Service management integration (SMI)

Transcription

1 Sean Harapko, Principal, Ernst & Young LLP Aristide Toundzi, Sr. Manager, Ernst & Young LLP Steven Decker, Manager of Technical Services, PSEG

2 Agenda What is service integration (SMI)? Building and implementing the right SMI model SMI benefits and lessons learned Q&A Page 2

3 EY s Advisory services Global reach and operations 150 countries 31k professionals $5.8b revenue Americas 11,400 professionals EMEIA 14,400 professionals Asia-Pacific 4,200 professionals Japan 1,000 professionals Page 3

4 What is service integration (SMI)? Page 4

5 What is service integration (SMI)? IT Approach for managing and governing the delivery of services across the enterprise Critical in an increasingly complex ecosystem, including various outsourced providers and functions and a shared delivery Integrated service and process, supplier, governance, and program/change Rigorous structure to drive innovation and compliance, and manage risk while optimizing total cost of the delivery model Service Providers Software/ Infrastructure Finance Procurement HR Software Platform Infrastructure Retained Managed as a as a as a Service BPO Function Service Service Service Change Management Service Management Integration (SMI) IT Services Integrated Services Service and Process Supplier Management Demand Lifecycle Management Portfolio Management & Service Catalog Supplier rationalization Service/ Process Design Contract Mgmt Service Transition Commercial Mgmt Service Operations Supplier Performance Services Service Improvement Mgmt Continuous Improvement & Innovation Demand Program and Change Management Project Delivery Service Delivery Project Portfolio Project Planning Services Management Financial Project Management Business Value Benefits realization Risk and Compliance Mgmt Demand SMI Tools and Reporting (Service Now, SMI dashboard) Outcomes Integrated SLA Monitoring and Optimization Integrated TCO Monitoring and Optimization Continuous Improvement and Innovation Integrated Demand Retained Organization HR Procurement Finance Supply Chain Operations Business Units Legal Business Functions Service integration is the bridge that links the enterprise, vendor base and shared delivery. Performance Reporting (KPIs) Process Compliance SLA Measurement Financial Measurement Total Operating Cost s Client Satisfaction Vendor Satisfaction Innovation / Continuous Improvement Page 5

6 SMI enables technology and sourcing innovation SMI is an integrated service framework that allows organizations to: Optimize source of supply (best of breed) Increase cost transparency and lower costs using service costing Simplify oversight and control via centralized accountability Mitigate risk and standardize service delivery through effectively implemented SLAs Contracts Approvals Future business service HR Workflow Forms KPIs Approvals Finance Core SMI and IT service (ITSM) Data Security SLAs Access Budget Forecast Case Workflow Tickets Knowledge Customer FAQs Portal Fulfillment Portal Contract Vendors Legal Provider interface Repository Request Procure Purchase Request Vendor Contract workflow Benefits of the approach Ability to seize benefits in technology breakthroughs to reduce costs while delivering superior service Single point of accountability for end-to-end service delivery to the business Effective framework for managing vendor performance Enterprise-wide capability for managing risks and compliance across environments of service providers A mechanism to better align priorities with business objectives Page 6

7 The need for SMI is growing Yesterday a world where you were expected to cover and do everything yourself Today a changing world that is becoming a grey mix of internal and external IT services Tomorrow a clearer black-and-white world where many services will be provisioned externally, with your core closely aligned to strategic value and new, more formal integration layers being defined Broker IT cost optimization (moving from capex to opex) Business planning/performance (moving to multiple SLA ) Portfolio planning/apps rationalization (commodity versus business differentiation) IT strategy (moving more from doing to governing) IT security (moving to more and more federation) IT risk and compliance (introduction of compliance clouds) Business continuity and resiliency (early type 3 off-site) Database to MDM to information services (new revenue stream) IT sustainability (including third parties) Enterprise intelligence (from periodic to realtime into predictive plus more aggregation) From ITIL to wider service and integration Moving from business process into service orchestration Systems integration (new peer-to-peer ways now automatic) Core services (CRM) SaaS Core services (ERP/HR) SaaS + BPO Core services (supply chain) Client/desktop services (moving to zero client) Intra/collab/ (becoming merged) Network services Managed print services Innovation networks From internal teaming to external and internal collaborations Systems development/maintenance ( D clouds and off-site testing) Emerging technologies Surface computing Location-based services Sense and respond Predictive systems Page

8 Industry trends for outsourcing are evolving, but questions around benefits realization remain Outsourcing has its own set of issues, but effectively managing an increasingly complex and specialized supplier landscape is fraught with challenges. Many of these apply to both the suppliers and the retained organization. Without effective control of these areas, delivery costs can spiral out of control. 10 challenges facing the multi-sourced technology environment Business implications 1 Contract compliance without value 2 Poor performance visibility 3 4 Impotent governance Lack of data/information access Lack of direction and innovation Out-of-control costs 5 Poor architectural and system integration 6 Convoluted and labor-intensive reporting and analytics Unclear delineation of responsibilities and accountability 8 Insufficient collaboration across suppliers Low customer satisfaction Damage to brand reputation 9 Ineffective and tactical contract terms/slas 10 Incompatible delivery culture Companies that take a strategic and service-focused approach to service can reduce delivery costs by as much as 30% and the application footprint for service by as much as 33%. High-profile service outages Page 8

9 Building and implementing the right SMI model Page 9

10 Understanding current maturity is critical to build the future-state road map To effectively make the transition, companies need to understand and identify where to increase maturity to drive the most benefits. Strategy Sourcing strategy aligned with business strategy and outcomes Broad base of business stakeholders involved in sourcing decisions Dynamic process of re-evaluating and updating sourcing strategy Talent Career paths and human capital programs aligned with the sourcing strategy Proactively forecast, monitor and report workforce strategy to key stakeholders Risk Risk and & Compliance compliance Legal/contracts Legal/Contracts Illustrative maturity model and characteristics of leading practices Strategy Innovation Serivce Service Life life Cyle cycle Mgt Contract and legal Central contract and service provider database for managing all contract life cycle activities Proactive process for educating stakeholders on contracts and for triggering escalations/clarifications Risk and compliance Single risk register with risk, probability, impact and mitigation plan Clear mapping of risk categories with staffing levels and regulatory agencies Service life cycle Match SOWs and roles/responsibilities with current and future service catalog Interact with performance and demand mgmt. functions to promote service-level alignment with business Real-time performance data/tools Supplier governance Governance Talent Talent Mgt Financial Continuous improvement and innovation Documented and adopted processes for capturing service gaps and improvement opportunities and developing continuous improvement/innovation plan Gain-sharing and outcome-based pricing models Supplier governance Integrated performance/sla reporting dashboard across key vendors Individual vendor scorecards Operating level agreements (OLAs) established between key vendors Current Desired 1. Informal 2. Documented 3. Adopted 4. Collaborative 5. Leading Financial benefits Metrics aligned to business objectives Benefits tracked against original sourcing business case Benchmarking against best-in-class Balanced scorecard approach Page 10

11 Building the SMI framework It s important to build an integrated and structured framework to drive business results that span the service life cycle. Building the right SMI framework will provide a robust interface for service integration and accountability, spanning the breadth of the service experience, from demand through delivery/consumption. Effective application of this model, along with effective oversight of the five focus areas mentioned earlier, allows organizations to optimize the source of supply, increase transparency, lower costs, simplify accountability and minimize delivery risk. BPO Service supply Supplier A Individualized service Change Service integration (SMI) Integrated delivery Retained organization Service consumption HR IT Saas PaaS IaaS Managed services Internal function Supplier B Supplier C Supplier D Supplier E Supplier F Demand interface Integrated demand Continual service improvement Value and risk Portfolio Project Service Bus architecture Delivery Workflow Performance Management Value interface Individualized demand Procurement Finance Supply chain Operations Business units Legal Process compliance SLA measurement Financial measurement TCO measurement Customer satisfaction Supplier satisfaction Innovation measurement Performance interface Page 11

12 Service integration Building a functional framework Change Finance BPO Services Integrated services IT Service providers Software/ infrastructure IT HR Procurement Managed service Retained function Infrastructure as a service Platform as a service Software as a service Demand Services Demand Services Demand Service delivery Project delivery Service and process Life cycle Service catalog Service/process design Service transition Service operations Service improvement Program and change Project portfolio Transformation/transition Benefits realization Continuous improvement and innovation Supplier Portfolio and supplier rationalization Contract Commercial Supplier performance Project planning Financial Business value Risk and compliance mgmt. SMI tools and reporting (e.g., ServiceNow, Apptio TM, SMI dashboard) Outcomes Integrated SLA monitoring and optimization Integrated TCO monitoring and optimization Continuous improvement and innovation Integrated demand Retained organization HR Procurement Finance Supply chain Operations Business units Legal Business functions Process compliance SLA measurement Financial measurement Performance reporting (KPIs) Total operating costs Client satisfaction Vendor satisfaction Innovation/ continuous improvement Page 12

13 Key components of a robust service framework Key activities to be managed through the SMI framework and organization: Function Summary description Service life cycle Program and change Strategy Service and process Demand Risk Financial Program/transformation Dashboard and reporting Aligns outsourcing strategy with business goals so that service delivery follows and enables the defined business; manages overarching service or process catalog Oversees and integrates the delivery of services from internal and external suppliers for seamless, end-to-end service delivery; validates the right processes, integration points and hand-offs are in place, as well as transformation Oversees and promotes the prioritization and timely fulfillment of business services and requirements based on budget and funding constraints Provides processes and controls to prevent, detect and mitigate business and sourcing risks associated with the delivery of services Develops, administers and optimizes the financial aspects for sourcing initiatives in line with the business and sourcing targets Provides and executes a structured approach to manage projects and programs against agreed-upon business outcomes, transformation projects and the sourcing strategy Provides end-to-end dashboard across competencies (financial, SLA, performance ) Supplier Supplier performance Supplier relationship Contract Change Establishes the approach and establishes and executes the processes to oversee and optimize service delivery performance in alignment with business and service-level requirements; validates performance against contracts Aligns service providers with the business organization to optimize the understanding of, and collaboration in, realizing sourcing and business targets and business reviews Establishes and oversees all sourcing-related contract development and contract administration activities Drives the change strategy and communications and employee retention throughout the transition and throughout the life of the agreement Page 13

14 Scaling the framework An integrated framework becomes more critical as organizations move into multi-tower outsourcing arrangements Outsourcing program example Procurement function Source to pay Source to contract Vendor 1 Procure to pay Vendor 2 IT Tower 3 Tower Additional towers will grow the vendor base and scope of services, increasing the complexity of service delivery. Data analytics, benefits and performance Challenges Lower costs and end-to-end benefits realization: best-of-breed pricing and contracting, outcome-based pricing End-to-end transparency: end-to-end transparency across process (SLAs, costs, benefits, FTE) FTE rationalization: elimination, simplification, automation and optimization of activities, FTE rationalization and redeployment Clarity of accountabilities and responsibilities among providers, shared services and stakeholders Vendor : unified service and vendor across processes, vendors and the business Improved customer service: integration of multiple service desks and applications for catch and dispatch Page 14

15 SMI benefits and lessons learned Page 15

16 Benefits and value of SMI Value to CIO Value to C-suite Value to CFO Ability to seize benefits in technology breakthroughs to reduce IT costs while delivering superior functionality to the business Single point of accountability for end-to-end service delivery to the business Consistent service framework globally with incentives for service improvement and innovation Enterprise-wide capability for managing IT risks and compliance across complex environments of IT service providers A mechanism to increase alignment of IT priorities with business objectives Greater ability for IT to support the business strategy Increased independence from suppliers, leading to lower switching costs and greater agility/flexibility in the supply base Scalable and extendable solution so new suppliers can provide more capacity Ability to leverage emerging technologies and technology innovation An established, centralized framework with standardized mechanisms to evaluate processes, vendors and activities Integration of business objectives with IT support through an enterprise-wide view of IT, risk and vendor Post-transition vendor, including key metrics analysis and critical knowledge of end-to-end processes Short- and long-term cost savings through optimization and ability to plug and play new vendors as needed Increased cost transparency for IT services to the business A mechanism to quantify the value IT provides to the business in measurable results and metrics Ability to drive cost down within the business and IT as technology breakthroughs mature and cost-saving opportunities arise Easier to allocate costs across the organization Page 16

17 What can you take away from our experiences? Define a strategy that can scale across functional towers Treat the program as a transformation, gain buy-in at all levels and separate transformation from operations to achieve end state more quickly Establish a credible business case and, where possible, show how the program can be self-funding Build an achievable plan that builds upon quick wins and initial success stories, using a phased approach Leverage a third party to help accelerate and/or maximize the benefits of transformation early in the process Define the end-to-end processes, service catalog, integration points, RACI and OLAs prior to finalizing the service provider contracts Don t underestimate the strategic sourcing, contracting, negotiating and program skills needed to achieve the cost savings Use a tool set that can work across the provider landscape; stay away from using niche supplier tools Page 1

18 EY s approach to SMI Core focus areas Avoiding the pitfalls of a multi-vendor sourcing model requires discipline well beyond the stewardship of individual contracts and commitments. Cross-discipline and cross-functional coordination of the multisourced environment is imperative, or benefits will not be realized. EY has a long history of maximizing benefits and minimizing risks for our clients. Our model for SMI planning, transition and steady-state operations is strategic and effective, and it manages the convergence of five core focus areas for the business. 5 1 Demand and value 2 1. Demand and value 2. Financial and analytics 3. Application and cloud convergence 4. Supplier and oversight 5. Service delivery and support convergence EY SMI Service catalog Approaching SMI in this fashion addresses whether that performance is measured against defined business value and not just SLA conformance. 4 3 EY has established relationships with leading service integration providers like ServiceNow, Fruition Partners and Apptio TM to help our clients realize SMI benefits. Page 18

19 Questions? Sean Harapko Ernst & Young LLP Aristide Toundzi Ernst & Young LLP Steven Decker Manager of Technical Services, PSEG-LI Page 19

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