Document the IT Service Portfolio Before Creating the IT Service Catalog

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1 Research Publication Date: 8 January 2009 ID Number: G Document the IT Service Portfolio Before Creating the IT Service Catalog Debra Curtis, Kris Brittain IT service portfolios and IT service catalogs are new constructs for IT organizations. They are essential to manage IT services, deliver better service experience to customers and run IT more like a business. It's imperative to first document the overall IT service portfolio with the business value and business outcome of each service as a prerequisite toward developing an IT service catalog. Key Findings An IT service portfolio describes services in business value terms that are articulated from the customer's perspective, specifying what the services are, how they're bundled or packaged, and what benefits they deliver. Most service portfolio and catalog initiatives by IT organizations tend not to engage the business in the development of the services, even though improving service and the IT organization's relationship with the business is the primary motivator. An IT service catalog project is most often pursued as a mechanism to receive service requests from customers and automatically channel service demands to the correct IT resources and service delivery processes. Most IT service delivery automation initiatives incorrectly focus first on tools instead of analyzing service groupings, service definitions and the processes used for service delivery. Recommendations Start your IT service portfolio project by working with your business unit customers to document and describe the business-oriented IT services that you offer. Don't go to business customers with a blank sheet of paper and ask them to define the services; they won't know where to start. Bundle related service components into whole service catalog offerings that make sense to customers, thus resisting the temptation to confuse your customers with a list of hundreds of technical subservices in the customer-facing IT service catalog. Actively educate customers on the mutual benefits of the IT service portfolio, and train them to use the IT service catalog request process for all types of IT service requests. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

2 WHAT YOU NEED TO KNOW Successful execution of an IT service portfolio and IT service catalog initiative is dependent on people and processes. Prior to publishing an IT service catalog, use relationship managers to work with business unit customers to document an IT service portfolio of value-based, businessoriented IT services aligned with customer requirements. When you move to the service catalog stage of the project, use caution and ensure that it is populated, first and foremost, with business services visible to the customer. Resist the tendency to focus only on technical services that are visible to the internal IT support team, even though these will be more familiar to the IT staff working on the project. STRATEGIC PLANNING ASSUMPTIONS Through 2011, 70% of IT organizations with an IT service portfolio management project will rush to develop the IT service catalog as a customer-ordering mechanism before documenting their IT service portfolios. By 2013, 80% of IT organizations that developed their IT service catalogs prior to their IT service portfolios will suffer the additional cost of overhauling the service catalog contents once the portfolio is defined. ANALYSIS Aligning IT to business value and company strategy has become a key CIO initiative. Defining and documenting a portfolio of IT services associated with business value, with a corresponding IT service catalog, are critical first steps to address this CIO initiative. When this requirement trickles down to the IT infrastructure and operations team, many IT operations groups develop an IT service catalog composed of a random list of technical services, processes, products and platforms that are generally representative of what the IT organization spends the most time or money on. Little to no attention is invested in the development of an IT service portfolio and the business assessment of value. As a result, the IT organization continues its self-focused behavior at the expense of the business. Gartner believes that an unbalanced focus on the IT service catalog without appropriate attention to IT service portfolio development will have negative consequences on IT operations and its supporting role of aligning IT to business value. What the Right Approach Is and Why That's Good Start from the top down by defining the customer-facing services in an IT service portfolio, along with their business outcomes and business value. Then move on to creating the IT service catalog, which is the operational manifestation of the portfolio used to capture service transaction requests and make it easier to do business with the IT organization. Ultimately, a service portfolio is the strategic manifestation of the IT organization's mission, role and capabilities. The catalog is a tactical, operational tool. Both are necessary, but they can't substitute for one another. With that said, definitions developed by Gartner are listed below: An IT service portfolio describes services in business value terms, specifying what the services are, how they're bundled or packaged and what benefits they deliver. It's articulated from the customer's perspective and answers the questions, "Why should I buy this service?" "How much do I need to budget for IT services?" and "Why should I buy it from my internal provider rather than an external service provider (ESP)?" A service portfolio is product-, process- and platform-neutral. Thus, it's an important communication and relationship management tool. When created correctly, it also Publication Date: 8 January 2009/ID Number: G Page 2 of 8

3 becomes a vital decision framework. A service portfolio that is stated in customer terms is also, by definition, stated in market terms, providing the means for assessing the IT organization's competitiveness relative to ESPs. Service-level agreements (SLAs) and chargebacks should be established at the portfolio, not the catalog, level. An IT service catalog is a service order and demand-channeling mechanism. It takes portfolio services and decomposes them into the standard offerings that a client can buy. Ensure that every catalog item rolls up to one and only one service, so you can report on SLAs and aggregate chargeback at the service portfolio level. A service catalog can be as simple as a Word document. It's not required to have a customerfacing portal for ordering services online, although that is the desirable goal of most service catalog projects. The IT service catalog should include pricing, service-level quality options and escalation commitments. Catalogs are derived from the service portfolio, providing the vehicle for stating the terms and conditions associated with service provisioning. They also document and provide the method for processing service requests, as well as authorizing exceptions. By documenting its portfolio of value-based, business-oriented IT services at different price points, the IT organization can present a well-defined IT service offering to its business unit customers, which raises its credibility with the business and helps establish a foundation for service quality and IT investment negotiations that are based on business value and results. Through standardization, along with better understanding of customer requirements and delivery costs (such as capital and labor requirements), the IT organization is in a position to conduct an accurate cost/profit analysis for its service portfolio and continually seek methods to reduce delivery costs while meeting customer service and quality requirements. Once services are decomposed into standardized, orderable IT service catalog offerings, repeatable process methodologies for service delivery can be documented and automated. This will reduce errors in service delivery, help identify process bottlenecks and uncover opportunities for efficiency improvements. Presenting a single "face" of IT to the customer for all kinds of IT interactions (incident logging, change requests, service requests, project requests and new portfolio requests) simplifies the customer experience and improves satisfaction. Understanding costs and communicating the price for standard services on supported architectures help develop a shared understanding of the increased costs of ordering custom services that are not in the catalog and reduce the volume of exception or ad hoc service requests. In addition, industry process frameworks have weighed in on the right approach. The Information Technology Infrastructure Library (ITIL) has significantly expanded its content on service portfolio and service catalog in its v.3 refresh, which introduces a new concept of a service life cycle with separate books covering the five phases of the life cycle: Service Strategies Service Design Service Transition Service Operation Continual Service Improvement The main tenet of the ITIL service design book is to provide guidance on IT service development, together with governing IT practices, processes and policies to facilitate the introduction of these services into the live environment (see Figure 1). Within this context, the book explores the interrelationship and interdependency of the IT service portfolio and IT service catalog. Guidance Publication Date: 8 January 2009/ID Number: G Page 3 of 8

4 from Gartner and the ITIL service design book places emphasis first on the strategic design of the service portfolio (see Note 1), whereas many IT organizations will rush to develop the IT service catalog as a customer service ordering mechanism before documenting their IT service portfolio. The portfolio is developed to describe the provider's IT services in business terms. From an ITIL service design perspective, an IT service, used in support of business processes, is constructed from a combination of internal IT assets and externally sourced underpinning services. Figure 1. ITIL Diagram of the Service Portfolio and Its Contents Service Knowledge Management System Service Portfolio Service Life Cycle Service Status: Requirements Defined Analyzed Approved Chartered Designed Developed Built Test Released Operational Retired Service Pipeline Service Catalogue Retired Services Customer/support team viewable section of the service portfolio (the service catalogue, with selected fields viewable) Crown copyright material reproduced with permission of the Controller of Her Majesty's Stationery Office (HMSO). Source: Office of Government Commerce (OGC) From ITIL v.3 Publications (2007) What Normally Happens and Why That's Bad Understanding the differences between an IT service portfolio and an IT service catalog is fundamental to an effective IT service management strategy. Many IT organizations confuse IT service portfolios with IT service catalogs. In addition, confusion arises from common mistakes associated with how to define a service. Marketing hype by tool vendors also fuels the confusion. Companies attempting to adopt a service-oriented IT delivery model sometimes skip the creation of a service portfolio, believing it will save time and avoid difficult internal debates. It's a mistake to rely on the service catalog for communication with the business, because the value-based distinction between portfolios and catalogs is the only thing standing between the IT organization and commoditization. If the IT organization only produces a catalog, then clients will fail to understand the value-added activities that go into provisioning a device and will assess its Publication Date: 8 January 2009/ID Number: G Page 4 of 8

5 business utility purely on the basis of cost. If, for example, the internal IT organization has to charge $1,000 per PC because of the associated administration, networking, security, disaster recovery, service desk support and technology refresh services, but the client has no insight into those services, then the client will ask why not go to a retail catalog and get one for $500. Business units that go factory-direct generally do so because all they see is the device or application, with the IT organization being just an expensive bottleneck. Associating PCs with a "workplace" or "desktop management" service creates a value-based context that corrects these perceptions and challenges. How the ITIL v.3 divides the service catalog into business services visible to the customer and technical services visible only to the IT support team causes Gartner some concern. IT organizations are more comfortable with the familiar technical services, and less-mature teams are likely to have a myopic focus on that portion of the service catalog alone. This defeats the purpose of the exercise and will not help create a well-defined portfolio of IT services with documented business value that align with customers' requirements. Starting with the IT service catalog, and especially the technical services, just continues the same behavior that's been ineffective in creating business alignment up until now. As with many projects, IT operations teams often start by selecting a tool, rather than first defining their own services and processes. The same holds true with IT service portfolio management tools (see Note 2) used to help manage your IT service portfolio and house your IT service catalog. Many IT operations groups go straight to purchasing a tool to publish an IT service catalog as a mechanism to receive online service requests from customers so they can gain efficiencies by using process workflow technologies to automatically channel service demands to the correct IT resources and service delivery processes. Alternatively, they rush to leverage the IT service desk's self-service portal, which lacks IT service portfolio functionality and has limited IT service catalog capability. We think these common actions are shortsighted and will cost the IT organization extra labor expenses in the long run. Through 2011, 70% of IT organizations with an IT service portfolio management project will rush to develop the IT service catalog as a customer-ordering mechanism before documenting their IT service portfolios. By 2013, 80% of IT organizations that developed their IT service catalogs prior to their IT service portfolios will suffer the additional cost of overhauling the service catalog contents once the portfolio is defined. What You Can Do to Avoid the Pitfalls To avoid these perils, start your IT service portfolio project by working with your business unit customers to document and describe the business-oriented IT services that you offer. Build the portfolio yourself, and do not copy it from someone else; their value propositions are not the same as yours. Ensure that your portfolio contains only services that are actions, not things (see "Know Your Services; Know Your Customers"), and limit your portfolio to less than 15 items. Don't go to business customers with a blank sheet of paper and ask them to define the services; they won't know where to start. Instead, prepare your first draft of the customer-facing IT services that you offer (not the laundry list of processes, tasks and IT components that you manage), and be ready for some give-and-take with your business unit customers before you reach the final list of IT services that make sense to them. Document the full breadth of IT services in your catalog from simple moves, adds and changes, to complex projects, such as new business applications. If the service catalog only contains mundane, repeatable, commodity services, then you risk diminishing the perceived value of IT, rather than improving IT's credibility. To make the IT organization's job easier, document subservice components so they can be combined and reused to support multiple, higher-level, customer-facing services, but don't publish the subservice components as service Publication Date: 8 January 2009/ID Number: G Page 5 of 8

6 catalog items. Customers don't need to know how to build the car to drive it, and they don't need to know what makes up the IT service. For each customer-facing service defined in the IT service catalog, develop the service delivery process workflow steps and milestones for tracking success. This connection to the back-office service fulfillment processes supports automation and improves IT efficiency. Although technical services are important within IT, they should not be the starting point for a service catalog. Build a technical service catalog only if you have multiple IT organizations involved in a service value chain, and plan on putting formal operational-level agreements in place between departments. Otherwise, it's a waste of time and obscures the objectives of business alignment and customer satisfaction. Lastly, actively engage your customers in the development and continuous service improvement of the IT service portfolio and IT service catalog. An educated customer will gain an understanding of the mutual benefits of the IT service portfolio and the corresponding IT service catalog. Train them to use the IT service catalog request process for all types of IT service requests to gain the desired standardization and cost-benefits. RECOMMENDED READING "Toolkit Decision Framework: Top 10 Evaluation Criteria for IT Service Portfolio Management Products and Vendors" "Toolkit: A Sample List of IT Services for MSEs" "Mature Your IT Service Portfolio" "ITIL v.3 Services Guidelines Expand Audience Through Update" "Toolkit: Running IT Operations as a Business" "Toolkit Case Study: Insurance Provider Improves Service Delivery via a Service Catalog" "A Framework for Designing IT Service and Process Metrics" "Know Your Services; Know Your Customers" "The Six Myths of IT Service Management" Note 1 ITIL v.3 Glossary Definitions Service Portfolio: The complete set of services that are managed by a service provider. The service portfolio is used to manage the entire life cycle of all services, and includes three categories: service pipeline (proposed or in development), service catalog (live or available for deployment) and retired services. Service Catalog: A database or structured document with information about all live IT services, including those available for deployment. The service catalog is the only part of the service portfolio published to customers, and is used to support the sale and delivery of IT services. The service catalog includes information about deliverables, prices, contact points, and ordering and request processes. Publication Date: 8 January 2009/ID Number: G Page 6 of 8

7 Note 2 IT Service Portfolio Management Product Capabilities The emerging software product category coined "IT service portfolio management" (ITSPM) by Gartner is being investigated by the IT operations group to help manage its IT services, deliver better service experiences to customers and run IT operations more like a business. The ideal ITSPM product is intended to: Document the portfolio of standardized IT services, along with their standard, supported architectures and contracts with internal providers and ESPs. Decompose IT services into a service catalog of specific offerings that meet the majority of customer requirements and create the portal so that an end user or a business unit customer can purchase them, including order/request procedures, pricing, service-level commitments and escalation/exception-handling procedures. Automate, manage and track the process workflow from a service request (a customer order) that comes into the portal through to service delivery, including task definition, dissemination and approval. Report on service demand, service delivery and service-level performance. Manage IT service financials, such as tracking service costs, business unit funding, chargebacks and cost allocation; analyzing service profitability; and reviewing actual versus plan data. Publication Date: 8 January 2009/ID Number: G Page 7 of 8

8 REGIONAL HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT U.S.A European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA Japan Headquarters Gartner Japan Ltd. Aobadai Hills, 6F 7-7, Aobadai, 4-chome Meguro-ku, Tokyo JAPAN Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, andar World Trade Center São Paulo SP BRAZIL Publication Date: 8 January 2009/ID Number: G Page 8 of 8

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