IT Transformation. Moving Beyond Service Management to a Strategic Business Role. August kpmg.com

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1 IT Transformation Moving Beyond Service Management to a Strategic Business Role August 2013 kpmg.com

2 KPMG surveyed over 275 attendees at ServiceNow s Knowledge13 conference, here is what we learned.

3 Key Survey Insights & Critical Findings Taking advantage of IT s emerging capabilities In industries from financial services to healthcare, energy to retailing, organizations are recognizing that the IT function can be used to deliver greater strategic value. But knowing what other organizations are doing is only the beginning of the story. KPMG wanted to learn more about how companies were approaching IT transformation. From our perspective, it s clear that more and more IT organizations are moving beyond IT service management and into a more strategic business role one in which IT is able not only to support today s dynamic business environment, but to help evolve their service delivery model. Our survey results bear this out. To help gain a greater understanding about how the IT function is evolving, we surveyed more than 275 IT professionals attending the ServiceNow Knowledge13 conference. We learned that there are several emerging capabilities that respondents felt were critical in shaping this new strategic role of IT. Following are the results and more information about these four critical capabilities.

4 3 IT Transformation: Moving Beyond Service Management to a Strategic Business Role IT leverages platform as a service (PaaS) capabilities The agility, scalability and operational efficiency made possible by PaaS has led to its widespread adoption within many enterprises and our survey data during K13 underscores this acceleration. Many organizations have started applying the ServiceNow platform capabilities to domains beyond IT service management (ITSM) to address similar service management requirements in other business areas, among them human resources, accounts payable, and research and development. Leveraging a common technology platform such as ServiceNow for the service management across the enterprise allows organizations to develop a consistent approach and look and feel to the delivery of all enterprise services which enhances operational efficiencies, improves quality and drives high user satisfaction rates. As IT gains more traction as a business partner, and the business confidence in IT s agility increases, IT will begin to support more complex business service applications on the platform and we expect this trend to ramp dramatically higher in the coming year. Key PaaS considerations and takeaways As ServiceNow PaaS evolves into the platform of choice for complex business service management applications, it will become all the more critical for IT to establish strong governance around the administration and maintenance/support of the ServiceNow instances. This will help prevent issues that can be caused by upgrades run by ServiceNow, resulting in unforeseen errors. IT organizations should establish strong enhancement request controls and strong release management frameworks to manage the environment. Additionally, even though the enablement of complex business needs may leverage the ServiceNow ITSM application instance, it would be prudent to map the application architecture within the ServiceNow configuration management database (CMDB), leverage the Release Management application for managing features and bugs against planned releases, and leverage the knowledge management application for dissemination of the application information to the end-users and support teams as part of the transition services. Moreover, the existing Service Catalog, Request Fulfillment, Incident Management, and Problem Management applications should be leveraged and enhanced in order to support the application effectively within operations.

5 IT Transformation: Moving Beyond Service Management to a Strategic Business Role 4 Software asset management (SAM) emerges as a priority IT transformation brings with it increasing needs for software asset management to help manage IT costs, limit risks related to software ownership and use, and increase IT and end-user efficiencies. An effective SAM program enables companies to better manage the infrastructure and processes that control and protect software assets throughout the life cycle. This can significantly reduce software expenditures through better license management and reduce audit risk through better understanding of controls. As IT budgets shrink and software vendors ramp up their audit programs, companies that ineffectively manage their software assets could be vulnerable unaware of where cost cutting measures can be taken and exposed to costly compliance issues. Many of our survey participants already recognize the strategic value to their organizations of cohesively managing software assets. Nearly half (47%) said they currently are using an IT asset management tool to manage corporate hardware and/or software assets. However, 53 percent said they are not yet leveraging this capability. Key SAM considerations and takeaways SAM is about more than just tools. Beyond the repositories necessary to track and manage software assets, SAM relies on sound integrations with key systems, including procurement, human resources/identity access management, and discovery tools. Trained and knowledgeable licensing resources, good lifecycle processes and enforceable policies are essential as well. SAM also requires collaboration across various departments and functions of an organization, spanning lifecycle processes from planning and request through retirement and disposal. To avoid roadblocks, areas of weakness should be identified and rectified early on. A careful focus on scope, workload assessment, and prioritization of effort are also imperative. This can include determining: which vendors are high audit risk; the current software deployment footprint; which vendors make up the majority of IT expenditures; and which contracts are up for re-negotiation in the near future.

6 5 IT Transformation: Moving Beyond Service Management to a Strategic Business Role Most are considering IT governance, risk and compliance (GRC) applications Today s enterprises face a multitude of risk and compliance challenges that affect a broad range of business functions. These challenges include increasing regulatory compliance requirements, as well as new risks and security exposures brought on by business complexity and the use of new technology. Reputational risk is another pressure many businesses face. Today s advanced GRC applications meet these challenges by providing a top-down, risk-based approach across multiple functions operations, finance, information technology, compliance, and regulatory teams. GRC applications offer a host of benefits. They provide cost efficiencies by replacing costly patchworks of process monitoring and regulatory reporting tools and instill agility into critical governance efforts. They also afford organizations significant value in GRC data that can inform decision-making to aid boards, audit committees, and corporate leadership in addressing many risk exposure and other diverse concerns. Through the use of a common set of risk taxonomy, issues management, and reporting processes, GRC applications enhance consistency, transparency, and operational efficiencies. Increasingly, organizations look to GRC applications to coordinate an enterprise s key components: their risk profile, culture and behavior, governance, organization, infrastructure and enterprise assurance. The use of GRC applications is a fast-growing trend borne out in our survey, in which nearly threefourths of survey participants (73%) indicated their IT organizations are considering leveraging IT governance, risk management and compliance applications. Key GRC considerations and takeaways Although GRC generally is considered in the context of technology tools, GRC actually has the capability to become pervasive across a business, at all levels of its operations. It is vital, then, that GRC be closely aligned with an organization s strategy and mission, and that setting priorities on IT risks is accomplished collaboratively, with input from all stakeholders. Policies and controls should be created and mapped to regulations and internal compliance requirements. It is also important to assess whether controls are actually in place and working. Once strengths and weaknesses are clarified, corrections and adjustments can be made.

7 IT Transformation: Moving Beyond Service Management to a Strategic Business Role 6 Technology Business Enablement (TBE) gains ground More and more enterprises are looking to manage IT from a business results and value perspective. In order to do this, the organization must have a clear picture of its services from both cost and quality perspectives. Technology business enablement harnesses a number of key capabilities, all of them needing maturity and integration with one another, to provide CIOs with a complete panorama of IT service value and costs across the enterprise. Among these key capabilities are IT financial management (ITFM), analytics, and service provider management. Our survey shows that a significant number of IT organizations are embracing all three to varying degrees. IT financial management (ITFM) tools provide broader insights IT financial management (ITFM) software brings costs into sharp focus and provides transparency into a host of key financial metrics and analytics, data vital to helping the CIO run the business of IT. More than a quarter of the IT professionals we surveyed indicated their organizations already are using ITFM tools. Advanced analytics and service provider management just taking off IT organizations operate a number of tools to monitor and manage their IT services and processes. Within these tools is a wealth of information on the technology business. The analysis of this data, which we call IT intelligence, is a trend that is early, but gaining momentum. The KPMG survey found that advanced analytics are, as yet, underused, with only 12 percent of respondents taking advantage of this TBE capability. A slightly larger number one-fifth of survey participants are using their current platform to manage their portfolio of IT service providers. We believe these are important emerging trends that have significant potential for the near future. Key TBE considerations and takeaways IT intelligence, by definition, requires an assessment of what metrics and analytics are needed by the CIO in order to make highly informed decisions. This is a key aspect of a process that begins with sufficient groundwork, staffing and buy-in by all stakeholders. In addition, while both ITFM and analytics are critical components of the business of IT, indications are that many enterprises may be lacking in the robust, scalable tool sets needed to support, automate and ensure these practices. With multiple options for service delivery (e.g., internal, hosted, cloud) and support (e.g., internal or outsourced), IT organizations in many cases are functioning as Service Integrators; pulling together components from a number of providers into a seamless, businessfacing service. This makes the comprehensive management of diverse service providers imperative. One function of a strong TBE program is an integrated capability of processes and tools to manage and drive value from those service providers.

8 7 IT Transformation: Moving Beyond Service Management to a Strategic Business Role Conclusion Our survey shows many IT organizations, are in the midst of IT transformation, taking their organizations well beyond IT service management and into a strategic business role. In shaping this transformation, they are leveraging a number of new and emerging capabilities, including PaaS, asset management, and GRC applications. They also are in the beginning stages of conceptualizing a group of key capabilities under the umbrella of technology business enablement. These capabilities, which are just beginning to be leveraged, include software license management, IT financial management, and advanced analytics. Clearly, IT organizations are not only moving forward with technology, but elevating their role as a critical business partner. They are tapping powerful technology platforms such as ServiceNow to support their holistic approach to managing the IT organization as a business. To read more about KPMG & ServiceNow, visit the ServiceNow website:

9 IT Transformation: Moving Beyond Service Management to a Strategic Business Role 8 KPMG Thought Leaders KPMG teams with ServiceNow, our Alliance Partner, to help enterprises find and sustain value in their IT spending. As a leading provider of cloudenabled IT transformation solutions, KPMG provides implementation services and process consulting for ServiceNow enterprise customers. Rick Wright Principal richardwright@kpmg.com Two Financial Center 60 South Street Boston, MA Ross Rexer Managing Director rrexer@kpmg.com 200 E Randolph Drive, Suite 5500 Chicago, IL Mitch Kenfield Managing Director mkenfield@kpmg.com 303 Peachtree Street, N.E. Atlanta, GA Troy McLaughlin Manager rtmclaughlin@kpmg.com Two Financial Center 60 South Street Boston, MA Sriram Damaraju Director srdamaraju@kpmg.com 150 JFK Parkway Short Hills, NJ Ferdinand Hamada Director fhamada@kpmg.com 345 Park Avenue New York, NY 10154

10 kpmg.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. NDPPS