IT services: What are you selling?
After 25 years of striving for Business-IT Alignment, the results are – to say the least – disappointing. The key source of evidence is the state of the average Service Catalog and Service Level Agreements. These documents still tend to represent the IT view of what is provided, being a summary of the components that are required for delivering a service to the customer. The documents do not describe what the customer is buying. Little wonder that customers of IT organizations feel that IT does not understand the business. Consequently, the feeling of alignment is distant, if present at all.
Do IT and Business need to be aligned at all? To answer this question, we need to understand what is meant by Business-IT Alignment (BITA). BITA is “a desired state in which a business organization is able to use information technology (IT) effectively to achieve business objectives”. In other words, IT must be of value to the business. In practice, aligning business and IT involves taking the business strategy and IT determining how to act and what to deliver to ensure that this strategy is met.
Let’s take an analogy: something that is vital to me, my finances, and my supplier of financial services, my bank. Using the same logic as with Business-IT Alignment, I (and my bank) should be aiming for Customer-Bank Alignment (CBA). CBA is a state in which I am able to use finance effectively to achieve my objectives. Let’s assume that I am aligned with my bank since the financial issues I have, have been addressed adequately by the bank, rather by multiple banks. How did this desired state come about?
I took a good look at how IT organizations do it and followed their example: First, I read the annual reports and strategic intents of the banks my parents bank with. I then had a series of strategic discussions with the boards of each of these banks so that they could make sure that they would align their strategy to my needs (I hoped). I then said “OK, give me what you’ve got”, without really specifying what I needed. Does this seem unlikely? It is.
The real process works differently. For my basic service (a checking account), I looked for the most convenient bank. The one closest to my house at the time; this was at a time before internet banking had started. As my need for financial services grew (e.g. saving, mortgage, investment, insurance), I first looked to the bank providing my basic service. If the desired service was either not available or did not meet my requirements, I sourced my service from a different provider.
Over the last 20 years, my portfolio of financial services has grown considerably. My basic service bank has regularly contacted me (about once every 5 years) to understand what needs I have and where these needs are fulfilled. They subsequently improved their service portfolio to make it interesting for me to source my service through them.
The big question is: am I aligned to my provider of financial services? Or, more importantly, has my provider made a concerted effort to be aligned with me? Looking at an adjusted definition of alignment, being “a desired state in which I am able to use financial services effectively to achieve my objectives”, I can safely say “yes, we are aligned!”
How did we become aligned? It started as a result of the bank being able to provide the basic service that I was looking for. Over time, I have become more interested in more advanced financial services and my bank was (sometimes in second instance) able to deliver the service I was looking for. In some cases, they organized the service for me at a different provider (e.g. my insurance was a bank-branded product from a completely different company).
Over the last 20 years, they have proven to deliver services reliably, at a decent price and they have been able to improve their services on an ongoing basis. Sometimes, they were not able to meet my needs (either functionally or in terms price) and those were the moments that I went to a different supplier.
Whatever happened during the 20 years, I always measured the relationship along the lines of the value for me. Unfortunately for the bank, my value is, of course, subjective and based on my perception of the service provided. And the bank did not just have to deal with my perception; they have tens of thousands of other customers’ perceptions – and, therefore, perceived values – to manage. The figure below illustrates the relationship described.
The key to ensuring alignment is, therefore, providing value. In general, when someone wishes to buy a product or a service, they tend to look for a sense of value when buying the product or service. Value is a combination of the service (at a given quality), the price that is paid and the customer who purchases the service. The customer experiences value; there is no absolute determination of value. This means that a certain service delivered at a set price may result in a differing value experience.
The core element of providing value (and thus aligning yourself to your customer) is delivering a service. Using our bank example, it is clear that customer and supplier do not need to be “strategically” aligned, i.e. our “business” plans for life do not need to match at all. What is important is that the services provided by the supplier come close to matching the needs of the customer.
Whether a customer has the choice of supplier or not (as is often the case between business and IT), it is important that customers feel they are getting their money’s worth. It is a fact that many IT customers do not experience a sufficient sense of value when purchasing IT services. The main problem involves the fact that most IT organizations have not got a clue about what they are actually “selling”.
When you ask an IT manager what services he provides, you will get a list including the following buzzwords: workplace services, network services, data center services, application services, project management, and so on. But what exactly does the user organization ask of IT?
The Basic Services of IT
When you ask customers of IT organizations what IT should do, they will tell you the same three things (possibly in different words, but the intent is the same):
- “My current IT stuff simply has to work”;
- “Give me new IT stuff as soon as possible”;
- “Advise me on how I should use new IT stuff or make better use of my current IT stuff”.
This is what every customer of IT wants. In essence, IT organizations provide three basic services (see figure 2):
- IT ensures that the existing functionality is available for use.
- IT delivers new functionality when necessary.
- IT advises its customers on the first two services.
IT customers are interested in functionality as supplied by IT, not in “hardware” or “software”.
Figure 2 is a simplified representation of the relation between IT services and the customer needs (both of the business as well as customers in the market). As the information value of the product or service increases for the customer, the IT organization comes closer to the customer, meaning that the performance of IT becomes more and more important.
Let’s take a closer look at these three basic services:
Basic service 1: IT ensures that the existing functionality is available for use – This involves ensuring that all components that are necessary for providing the existing functionality all work together well. The components consist of hardware, software, communication and people. These components together form the service.
The activities necessary for providing the services include solving incidents, answering user questions, carrying out minor (standard) changes, managing applications on a daily basis and carrying out routine operational work on both applications and infrastructure to ensure their continued health. As with the bank, this job becomes increasingly more difficult as services are added to the portfolio. There are more services that I may become dissatisfied with.
Basic service 2: IT delivers new functionality when necessary – Organizations develop themselves based on the demand for creation and delivery of new products and services (through competition and/or innovation). Increasingly, IT is a key component of new products and services. For this reason, IT customers demand new and better functionality for maintaining their competitiveness. For the IT organization, this means being able to define, design, build, manage, test and implement changes quickly, efficiently and effectively.
In order to do this, basic conditions such as a project management methodology, applications management and a number of planning processes (e.g. Availability, Capacity, Security, Continuity Management) must be in place. This service means adding capability to the organization, either through developing it or through buying it from someone else. My bank was not an insurance expert, but still managed to satisfy my needs in that respect.
Basic service 3: IT advises its customers on the first two services – Organizations need to know what the possibilities of IT are. IT is not their core competence, which is why they need a department or supplier that helps them to make the right choices. Being able to provide this service is the way to achieve the status of “business partner” – a goal for IT organizations that is often strived for but seldom achieved. This desirable status is rarely achieved because IT is only trusted to deliver basic service 3 once the first two basic services are executed at a high level.
Unfortunately, most IT organizations or IT suppliers are not capable of delivering basic services 1 and 2 at a constant and high quality level. My bank has proved to me over many years that can provide me with my existing services and new ones; some, I didn’t know I needed until my bank suggested them. Has their service been perfect? By no means, there have been glitches in the service both in a technical and a people sense.
The speed and way they resolved these issues was what has made me stay. Despite my distrust of most financial institutions, my bank has earned the right to provide me with advice, as they have made the effort to appear to put my needs above theirs.
What does this mean for an IT organization? The key lesson is that it’s not about the routers, the databases, the bits and bytes and so on; it’s about execution. It does not matter what brilliant functionality you have organized for your customers. If you can’t make it work, keep it working and adapt it to changing needs, then, in the end, your customer will make a different choice regarding the supplier of IT services.