Week 7 - Applegate -V8- Managing IT Service Delivery CH7[1]

Managing IT Service Delivery : 

1 Managing IT Service Delivery Chapter 7

Introduction : 

2 Introduction Increasingly companies are outsourcing all or significant parts of their IT. Reasons include: You can get almost any service you need on the Internet. Why build and maintain systems when you can pay for only what you need. Huge value proposition – much less costly No need for special technical and application skills

New Service Models : 

3 New Service Models Incremental outsourcing Whenever your can you should rent space in a vendor-owned hosting facility rather than build your own data center or systems. Reasons include: No need to manage the shortage of specialized IT workers Reducing time to market Allows for 24X7 operations Favorable cash flow profiles Cost reduction in IT service chain – (capacity on demand) Making applications globally accessible

New Service Models : 

4 New Service Models On Demand, Software as a Service, Utility, and Grid Computing Models These are the terms / models used by IT vendors to describe their “rent what you need” products. Vendors can save you time and money if you can share computing infrastructure and business applications with other companies. The vendors make sure that your business is secure from others on the same system. This is really a no brainer Software as a Service (SaaS) Don’t need to install or buy software, just pay a usage fee and you avoid the pain of buying, installing, running the hardware and software. This is where most business computing will be done in 10 years. Grid Computing Vendors can spread work over many computers and make it look like one big machine. They can also slice off a small part of a computer for you to use. As with any “rental” watch that you are getting what you paid for. Monitor your “Service Level Agreement” SLA.

New Service Models : 

5 New Service Models Managing Risk through Incremental Outsourcing Many IT services do not provide competitive advantage. These services are essential in running a modern business. There is no reason one company’s service must be different from that of its competitors. Payroll, Human Resources, email, word processing… are commodity services that should just be reliable and low cost. The key to this entire chapter is: If the service (computer application) provides competitive advantage keep it internal to the company. (top of page 294) All other applications where a reliable lower cost service is available externally, should be outsourced to that vendor. (Instructors Note) Many companies don’t have any computer systems that provide competitive advantage. These companies can and should run with virtually all systems outsourced. All they need are PCs with an Internet browser and a printer. This is the IT infrastructure of most of your homes. What a cost reduction!!!

Managing Relationships with Service Providers : 

6 Managing Relationships with Service Providers Selecting Service Partners Follow a selection / bid process where you do an RFP, do your research in advance. An outsourcing deal that is too one-sided, too favorable to one party at the expense of the other, usually end up as a bad deal for both sides. Relationship Management Monitor the SLA. Appoint someone on your side to manage the relationship. No matter how big or small the system you must have a single point of contact on your side. Review each invoice to insure that you are only paying for what you used.

Managing Relationships with Service Providers : 

7 Managing Relationships with Service Providers Large Scale outsourcing Arrangements – Why? Concerns about Costs and Quality Vendors have more effective bulk purchasing/leasing arrangements Hustle – success measured by satisfied customers Tighter overhead cost control Breakdown in IT Performance Failure to meet service standards forces general management to find other ways to achieve reliability Access to Skills and Talent: Really expensive and highly specialized people. Large Scale Relationship Management Monitor the SLA. Appoint someone on your side to manage the relationship. No matter how big or small the system you must have a single point of contact on your side. Review each invoice to insure that you are only paying for what you used.

Designing and Managing Large-Scale Outsourcing Alliances : 

8 Designing and Managing Large-Scale Outsourcing Alliances Contract Flexibility Change is inevitable, plan for it Standards and Control Manage change by addressing controls and standards in the outsourcing agreement Scope - areas to Outsource Decide which areas to outsource Cost Savings Analyze your savings and carefully negotiate outsourcing deals The CIO Function Partnership/Contract Management Architecture Planning Emerging Technologies Continuous Learning Performance Measurement Relationship Interface

Managing IT Legacies and Assets : 

9 Managing IT Legacies and Assets Technology Problems “Core rigidities” – locked in by what we have. Residual Process Complexity Old batch processing systems may be at the core of the company Local Adaptation Systems don’t talk to each other Lack data and process integration Nonstandard Data Definitions The same data in different systems is defined differently. Dates without century? Different field lengths. Managing IT Infrastructure Assets Total Cost of Ownership (TCO)