1. Tracking and oversight 2. Costing and Charging

Assessment & Improvement of

IT Services / IT Service Management

Nynke de Vries

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Tracking and oversight

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Statement

You can not manage what you can not measure

(Informatie, IT-governance special, march 2004)

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Why T & O? Stakeholders

• Customer: performance ICT services and Service delivery: is it according the SLA?

• Supplier: performance service process managementprevent 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

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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)

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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!

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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

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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)

Business

Service

Work

Books on loan

Bookssearched

Booksreturned

Changes batch Requestsonline

CPU-time

Memory space

I/O's

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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

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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)

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Example monitoring e-mail underlying

infrastructure• Monitor mailserver memory utilization

– Norm: …– Warning to: …

• Monitor internal network utilization– Norm: …– Warning to: …

• Monitor server uptime ….

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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

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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• …

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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

2. Charging for IT services

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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

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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

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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

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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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SLA - OLA - UC

Contract Client Supplier

Service Level Agreement

Customer Service integrator

Operational level agreement

Service Integrator Supplier ‘internal basic service’

Underpinning contract

Service Integrator Supplier ‘external basic service’

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TCO and charging

TCO per servicecombined with% usage of a service per customer givescosts per customer

• See copy Ruijs (page 363-365)• Conclusion: charging per customer is now

possible

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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

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Charging ICT services

• Charging per customeror 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

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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?

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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

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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

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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)