Metrics-based IT service management

By Dimitry Isaychenko and Pavel Demin

This book’s title is ‘Metrics-based service management”, and we assume measurement is a fundamental component of, and essential for, effective decision making, communication, corrective action, growth, etc. However we wish to emphasise that measurement is not the sole tool at a manager’s disposal. Leadership, empathy, communication, process design, willpower, and delegation can help a manager with many professional challenges. All of these provide an opportunity for sound decision-making and motivation. Still, it is measurements that supply data for making and verifying decisions. Measurements pinpoint issues that can be tackled with process adjustments, and assure a reliable foundation for employee motivation. We are convinced, therefore, that a properly built measurement and evaluation system can be of a considerable use to organizations.

• Language: English
• Publisher: TSO
• Release date: Oct 1, 2022
• ISBN: 9780113318384

Book preview

1 Service management and measurements

We shall first try to sort out a few things: the definitions of a service, an IT service, and an IT service management system; the ways to measure them; and the implications of measurement.

1.1 Services

1.1.1 Definitions of a service and an IT service

Definition: Service

A means of enabling value co-creation by facilitating outcomes that customers wish to achieve, without the customer having to manage specific costs and risks.

This extensive definition of a service from ITIL 4¹ allows for a broad analysis, and from it one can draw multiple important conclusions about service management.

ITIL 4 defines an IT service as a service that is based on the use of information technology (AXELOS, 2019). In our practice, we use a different definition, which in our opinion is both more precise and universally applicable.

Definition: IT service

A means of enabling the use of information technology to improve the effectiveness of, and to remove constraints from, information processes.

In other words, enabling the use of information technology with IT resources and activities to implement, maintain, and operate is the very means of ‘creating value’ that a service provider offers to its customers.

The other party in a service relationship is the customer. The customer pursues certain goals that an IT service may help to achieve. When a customer consumes an IT service, they are completely or partially relieved of the burden of owning and managing service-related resources, risks, and costs. Therefore a service can enable value to a customer only when it supports the achievement of the customer’s goals.

1.1.2 Service customer’s goals

To cover the whole spectrum of goals thoroughly, we would have to analyse a variety of customer types: individuals, organizations, commercial enterprises, not-for-profit entities, etc. Yet along with arguably the majority of our readers, we mostly deal with service management challenges in medium-sized and large commercial enterprises. And for this reason, we shall focus our narrative on the goals of that specific customer type.

Commercial organizations exist to generate profit. Organizations earn money (revenue) and spend it (expenses). They also function in uncertain environments, i.e. they face risks. This leads to a generic set of business drivers:

■increase benefits

■reduce (optimize) costs

■reduce (optimize) risk.

It is no coincidence that COBIT also defines these very drivers as ‘value creation governance objectives’: benefits realization, resource optimization, and risk optimization (ISACA, 2018).

An organization can potentially increase revenue by creating more products, offering services to wider business areas, increasing its sales or the unit price. This, in turn, requires improved service quality, shorter time to market, broader end-user interaction channels, and many other improvements. In these, one can easily spot the ever-increasing role of IT and the IT management practices of internal and external IT service providers. A modern bank provides a perfect example of the impact IT has had on business products, services, and sales channels.

The second area of business interest is the optimization of expenses. It inevitably implies a reduction in the cost and/or the amount of resources required to create and deliver products and services, and an improvement in the resource utilization. The optimization and automation of business processes, as well as people’s performance, are hugely important for resource optimization. Again, the role of good practices for the development and management of digital products and services is apparent.

Finally, the third area of business interest is the optimization of risks. Where an organization is heavily dependent on IT, management of business risks is closely related to information security management, to the availability and continuity of IT services, and to some other ITSM practices.

1.1.3 Value of services

Once the areas of business interest are clear, one can identify and analyse the essence of service value. According to ITIL, value is ‘the perceived benefits, usefulness, and importance of something’. From a customer’s standpoint, a valuable service ensures the achievement of the goals it is pursuing: increasing benefits, optimizing costs, and/or optimizing risks.

ITIL 4 puts an important emphasis on value perception. It is not just the outcomes that service consumers are looking for. Their perception also matters. This is why forward-thinking service providers try their best to understand consumer perceptions and preferences. Many factors affect the perception of value: the capabilities a service brings to the consumers (functional experience); the emotions it triggers in them (emotional experience); and how well it is aligned with their expectations (satisfaction). These considerations comprise a part of the customer/user experience (CX/UX) knowledge domain, which we shall not cover in detail in this guide.

A different consideration is more important here: services can have side-effects. A service can help to achieve some goals, but it can also impede the pursuit of others. A service may reduce an organization’s expenses (e.g. by improving employee performance), but also generate additional costs (e.g. the application of licence fees). A service may reduce business risk exposure (e.g. by reducing the number of errors) but create new risks (e.g. availability disruptions or data inconsistency).

Thus, enabling service value is always a balancing act. Customers are interested in a service when its side-effects do not outweigh the benefits it brings.

So, in which cases does a service enable value? According to ITIL 4, the services delivered by a service provider create and/or modify a service consumer’s resources. For example, Cleverics delivers training services to enable resource improvement (in this case, the skills and knowledge of the customer’s employees). Cleverics also offers process consulting services to improve the customer’s capability to manage its resources and activities. Our customers in turn use their enhanced resources to create products for and provide services to their customers.

To summarize:

■Organizations pursue business goals.

■Organizations manage their resources in order to achieve their goals.

■Consumed services help to achieve the goals by creating and/or modifying the organization’s resources.

■A value creation (and transfer) chain represents this idea visually ( Figure 1.1 ).

IMag

Figure 1.1 Value creation and transfer chain

1.2 IT service management system

Figure 1.1 suggests that a service consumer’s and provider’s activities can be grouped into capabilities (or practices as they are called in ITIL 4). One of the capabilities is a process.

Definition: Process

A set of interrelated activities that are aimed at delivering the desired outcomes with the most efficient resource utilization.

Basically, a process is a manager’s tool for achieving a business outcome. To make this tool useful, the manager needs to define:

■the requirements for the process outputs

■an approach to performing the process activities, i.e. the methods and rules of working and interacting

■the requirements for the resources that are used in the process

■the rules for the control, evaluation, and adjustment of the activities

■responsibilities.

Processes are widely used in management frameworks and methodologies because process purpose statements and interfaces are quite uniform within an industry (unlike organizational or geographical structures, which vary considerably). There are industry-specific standards that describe organizations as systems of interrelated processes (eTOM,² PCF³, and others).

Processes that are designed to orchestrate the activities and resources of a service provider for the management and delivery of high-quality IT services are called IT service management processes. The most comprehensive description of these can be found in ITIL practice guides and other sources based on ITIL.

Each IT service management process contributes to the achievement of a customer’s goals by contributing to the service value. Some examples are provided in Table 1.1.

Table 1.1 Contribution made by service management processes to the achievement of service value

Every IT service management process impacts a customer’s goals in its own way. Thus, it takes a complete integrated and balanced system to achieve goals, not merely a handful of disparate processes.

The international standard ISO/IEC 20000 offers a definition for an IT service management system: ‘a set of interrelated or interacting elements that service providers use to direct and control their service management activities’. Service management in turn is ‘a set of capabilities and processes that service providers use to direct and control the activities and resources needed to fulfil service requirements. Service management is used to direct and control the design, deployment, delivery, and improvement of services’ (International Organization for Standardization, 2011).

In our consulting practice, we use Figure 1.2 to describe an IT service management system.

IMag

Figure 1.2 An IT service management system

The architecture of an IT service management system architecture includes:

■key inputs to the IT service management system

■key outputs of the system

■key resources that the system employs in order to produce the outputs

■key controls and constraints of the system

■governance and management processes that jointly enable achievement of the service management goals.

According to ISO/IEC 20000, the most important feature of the service management system is the plan-do-check-act (PDCA) cycle. PDCA ensures the continual improvement of the system elements, such as processes. One of the steps in the PDCA cycle is control and analysis (the ‘check’ aspect). This step includes the measurement and evaluation of processes, verification of the goals achieved, evaluation of resource utilization and of management decisions, etc. Measurement is therefore an intrinsic enabler of the IT service management system (and of any other quality management system).

1.3 Dimensions and methods of measurement and evaluation

With this publication, we do not aim to deliver a complete reference guide to the methods of measurement and evaluation for all types of service management objects. Rather, we suggest a metrics-based approach to measurement and evaluation of services, processes, and personnel. To navigate the multitude of methods and approaches to measurement and evaluation, and also to define the applicability for those in this guide, we need to address the following questions:

■Why measure and evaluate?

■What to measure and evaluate?

■How to measure and evaluate?

1.3.1 Why measure and evaluate?

Before jumping into measurement and evaluation, it might be useful to understand why we are doing this at all. Measurements carry no value of their own. The value emerges only when the measurements are applied when making a decision or performing an activity. ITIL Practitioner Guidance (AXELOS, 2016) describes four management tasks that measurements can help with:

■To direct activities Planning implies identification of goals. According to the SMART concept, the goals should be specific and measurable. Thus, each goal should be accompanied by one or more indicators that would enable the evaluation of achievements.

■To justify changes Any improvement initiative (or rather, any change) needs justification. ‘Why change anything?’ is the question to which sponsors and other stakeholders demand a solid answer. Metrics that indicate deviations from the targets or negative trends become measurable arguments in favour of the change.

■To validate decisions and outcomes Measurements help to ensure that an activity (e.g. a project) has indeed been completed, that the teams have performed to the agreed targets, and that decisions have been implemented and yielded the desired outcomes.

■To intervene with corrective actions Unanswered calls sit in the first-tier support queue. The incidents at the top escalation level are almost overdue. The server workload exceeds the threshold. In all these cases, corrective actions are in order. Metrics, specifically the lead indicators (more on those in Chapter 2 ) allow triggers to be set for the corrective actions and identify areas of risk and how to manage them.

1.3.2 What to measure and evaluate?

We often use and will continue to use the terms ‘management object’ and ‘measurement object’ throughout this guide. An important caveat is that we do not make any distinction between them. Measurement is one of the management tasks. What we measure we need to manage, and vice versa.

Management objects are any resource that an organization manages in order to achieve its goals. Many bodies of knowledge suggest various classifications of resources. ITIL v3 offered a concept of ‘service assets’ that were split into two groups: resources and capabilities. In ITIL 4, this list evolved into four so-called dimensions of service management: organization and people, information and technology, partners and suppliers, and value streams and processes. COBIT 5 authors used the term ‘enablers’ for a similar classification but fortunately dropped it in 2019 in favour of a more straightforward option: ‘components of a governance system’.

Although it may not be complete, we find the following list of management object types to be sufficient:⁴

■services

■organization

■people

■processes

■projects

■technology.

Management tasks can be applied to all of these. Each management object type has meaningful characteristics (measurement dimensions), each with its own measurement methods and tools. Some characteristics are intrinsic only to some of the management objects, while others are universal. The most common characteristics include:

■Performance Are the objectives of the management object being achieved?

■Maturity Does the object have the necessary capabilities to produce the desired outcome?

■Compliance Does the object comply with internal and/or external regulations?

1.3.3 How to measure and evaluate?

The object and its significant characteristics largely define what means and methods of measurement and evaluation are applicable in each case.

1.3.3.1 Performance

Each management object has a purpose. Fulfilment of the purpose implies that the management object performs certain functions. Evaluation of the performance of these functions provides a manager with