White Paper APPLICATION MANAGEMENT. benchmark

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1 White Paper APPLICATION MANAGEMENT AND MODERNIZATION maturity benchmark

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3 CONTENT Introduction to IT Benchmarking THE amm maturity benchmark general observations and findings important benchmarks detailed analytical results Outsourcing better than onsite Budget doesn t always mean more maturity Objectives aren t easy to meet ADDITIONAL information sources And Figures

4 introduction to it benchmarking Benchmarking as a general term is defined as the measurement of the quality of a company s or an organization s policies, products, processes, strategies, etc. and their comparison to standard measurements or the measurements used by their peers (Luthra, 2012). Comparing how a specific activity is performed against the methods of a competitor or other organizations doing the same is a way to identify best practices and to find ways to be more efficient, improve the outcome over time and even possibly lower costs (enotes, 2012). When it comes to the IT services industry, the primary question asked by organizations outsourcing their IT is whether they receive value for money from their IT service provider. The difficulty in answering that question is the fact that the spectrum of IT services across organizations are different from each other and hence conducting a comparative study to extract an objective benchmark is often a huge challenge (Limited, 2002). However, it is still possible to segregate IT services into categories or service groups such as Desktop Software Services, Application, Server, Networks, Infrastructure, etc. and be able to orchestrate a benchmark study based on the common areas within these groups. One such benchmarking study within the scope of Application and Modernization (AMM) services operated by T-Systems International GmbH has been carried out using a tool developed at the company s Global Competence Center for AMM. This tool, called the AMM Maturity Benchmark, is T-Systems offering to the AMM market across all industries. In the following sections of this paper, an overview of the tool is discussed, before diving into the initial findings of the study. The data collection for this study was done over a period of 7 months from April to November 2012 for more than 70 services currently run by T-Systems. In November 2012, each participant received its individual report with recommendations on how to optomize its Application Landscape. 4

5 The AMM Maturity Benchmark The AMM Maturity Benchmark aims to assess and measure the maturity of the AMM portfolio of an IT service, and compare it to other services, both within and across industries. It offers participants the opportunity to rate themselves among their peers in the global AMM market. The tool is implemented via an online survey, in which the questions are divided into 6 different categories, based on which the AMM services are benchmarked. These categories can be seen in Figure 1. Each of these categories results in benchmark values such as average, best-in-class, worst-inclass maturity which will be showcased in later sections. In addition, the maturity of ITIL processes such as Incident, Change, Release, etc. are also discussed and compared against different variables in order to infer common trends among the AMM services. General observations and findings When it comes to the general trends exhibited by the study results, most complied with the expected findings, however there were a few surprising observations that were worth noting. As anticipated, the most chosen or preferred AMM objectives of the universal set were Stability of the IT-Landscape and Long Term Cost reduction. This was even more apparent among the IT services that were operated in the automotive sector. categories of questions Objectives and Strategy BIS Assessment* Master Data Governance Processes and Tools People Service-Infrastructure Input from... Security and Privacy ITIL / ISO * A BIS Assessment analyses the Current Mode of Operation (CMO) and then applies more than 25 leading-practice savings techniques ( levers ), including industrialization, consolidation and transformation to identify and define concrete optimization projects/programs. The corresponding CAPEX/OPEX requirements and benefits are estimated as well to enable you to make an informed decison on the way forward. FIG. 1 Among the importance given to the various IT chain activities, it was rather logical that Application be the most significant among the participants. In keeping with ever changing industrial and technological advancements, the results also showed that services look to increasingly modernize or innovate their business processes as well as pay much more importance now, to IT Strategy and its alignment with the business, than in the past. This suggests the realization that IT is no longer a mere supporting function, but must be given its due when it comes to the vision and the future planning of an organization. 5

6 An interesting finding from an IT service provider s point of view is that most of the services rely heavily on second and third level of support. This leaves plenty of room for introducing a first level support such as help desks or shifting the balance of tasks that are carried out towards a first level support structure. This would significantly help to reduce costs and wherever possible, could be a key to help services achieve their most important long term goals. Another intriguing observation was that among the 35% of the participants who run some amount of SAP applications within their portfolio, more than 60% of those applications were used in the Logistic domain, while less than 12% use those applications in the Production or Manufacturing domain, and approximately only 18% use them to assist their Procurement functions. This shows the tendency of European AMM services to prefer SAP for its renowned Logistics suite while making use of a combination of Legacy and Modern Open Systems to facilitate Production heavy and other functional clusters. Some important benchmarks Maturity FIG Average Maturity Incident Problem Best in Class Change Configuration Training and Skill Service Dokumentation Important benchmarks In addition to the general patterns and trends that the study confirmed or revealed, the numerical values representing the maturity of the benchmarked processes within the AMM services, also makes for interesting reading. These are summarized in Figure 2. Among all the ITIL processes to do with Service, Incident had the highest average maturity. It also had the least percentage of services with a maturity of 0, on the 0-5 scale, indicating that most services implement Incident as a primary process, even if other processes are neglected. Other important processes like Problem and Change were lower in terms of average maturity, both at values close to 2. However one process often found neglected was Configuration, with 50% of the participants not implementing it at all. Apart from the ITIL processes, other benchmarks like the maturity of Service Documentation and Training and Skill also yielded compelling results, with the best-in-class maturity in these categories being only a value of 4. This shows the tendency of IT service managers to not spend too many resources on improving documentation quality as well as investing money in training the people so that the correct skills are acquired. Often, these parts of running a service are overlooked and it has been proven so with the help of this survey as well. 6

7 White Paper OPPORTUNITIES AND CHALLENGES FOR BIG DATA IN THE AUTOMOTIVE INDUSTRY Detailed analytical results The participants in the study were broken down into various peer groups containing similar features like budget, technology, size of the service, global sourcing mix, etc. and the maturity over these groups were compared to each other, within each category. It made for some interesting revelations and in this section, a discussion of a few of these findings has been covered. Outsourcing better than onsite This result discusses how the maturity of different processes varies depending on whether the service is run completely onsite or from multiple on-shore, near-shore and off-shore locations. The universal set was divided into two groups - one where 37% of the services were operated exclusively on-site at the client location, while the remaining services were spread over various locations from where the service provider delivered the service. The average maturity for these groups across various processes were then analyzed. Figure 3 shows that the average maturity is consistently higher, across all processes, in the group where the service is outsourced and not operated solely at the client location. This reinforces the fact that processes and structures are more likely to be implemented when the service provider has more control and operates the service with tools, policies and laws that are better known to them. When operated from on-site, the providers generally tend to adapt or change their processes to the pre-existing client environment and this often leads to them operating at a lower maturity. It is important to understand, however, that simply outsourcing application maintenance is not a solution to increase maturity. It needs to be done taking into account the client situation and also the various trade-offs involved across the different operational areas. effect of global sourcing on maturity 4 Multiple locations Completely onsite Budget doesn t always mean more maturity It is often believed that a manager who has more budget to his disposal will be able to operate his service at a more mature level and hence guarantee higher customer satisfaction. This observation does not support that belief and instead shows that maturity is not always achievable if more funds are made available. Figure 4 clearly demonstrates that all AMM processes do not exhibit more maturity, just by the fact that more AM budget is available to use. For processes like Incident and IT Security and Privacy, clear differences in maturity level can be seen. This is fairly comprehendible as implementation of service desks, Incident boards, buying licensed ticketing tools or setting up firewalls, server and data rooms or other security features are expensive but at the same time contribute to increasing the maturity. In terms of processes such as Training and Skill, it is more important to know what kind of training to invest the available budget on, in order to make it more mature. Similarly for Documentation, using the right documentation such as Service Manual, Configuration DB, etc. is more important as it also affects the maturity of the other processes that are involved. In implementing the correct Governance procedures and RACI within a service, more can be drawn from following it closely, rather than spending money on organizing emergency meetings or handling escalations. 3,5 effect of AM BUDGET ON MATURITY 3 Less than 1 Mio AM Budget More than 1 Mio AM Budget Average Maturity 2,5 2 1,5 1 0,5 Average Maturity 0 FIG. 3 Incident Change Release Service Level Knowledge Training and Skill Service Documentation Governance Security & Privacy 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 FIG. 4 Incident Problem Release Training and Skill Service Documentation Governance Security & Privacy 7

8 Objectives aren t easy to meet As service objectives and importance given to various IT value chain activities act as a baseline for a service and how it performs, an examination of how effectively services have achieved their most important objectives, especially those that are measurable with this benchmarking tool, was carried out. Two components of the service s strategy were looked at closely: Security & Data Privacy and Importance given to Operational Application. It was found that only one-third of the services who listed Security & Data Privacy as one of their top three objectives could be classified as mature in that process. In this case maturity is considered to be achieved if the service has a maturity value of 3 or more on a scale of 5. This can be seen in Figure 5, which gives a breakup of the entire universal set and its performance in the Security & Data Privacy parameter. security and data privacy as an objective FIG % 75% 50% 25% 0% Security & Privacy important objective Other Services Mature in Security & Data Privacy Immature in Security & Data Privacy A further analysis of objectives and the success in achieving them was carried out using the importance given to Operational Application as an IT value chain activity. To measure the performance in this area, it was decided to take into account the services maturity in Release and Service Level, which are extremely significant activities in an AM service and are ITIL core processes. Other important activities like Incident, Problem and Change were ignored because it was seen in section 2.2 that most services pay most attention to these services and they achieved a relatively high average maturity. For similar reasons, Configuration was not taken into account to assess Application because it has a very low average maturity level, showing that most services choose to neglect its implementation. Here too, as can be seen in Figure 6, results showed that the majority of participants who list Operational AM as a very important activity, fail to back that objective up with maturity in that activity. Only 24% of the services showed maturity in Release, while less than 50% of them exhibited maturity in Service Level. operational application management as an it value chain activity FIG % 75% 50% 25% 0% Operational AM as an important objective Other Services Mature Services Immature Services Release Mature Services Immature Services Service Level For these services, a strong recommendation would be to focus on bringing those processes to a more mature level, which are important to them as part of strategy or objectives. Action items or improvement plans for all processes are formulated as part of the customized service report, which every participant receives as part of taking part in this survey. The results above show that this tool can prove to be a good assessment of any customer s application landscape, but is highly reliant on the answers being accurate and complete, without any biases. In addition, it must be remembered that the AMM Maturity Benchmark is intended to be a catalyst to opening a discussion on the entire service level and not a detailed analysis of each application within the scope of the service. If these two important factors are considered, this offering can be successful in evaluating and benchmarking AMM services, no matter where they are run, or which industry they operate in. 8

9 additional information The AMM Maturity Benchmark is a T-Systems offering used to assess the current mode of operations of an Application Service over all its constituent aspects. It is run out of the Advisory Practice unit of the Global Competence Center for Application and Modernization. Apart from providing the benchmark data and a set of AMM to-dos, the tool can act as a door opener for potential AMM business with completely new clients. It can also be used by existing accounts to strengthen their client relationship, by drawing up improvement plans for existing services and become a trusted advisor for all AMM related activities. In order to find out more about the AMM Maturity Benchmark & for a free trial visit the landing page of the tool at: T-Systems is Deutsche Telekom s corporate customer arm. Using a global infrastructure of data centers and networks, T-Systems operates information and communication technology (ICT) systems for multinational corporation and public sector institutions. With offices in over 20 countries and global delivery capabilities, T-Systems serves companies in all industries from the automotive industry to telecommunications, the financial sector, retail, services, media, energy, and the manufacturing industry all the way to government agencies and the healthcare sector. Approximately 48,200 employees worldwide use their industry expertise and ICT know-how to provide top quality service. T-Systems generated revenue of around EUR 9.2 billion in the 2011 financial year. ABOUT THE EXPERT Darryl Lowe is a consultant within the Global Competence Center for Application & Modernization (AMM). His work-experience includes large AMS projects, after initially joining the IT service industry as a software developer. His responsibilities included Incident, offshore team co-ordination and management of operational activities and processes. He also led teams working on critical change requests and development projects within the AMS deal. At the GCC AMM, he is responsible for the AMM Maturity Benchmark and is the product owner. He has also been involved in the development and release of other tools and methodologies related to T-Systems AMbition book to support various consulting projects and bids dealing with a wide base of international clients. The GCC AMM is a multinational team of more than 30 consultants and project managers who specialize in the implementation of critical application outsourcing projects. Big AMM deals are accompanied from Lead to FMO above all branches, technologies and countries. This Expert Paper is published within the Experts on Application & Modernization column. For more information go to: 9

10 sources And Figures SOURCES enotes. (2012) Limited, F. &. (2002) LUTHRA, V. (2012) Abgerufen am 27. November 2012 von enotes: Benchmarking IT Services. NSW: Farrell & Associates Pty. Limited. Online Business Dictionary. Abgerufen am 27. November 2012 von Online business Dictionary: FIGURES FIGURE 1 FIGURE 2 FIGURE 3 FIGURE 4 FIGURE 5 FIGURE 6 Categories of questions some important benchmarks effect of global sourcing on maturity effect of am budget security and data privacy as an objective operational am as an it value chain activity 10

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12 Contact T-Systems International GmbH Global Competence Center AMM Darryl Lowe Fasanenweg Leinfelden-Echterdingen, Germany T-Systems International GmbH Product Marketing Stefan Spielbauer Dachauer Str München, Germany T-Systems International GmbH Market Intelligence Hermann Hänle Fasanenweg Leinfelden-Echterdingen, Germany Published by T-Systems International GmbH Hahnstraße 43d Frankfurt, Germany Responsible for content: Focus Industries Marketing Last revised: March 2013

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