunities.
- Increased employee satisfaction: This reduces turnover, generating cost savings in Personnel (Human Resources).
- Reduced operational costs: Less effort is required to achieve the required/agreed standards.
- Increased IT department efficiency: The IT department becomes more efficient and reacts/responds more quickly to changes required by the business.
5B (12p)
Advantages
- Reuse of knowledge: This action would allow CTI to manage incidents and problems together through a centralized CMDB. Solutions implemented in one regional office can benefit others, and vice versa.
- Easier configuration control: A centralized management tool for all regional offices allows for more controlled and straightforward administration. For example, version control would be much easier because deployments would originate from a single location.
- More effective disaster recovery: A centralized tool helps avoid redundancies in functions, roles, and efforts, as the disaster recovery plan is implemented from a single location.
Disadvantages
Different languages among the regional offices: the need to have three different versions between the seats (Orange, Utrecht and Dusseldorf) because the languages are different, would increase costs and complexity to the centralization of the tool due to release management specific roles needed in each office to address them individually. In addition, the reuse of knowledge would also be affected by this factor. REMOVAL
Overrides individual initiative and autonomy: that is, to create a dependency on the regional and local offices on the central housing the tool generates an evolutionary stasis and dependency. One goal of CTI is to provide greater autonomy to regional offices, making them directly responsible for their own results, and the centralization of the tool IT Service Management, would be contrary to this objective.
There will be a Single Point of Failure (SPOF): If the central tool is dropped, none of the branches may get support from the tool.