W H I T E P A P E R I T S e r v i c e M a n a g e m e n t N e eds and Adoption Trends: An Analysis of a Global Survey of IT Executives

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1 W H I T E P A P E R I T S e r v i c e M a n a g e m e n t N e eds and Adoption Trends: An Analysis of a Global Survey of IT Executives Sponsored by: HP Frederick W. Broussard September 2008 EXECUTIVE SUMMARY Global Headquarters: 5 Speen Street Framingham, MA USA P F IDC recently conducted a survey of over 600 IT organizations worldwide, selecting those operations that are supporting companies with 1,000 employees or more. The purpose of the survey was to identify issues confronting IT departments that are adopting service models and to better understand the status and priorities of key functions and processes that underlie successful implementation of IT service management (ITSM). The survey covered three major geographic regions: the ; Asia/Pacific (); and Europe. Key survey findings include the following.! IT organizations cited "costs/budgets/financial concerns" as the top-priority needs for IT-supported business units in 2008.! "Lack of alignment to the business" and "service delivery issues" were ranked as the top 2 challenges faced within IT.! The highest-priority IT service initiatives for 2008 are "improving service performance," "aligning to the business," and "reducing costs." INTRODUCTION IT organizations are moving from traditional, stovepiped technology-centric orientations to becoming service providers to the business. Typically, transforming IT to a service model requires significant changes in organization and changes in the supporting infrastructure people, processes, and technology to better align with business needs and respond quickly to required changes in service. IDC found IT executives and managers are working through a variety of service initiatives. Key initiatives being undertaken by IT departments include:! Optimizing the value of IT by adopting formal process standards for IT service management, especially the Information Technology Infrastructure Library (ITIL). ITIL adoption has become a key indicator and measure of IT department progress toward "service orientation." Core ITIL v2 service delivery and support processes still constitute the majority of existing ITIL adoptions. Most ITIL v3 interest is an evolution of existing ITIL initiatives, with the ITIL v3 concepts of service life-cycle management and continual service improvement supporting and expanding the focus on business and IT alignment and on more predictable end-to-end service delivery.

2 ! Consolidating service support around fewer service desks. The heightened interest in service desk consolidation reflects the continued role of the service desk as a key integration hub for IT operations. As infrastructure complexity continues to proliferate, the consolidation of multiple service desks reduces the need for multiway integrations, enabling consolidated event processing and further standardization, scaling, and efficiency of the core processes of incident management and problem management. Some major challenges to achieving improved IT service management include the following:! Lack of corporate policies and standards around documenting service requirements and processes plus weak enforcement of policies! Manual processes that are bringing a lack of accuracy to IT service measurements! Lack of automation that reduces IT efficiency CURRENT CHALLENGES AND PRIORITIES: KEY SURVEY FINDINGS IDC noted from the survey findings that IT organizations across the, Asia/Pacific, and Europe are adopting ITIL at different rates and are taking different paths to achieve IT performance gains. One of the more striking observations is that, despite a 10-year head start by Europe, the and Asia/Pacific have overtaken Europe in the number of organizations adopting ITIL as a percentage of the total survey population. Another observation is that across all three regions, ITIL adoption tends to increase with the size of the company (i.e., the larger the company, the higher the ITIL adoption rate). IT Challenges IT executives, managers, and professional staff were asked to rank their top 3 IT challenges. 21.1% of total respondents cited "lack of alignment to the business" as the top challenge, with 26% of respondents citing it first. 23.6% of respondents and 17.4% of total Europe respondents cited it first. "Service delivery issues" was cited as the second biggest challenge by 20.9% of total respondents. Interestingly, 18.8% of respondents, 21% of respondents, and 21.7% of total Europe respondents cited this challenge first. "Limited visibility into service performance" was listed as the third biggest challenge overall, with 19.1% of total respondents citing this reason. Regionally, 24% of respondents, 20.4% of respondents, and 16.2% of total Europe respondents cited limited visibility into service performance. See Figure 1 for more details. 2 # IDC

3 FIGURE 1 Top IT Challenges Limited visibility into service performance Inability to prioritize Lack of alignment to the business Service delivery issues Limited automation tools Limited budget Europe n = IDC #

4 Top IT Priorities IT executives and management staff were also asked to rank their top 3 IT priorities for Survey results showed that 25.1% of total respondents cited "costs/budgets/financial concerns" as their top priority for It was the top priority for each of the individual three regions as well, cited by 27% of the total Europe respondents, 26.1% of respondents, and 20% of the respondents. "Improved end-user satisfaction/service/support" was selected next as the top priority for 2008 by 20.8% of total respondents. It was selected by the second highest number of respondents as well across the three regions. 25.2% of respondents, 18.9% of total Europe respondents, and 17.1% of the respondents said that improved end-user satisfaction was the year's top priority. "Upgrade/improve/integrate/innovate" was selected by the third highest number of respondents in both Europe and, as well as third most often among total respondents. Interestingly, 10% of the respondents selected "improve speed of service" and "safety/security/risk management" as their highest priority. See Figure 2 for more details. 4 # IDC

5 FIGURE 2 Top IT Priorities, 2008 Costs/budgets/financial concerns Improved end-user satisfaction/service/support Upgrade/improve/integrate/innovate Improve efficiency Improve speed of service Security/safety/risk management Efficient problem ID and resolution/reduce downtime SLAs/compliance issues Personnel issues Other Europe n = IDC #

6 Regional Takeaways on Challenges and Priorities It is interesting to note that the top priorities on a regional basis didn't vary as much as top challenges facing IT organizations. Cost and budget concerns were at the top of the priorities list for the three regions, but lack of alignment with the business was chosen most often for the total survey population and by the. Differences between the regions may point to different levels of organizational maturity across the three regions, as well as possibly a heavier reliance on technology within the. It may also highlight that is forcing ITIL adoption within and the. Additionally, with the creation of laws and regulations such as Sarbanes- Oxley and HIPAA, IT organizations adopt process standards in greater numbers in the United States than in other regions as a way to better address the changing and tightening legal and regulatory environment. IT Service Initiatives and Requirements IT managers, executives, and professional staff were asked to rank the importance of major IT service initiatives for "Improving service performance" was ranked as the top priority by 29.1% of total respondents. "Aligning to the business" was cited by 21.9% of total respondents, and "reducing costs" was cited by 16% of total respondents. On a regional basis, "improving service performance" was cited by most of the Europe and respondents 31.9% and 29.9%, respectively. But in the, "improving service performance" was cited by 20.8% of respondents. "Aligning to the business" was cited by most of the respondents, with 32.3% saying that it was their top IT service management initiative. 15.7% of total Europe respondents and 24.8% of respondents cited "aligning to the business." See Figure 3 for more details. 6 # IDC

7 FIGURE 3 Top IT Service Management Initiatives, 2008 Aligning to the business Reducing headcounts Improving service performance Reducing costs Reducing mean time to problem resolution End-user productivity Improving compliance with SLAs and corporate regulations End-user satisfaction Europe n = IDC #

8 It is interesting to note that the responses from respondents are consistent with their previous answers regarding top challenges as well as major service initiatives for However, total Europe respondents indicated that their top IT service initiative is to improve service performance, but they also must manage service delivery issues. Issues in Measuring IT Service Performance With a high priority placed on improving IT service performance, it is helpful to know how IT service performance is being measured and how important it is to measure it. The survey participants were asked, "How important has it been/would it have been if you were able to measure IT service performance accurately over time, and then create reports that address where improvements have been made?" Respondents were asked to rate their response on a scale of 1 5, with 1 being "not at all important" and 5 being "very important." Across the total population of respondents, 27.6% rated importance of measuring IT service performance a 5, and 74% rated it either a 4 or a 5. But interestingly, the were statistically different from the other regions, with 44.2% rating IT service measurement a 5 and 85.8% rating it 4 or 5 combined. Yet neither Europe nor respondents rated this category a 5 as often, with 22.2% and 26.3% rating it a 5, respectively. 68.7% of Europe respondents and 75.3% of respondents also rated it 4 or 5 combined. See Figure 4 for more details. 8 # IDC

9 FIGURE 4 Importance of Measuring IT Service Performance = Very important = Not at all important Europe n = 634 It is clear that in the, measuring IT service performance has a much higher priority. This may be due to the emphasis on the overall process for best practices implementation as well as the need to comply with internal governance and compliance processes. When asked "What were the top 3 issues in measuring IT service performance over time, and then creating reports identifying where improvements have been made?" the respondents again had statistically different responses. Respondents were allowed to pick more than one answer, and the choices were "demonstrate IT value to the business," "achieve continual service improvement," "increase the efficiency of IT staff," and others shown in Figure % of respondents, 64.6% of respondents, and 57.6% of total Europe respondents selected "demonstrate IT value to the business." 71.2% of total Europe respondents selected "achieve continual service improvement." 2008 IDC #

10 FIGURE 5 Top 3 Key Issues in Measuring IT Service Performance Demonstrate IT value to the business Receive more accurate reports on IT performance Achieve continual service improvement Increase the efficiency of IT staff Reduce IT cost and maintain/improve IT service delivery Other Europe n = 634 Note: Multiple responses were allowed. Accuracy in Measuring IT Service Performance Three questions led to a critical point regarding measuring IT service performance, which is that it can be a manually intensive process. One of the questions "Does your organization have the ability to measure IT service performance?" required respondents to answer yes, no, or don't know. 72.9% of total respondents said yes, and 19.4% said no. In a breakdown by region, the led the other regions, with 85% of respondents saying yes. 73.2% of respondents said yes, and 68% of total Europe respondents said yes. See Figure 6 for more details. 10 # IDC

11 FIGURE 6 Ability to Measure Performance Q. Does your organization have the ability to measure IT service performance? Yes No Don't know Europe n = 634 The respondents who answered yes to the question "Does your organization have the ability to measure IT service performance?" were asked a follow-on question: "How accurate would you say that information is?" Respondents could select from three choices: "very accurate," "fairly accurate," or "not at all accurate." 62.3% of total respondents answered "fairly accurate," and 33.5% of total respondents said "very accurate." Interestingly, 51% of respondents in the said "very accurate" and 48% said "fairly accurate." In contrast, 29.7% of respondents and 27.9% of total Europe respondents said "very accurate," and 66.2% of respondents and 66.5% of total Europe respondents said "fairly accurate." See Figure 7 for more details IDC #

12 FIGURE 7 Accuracy of Information Needed to Measure IT Service Performance Very accurate Fairly accurate Not at all accurate Europe n = 462 These same respondents then were also asked if it was a manually intensive process to ensure the data was accurate. 72.5% of respondents, 66.2% of respondents, and 69.5% of total Europe respondents said yes. See Figure 8 for more details. 12 # IDC

13 FIGURE 8 Level of Manual Effort Needed in Measuring IT Service Performance Q. Is measuring IT service performance manually intensive? Yes No Europe n = 462 What we can see from Figures 6 through 8 is that while IT organizations across the three regions are collecting data they feel is quite accurate, they are going through very manually intensive processes to get that data. This implies their processes aren't as efficient as they can be. Additionally, manual processes invite human error that can be misleading in ensuring that data is accurate by some objective measure. Corporate Policies and Documentation Another area showing differences between the regions is in explicit corporate policies for managing service requests. Survey respondents were asked, "What would you say is your company's policy toward managing service requests?" They were given four choices ranging from "there is no explicit policy" to "there is a policy, it is enforced, and there are strong consequences for violating it." Figure 9 shows that 11.4% of total respondents chose "there is a policy, it is enforced, and there are strong consequences for violating it." 14.2% of the respondents and 16.7% of respondents selected this answer, whereas 7% of total Europe respondents selected it. This is likely due to less reliance on process standards and frameworks such as ITIL IDC #

14 FIGURE 9 Policy for Managing IT Service Requests There is no explicit policy There is a policy, but it is not enforced There is a policy, and it is enforced There is a policy, it is enforced, and there are strong consequences for violating it Other Europe n = 634 When asked "How well documented is the process to track, manage, and execute service requests within your organization?" 33% of the total survey respondents selected the strongest answer "there is a formal plan for executing service requests." When the results were broken down by region, the had the highest percentage of respondents citing this answer, with 40.8% selecting it. 37.4% of respondents and 27.2% of the total Europe respondents selected this answer. See Figure 10 for more details. 14 # IDC

15 FIGURE 10 Documentation for Tracking, Managing, and Executing Service Requests There is no documentation There is some documentation There is a formal plan for executing service requests Other Europe n = 634 IT Service Desk Considerations All respondents were selected based on their current use of service desk solutions. A number of questions were asked regarding needs in this area. Service Desk Consolidation One set of questions dealt with service desk consolidation. Respondents were asked if they supported multiple service desks worldwide. 65.8% of total respondents said yes, and 28.5% said no. In the regions, both and Europe had similar percentages, with 65.2% and 62.3% of respondents, respectively, saying yes. The was statistically higher, with 75.8% of respondents saying yes. Respondents were also asked if they are looking to consolidate two or more service desks in the near future. Large percentages of organizations responded that they plan to do so in the coming months, with 49% of respondents, 55.1% of total Europe respondents, and 67.5% of respondents saying they would consolidate within 24 months or less. See Figure 11 for more details IDC #

16 FIGURE 11 Consolidation of Two or More Service Desks Yes, within 6 months Yes, within 12 months Yes, within 12 to 24 months No, we don't have multiple service desks in our environment No, we do have multiple service desks; however, we are not looking to consolidate Don't know Europe n = 634 Self-Service IT executives and managers were also asked to rate the importance of giving users more self-service capabilities on a scale of 1 to 5, with 1 being "not at all important" and 5 being "very important." 32.5% of respondents, 23.7% of respondents, and 20.3% of total Europe respondents rated it a 5. See Figure 12 for more details. 16 # IDC

17 FIGURE 12 Importance of Giving Users More Self-Service Capabilities = Very important = Not at all important Europe n = 634 In ranking self-service capabilities that would provide value to the organization, respondents across the regions most often listed getting answers from the knowledge base. Respondents could select multiple answers, but 77.6% of respondents in the, 77.5% of respondents in, and 72.1% of respondents in Europe selected the knowledge base. See Figure 13 for more details IDC #

18 FIGURE 13 Self-Service Priorities Opening tickets and checking status on those tickets Getting answers from the knowledge base Ordering IT goods and services in a catalog Other None of the above Europe n = 593, respondents who selected 3, 4, or 5 in Figure 12 Note: Multiple responses were allowed. Prioritizing Service Desk Incidents Knowing the business importance of service desk incidents was considered very important for survey participants; 51.7% of IT executives and managers in the rated importance of prioritizing incidents based on business impact a 5 on a scale of 1 to 5, with 5 being "very important" and 1 being "not at all important." In, 38.9% of IT executives and managers rated prioritizing incident importance a 5, and in Europe, 32.6% of respondents rated it a 5. it is quite clear that business impact prioritization is more important in the than in Europe, again due to a focus on business impacts dominating the IT agenda in the. See Figure 14 for more details. 18 # IDC

19 FIGURE 14 Importance of Prioritizing Incidents Based on Business Impact = Very important = Not at all important Europe n = 634 Business prioritization was seen to have specific benefits. 66.7% of respondents cited improving IT's reputation with the business as the top benefit, while 81.8% of respondents and 85.8% of total Europe respondents chose improving IT efficiency. See Figure 15 for more details IDC #

20 FIGURE 15 Benefits of Business Prioritization Improve IT's reputation with the business Improve IT efficiency Reduce financial risks to the business (identify which unsolved problems could impact most revenue/cost) Improve service delivery Achieve SLA compliance, compliance with corporate regulations Europe n = 634 Note: Respondents selected top 3 benefits. 20 # IDC

21 ITIL-Based Service Management There were differences between the regions regarding how IT aligns with the business, accuracy of data, and other areas previously noted. These differences may be due to ITIL adoption. The IT department's need for effective IT alignment with business helped increase adoption of best practices based on ITIL. ITIL provides a framework for the process-oriented management of software, hardware, and services. The recent update to the ITIL process standard, ITIL v3, also expands the view of IT service management to include service life cycle and continual service improvement of specific capabilities or offerings that IT might provide the business. ITIL adoption can involve many stages, as IT organizations may start with initial implementation of a single process and go on to implementing additional ITIL processes. One question asked of survey participants was "Are you looking to implement ITIL processes within your organization?" 21.1% of total survey respondents replied that they had already implemented some ITIL process(es), and 21.8% of total survey respondents replied that they are implementing ITIL processes now. Regionally, the had the highest percentage of those already adopting ITIL processes, with 25.8% of IT executives and managers saying they had done so. 23.2% of IT executives and managers in and 18% of Europe respondents said they had done the same. In terms of current and future plans for ITIL, over one-half (56%) of IT executives and managers who responded said they are implementing ITIL now or looking to implement ITIL within the next two years. Regionally, 54.1% of respondents in the, 56.1% of executives and managers in, and 56.4% of respondents in Europe said they are implementing ITIL now or looking to implement ITIL within the next two years. See Figure 16 for more details IDC #

22 FIGURE 16 Implementation of ITIL Processes Have already implemented Yes, implementing now Yes, looking to implement within 1 to 6 months Yes, looking to implement within 6 to 12 months Yes, looking to implement next year No Don't know Europe n = 634 ITIL v3 expands the number of processes and also expands the ITIL framework to include service life cycle and continual service improvement. IDC asked those survey participants who are planning on implementing ITIL what their plans are regarding moving to ITIL v3. Of the three regions, the plans to move the most quickly in adopting ITIL v % of respondents who are planning on implementing ITIL said they are planning on adopting ITIL v3 now or in the next 1 to 6 months. 40.8% of respondents who are planning on implementing ITIL said they are planning on adopting ITIL v3 now or in the next 1 to 6 months, and 38.7% of Europe respondents who are planning on implementing ITIL are planning on adopting ITIL v3 now or in the next 1 to 6 months. See Figure 17 for more details. 22 # IDC

23 FIGURE 17 Implementation of ITIL v3 Yes, implementing now Yes, looking to implement within 1 to 6 months Yes, looking to implement within 6 to 12 months Yes, looking to implement next year No Don't know Europe n = 488, respondents who answered that they have implemented or are looking to implement ITIL within the next year in Figure 16 IT executives and managers were also asked to select from a list of expected business benefits from implementing ITIL (multiple choices were allowed). 46.9% of respondents selected "lower IT asset costs." Both "improve business unit capabilities" and "lower IT operational costs" were tied, with 45.8% of respondents selecting these benefits. In the region, 47.8% of respondents selected "lower IT operational costs," 45.9% selected "improve IT security," and 40.8% selected "improve business unit capabilities." In Europe, 44.3% of executives and managers selected "improve IT security," 38.7% selected "faster response times," and 33.6% selected "lower IT operational costs." See Figure 18 for more details IDC #

24 FIGURE 18 Business Benefits from Implementing ITIL Processes Improve business unit capabilities Improve IT security Lower IT asset costs Lower IT operational costs Align IT technologies and processes more closely with business unit and company goals Faster response times Reduction in errors in making changes to the IT environment Satisfaction of regulatory or IT governance objectives Increased customer satisfaction Europe n = 488, respondents who answered that they have implemented or are looking to implement ITIL within the next year in Figure 16 Note: Respondents selected top 3 benefits. 24 # IDC

25 What's the Takeaway? A Quick Summary IDC is making observations on a regional basis within this document. Therefore, the reader is reminded that each country within a particular region is subject to different economic, political, and regulatory issues, and the resulting ITIL adoption rates would be subject to those influences. Having said this, IDC notes that:! In Europe, IT executives and managers viewed their main challenge for 2008 as addressing service delivery issues. Their priorities focused on addressing cost and budget concerns as well as end-user service and support. Measuring IT service performance is important within Europe, but it is not as critical a driver as in other regions. Relative to the other regions, Europe had the lowest level of ITIL adoption, both in overall terms and in the time horizons in which organizations would incorporate ITIL-based processes within their organizations.! In Asia/Pacific, managers and executives viewed their top challenge as aligning IT with the business. They most often selected addressing cost and budget concerns as their top 2008 priorities, along with improving end-user satisfaction. IT service performance measurement was important to many respondents in this group, and like their counterparts in Europe, respondents in Asia/Pacific found that data accuracy was achievable but manually intensive. ITIL adoption was stronger in than in Europe.! In the, IT executives and managers viewed their main challenge for 2008 as focusing on aligning IT with the business. Their priorities are centered on addressing that challenge, especially when dealing with legal and regulatory constraints facing the business as well as IT. But addressing cost and budget concerns is also a critical concern within this region. The is very strongly focused on measuring IT service management and wants to offload as much service management capabilities as possible through self-service portals and other devices focused on end users. IT service management measurement is assessed as being accurate, but it is a very manually intensive process, requiring as much offloading of tasks as possible. ITIL adoption in the was the strongest of the three regions. As we look across the regions, one of the more striking observations is that, despite a 10 year head start by Europe, the and Asia/Pacific have overtaken Europe in the number of organizations adopting ITIL as a percentage of the total survey population. At the end of the day, ITIL adoption may be stronger in the and than in Europe because IT managers feel that without the strong ties forced by ITIL between the business unit and IT, IT becomes less relevant and therefore easier to eliminate through layoffs. Another observation worth noting is that across all three regions, ITIL adoption tends to increase with the size of the company (i.e., the larger the company, the higher the ITIL adoption rate). This can be relatively easily explained through other observations that companies with distributed IT operations can no longer function as efficiently or as effectively using ad hoc or informal IT management processes that may exist within companies with fewer than 500 employees IDC #

26 Optimizing the Value of IT Through ITSM Integrated IT service management solutions based on ITIL, CobiT, ISO 20000, Six Sigma, and other process standards allow IT to adopt standardized processes across the IT organization. Through this standardization, IT organizations can eliminate redundant processes, better streamline existing processes, remove stovepipes that exist between IT department silos, and increase IT efficiency by eliminating redundant steps in change or configuration management. IT shops can also address optimizing IT service performance and availability while reducing operational costs. Need for Tighter Product Integration A clear need exists for stronger integration between ITIL-based processes and the technologies that IT organizations are using to measure IT service performance. Across all regions, the manually intensive nature of this measurement can still lead to errors in measurement and outcomes, as well as an overestimation of the accuracy of the service levels being measured. In addition to using ITIL or other process standards as a basis for managing internal IT processes, functional areas must be a clear part of the process being managed. This includes service delivery and service support functions such as:! IT asset discovery! Change management! Configuration management! Event alerting/management/monitoring! Incident management! Problem management! Release management HP'S PROACH TO IT SERVICE MANAGEMENT IT service management software vendors have developed management solutions that address IT department needs for software solutions that streamline management software and embed process standards such as ITIL into their operations. HP has introduced solutions that integrate key processes such as incident, problem, change, and service-level management while saving costs through automating previously manual tasks and process workflows. This also includes the discovery and tracking of assets within the IT environment to increase accuracy and help ensure a less manually intensive process. 26 # IDC

27 HP believes its ITSM solution creates business value and aligns IT with the business through:! Continuously measuring and optimizing IT's value to the business! Rightsizing costs through automation at the task, process, and governance levels! Mitigating risk through centralized and enforced processes Overview of HP Solution HP's IT Service Management solution covers the key areas of service support and delivery that are at the heart of modern-day service-focused operations, as shown in Figure 19:! The core of the solution is around HP Service Manager, providing both the scale and the functionality to be the enterprise Consolidated Service Desk! Key to eliminating cost while increasing end-user satisfaction through end-user self-service covering ticketing, catalog, and knowledge management! Efficient detection, prioritization, assignment, and elimination of incidents through a robust integration between Consolidated Event Management (HP Operations Manager) and the Consolidated Service Desk! Proactive measurement of service levels and process key performance indicators to optimize service value with the Consolidated Service Desk and HP DecisionCenter! Efficient management and automation of change, configuration, and release processes through HP Release Control, Universal CMDB, and Client and Service Automation solutions 2008 IDC #

28 FIGURE 19 HP Software ITSM Solution Source: HP Software, 2008 METHODOLOGY For this research project, IDC surveyed 634 organizations worldwide as follows:! Europe 316! 120! Asia/Pacific 198 Participating organizations had to have more than 1,000 employees and maintain one or more IT service desks. Typical respondents had titles such as CIO, VP IT, IT Director, IT Manager, IT Administrator, and Help Desk Analyst. Respondents were prescreened via panel demographics and completed the survey online. HP was not involved in recruiting, and respondents did not need to be HP customers. The 316 European organizations were segmented as follows:! United Kingdom and Ireland 69! France, Italy, and Spain (Western Mediterranean) 83! Germany, Austria, and Switzerland 89! Belgium, Netherlands, and Nordic countries # IDC

29 CHALLENGES/OPPORTUNITIES In moving forward on marketing and updating its ITSM solution, HP faces challenges, including:! Increasing demands from the enterprise. In response to economic pressures, enterprises continue to seek higher levels of productivity, economic efficiencies, and profits. This will put pressure on HP to continue to offer new technologies to reflect and to answer these business needs. In the process, HP will need to offer personal productivity tools that empower individual workers to become more efficient. For improved application and information access, HP must continue to offer efficient infrastructure tools and more secure, effective network infrastructure.! Market penetration from smaller vendors. HP solutions are generally tailored to meet the needs of larger enterprises looking for both robust functionality and economies of scale. Customers with fewer than 1,000 employees may have more of a challenge with working with some of the largest ITSM-focused solutions. Smaller vendors that focus on enterprises that have between 1,000 and 5,000 employees may provide solutions that provide enough functionality for that size organization much more easily than HP. This could enable smaller vendors to generate revenue growth significant enough to start pirating customers from HP, given enough time. Opportunities Opportunities for HP are as follows:! Virtualization. HP's strong road map can be developed to address virtualization. HP's differentiation strategy views the coming commoditization of the hypervisor as an opportunity for HP to provide management to virtualized environments. This management capability will differentiate HP from competitors and show the value of HP solutions.! Technology acquisitions. HP has steadily built a broad portfolio of business and technology solutions to meet different end-user needs. HP can build on its expertise and continue to evolve its range of solutions, and improve its portfolio to solve enterprises' virtual collaboration challenges. CONCLUSION Transforming IT to a service model requires significant changes in organization and in the supporting infrastructure people, processes, and technology to better align with business needs and respond quickly to required changes in service. Aligning IT with the business requires creation and maintenance of specific technologies applied to meet business user needs. This in turn requires tight integration among solutions that provide a specific user-focused service from the IT organization. Recent IDC research looked at IT organizations supporting as few as 1,000 employees to those supporting 10,000 or more employees. These IT organizations were surveyed across three regions: Europe, Asia/Pacific, and the. This was done to identify challenges confronting IT departments adopting service models and to better understand the status of key functions and processes that underlie successful implementation of IT service management IDC #

30 Some of the most-often-cited challenges facing IT included lack of alignment with the business, service delivery issues, and limited visibility into service performance. Top IT priorities included addressing cost/budget and financial concerns and improving end-user support. But IDC noted some regional differences. In Europe, IT executives and managers viewed their main challenge for 2008 as addressing service delivery issues. Their priorities focused on addressing cost and budget concerns as well as end-user service and support. Measuring IT service performance is important within Europe, but it is not as critical a driver as in other regions. In Asia/Pacific, managers and executives view their top challenge as aligning IT with the business. They most often selected addressing cost and budget concerns along with improving end-user satisfaction as their top 2008 priorities. IT service performance measurement was important to many in this group, and like their counterparts in Europe, respondents found that data accuracy was achievable, but manually intensive. ITIL adoption was stronger in than in Europe. In the, IT executives and managers viewed their main challenge for 2008 as focusing on aligning IT with the business. Their priorities are centered on addressing that challenge, especially when dealing with legal and regulatory constraints facing the business as well as IT. But addressing cost and budget concerns is also a critical concern within this region. The is very strongly focused on measuring IT service management and wants to offload as many service management capabilities as possible through self-service portals and other devices focused on end users. IT service management measurement is assessed as being an accurate but very manually intensive process, requiring as much offloading of tasks as possible. ITIL adoption in the was the strongest of the three regions. HP has introduced solutions that integrate incident, problem, change, and servicelevel management and save costs by automating previously manual tasks, including the discovery and tracking of assets within the IT environment to increase accuracy but help ensure a less manually intensive process. HP believes its ITSM solution creates business value and aligns IT with the business through a focused approach to IT service performance measurement, using metrics to measure this performance and what-if scenarios to add rigor to analyzing possible outcomes. This makes it a strong candidate for IT organizations needing an ITSM solution. 30 # IDC

31 PENDIX European Subregion Analysis As noted, the 316 European respondents represented four subregions: United Kingdom and Ireland; Western Mediterranean; Germany, Austria, and Switzerland; and Belgium, Netherlands, and Nordic countries. IDC found key differences in the responses among these subregions in several instances, with significant differences noted in this section. Top IT Priorities For the United Kingdom and Ireland, the top priority was cost and budget, with 36% of respondents selecting this answer compared with approximately 25% for other subregions. Improving end-user satisfaction was more important in Germany, Austria, and Switzerland, with 27% of respondents selecting this answer. The next highest response was 19% in France, Italy, and Spain. Upgrading and improving was more important in France, Italy, and Spain (19%) compared with other subregions. Consolidation of Two or More Service Desks France, Italy, and Spain (71%) and Germany, Austria, and Switzerland (74%) have a higher penetration of organizations supporting multiple service desks worldwide than the other two subregions, which averaged 50%. In addition, France, Italy, and Spain and Germany, Austria, and Switzerland show a higher number of organizations planning to consolidate service desks within two years (60%+) compared with the other two subregions (approximately 40%). Key Issues in Measuring IT Service Performance Demonstrating IT value to the business was more important in Germany, Austria, and Switzerland than in the other subregions (67% versus 53%). Receiving more accurate reports on IT performance was the most important issue in Belgium, Netherlands, and the Nordics (69%) and was also ranked higher than in the other subregions. Achieving continual service improvement was more important in France, Italy, and Spain and Germany, Austria, and Switzerland (78%) compared with the other two subregions (62%). Reducing IT cost and improving IT service delivery was the number 1 issue in the United Kingdom (71%) and was ranked far higher than in other subregions (approximately 50%). Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2008 IDC. Reproduction without written permission is completely forbidden IDC #