# Presentation: 536537

## Using ITIL® & ITSM to support Performance Based Service Contracts Service Level Management

- Suzann C. Balog
- Service Principal, Hewlett-Packard

## Agenda

- Current situation – drivers, trends, IT issues
- ITIL®/ITSM Overview, Key Concepts, and Definitions
- Objectives, Benefit, and Resources for SLM
- Best Practices, CSFs, and Roadblocks for SLM
- SLM Planning process & steps

## IT organizations are striving to:

- evaluate and align IT core competencies and value added to the overall mission/business
- improve their customer value through excellent service
- hire, train, and retain good IT people
- provide more proactive services
- provide a total system of IT service management
- meet new standards and regulations
- integrate 3rd party service providers in the IT value chain
- “outsource” certain IT functions to reduce cost, increase efficiency and support PBSC requirements

- the situationwhat’s happening to many organizations

## Government IT Trends

- Migration of contract types from T&M to PBSC
- Requiring contractors to adopt process standards – i.e. ITIL®, ISO9000, CMM/CMMI, Six Sigma, etc.
- Modernization of tool suites
- Transformation of organizations
- Changing role of government/military personnel to fulfill oversight function
- Evolving Service Level Agreements

## Requirements for Success

- Increase efficiency and flexibility
-   through well-defined, measurable
-   IT processes
- Eliminate organizational “silos”
- Increase staff proficiency through
-   comprehensive training
- Automate processes with proven
-   technology
- Manage services to customers,
-   NOT technology to users!
- Define the business IT wants to be in!

*What roadmap should you follow to get there? *
*              **IT Service Management...*

- Think like a business!

## ITIL®/ITSM Overview, Key Concepts, and Definitions

- ITIL®/ITSM Overview, Key Concepts, and Definitions

## What is IT Service Management (ITSM)?

-   ITSM is an approach that IT organizations can utilize to design, build, integrate, manage, and evolve quality IT services that -
- Are customer-focused and process-driven
- Meet cost targets
- Enable achievement of performance targets as defined in service level agreements (SLAs)

## What is the Information Technology Infrastructure Library (ITIL®)?

-  Open, best practice for IT Service management
-  Created through sponsorship by the UK Government
-  Written by consultants, vendors and users
-  Accredited Education and Examination scheme
-  ISO9000 compliant
-  _[WWW.CCTA.GOV.UK](http://www.ccta.gov.uk/)_
- Independently managed by the IT Service Management Forum - a global organization consisting of more than 12,000 corporate and government members (25,000 individual members) responsible for advancing IT best practices through the utilization of the IT Infrastructure Library (ITIL®).
-     Used by over 10,000 major corporations and governments, including Albertson's, British Airways, Barclays Bank, Proctor and Gamble, ABN AMRO, Shell, Chevron, Capital One, Philips, Eaton Corporation, Hewlett-Packard, US State Department, Internal Revenue Service, ITA-Pentagon, Census Bureau, USDA, various IC agencies

## ITIL® Structure

- Service Support Library contains:
- Service Desk/Incident Management
- Problem Management
- Change Management
- Configuration Management
- Release Management
- Service Delivery Library contains:
- Availability Management
- Capacity Management
- IT Service Continuity Management
- Financial Management for IT Services
- Service Level Management

- Other Volumes in the Library
- Security Management 			Customer Liaison
- IT Services Organization 		Managing Facilities Management
- Planning and Control for IT Services 	Quality Management for IT Services
- The Business Perspective		ICT Infrastructure Management
- Application Management		Planning to Implement ITIL

## Business Benefits of ITSM

- Reduced costs
- best practices are the key to cost reduction, with potential savings of up to 48% (source: Gartner)
- Improved agility
- Increased IT customer satisfaction
- well-linked and well-understood handoffs between IT processes means that customers and their problems don’t “fall through the cracks,” providing consistent and more predictable IT services
- Strong business partnerships
- expectations are clear throughout the value chain
- Built-in quality improvements

## What you get...

** ****Reduced risk and implementation time**
** ****Lower costs**
** ****Increased customer satisfaction**
** ****Competitive advantage**
**Because you now have...**
**Proven processes based on industry best practices**
**Faster time-to-market**
**Balance between customer requirements and service costs**
**Transparent support of business processes**
**Measurable, well-defined services**
**Management of customer expectations**
**Continuous improvement of service quality**
**Improved relationships with both customers and partner providers**
**Time to be proactive**
**Built-in “Management of Change”**
**Ability to dynamically address changing  business requirements with flexibility and speed**

**...****an approach that brings together**
***Process, People,****** *****and***** ******Technology,***
**requires an organization to adopt a *****service level management***** function...**

**Process**

**People**

**Technology**

**The Right Balance for Success**

**ITSM **

## The historical evolution of SLA’s

_***1st generation***_ - the uni-directional IT developed SLA:
- technical, anti-customer, non-measurable,only costs, lawyer text style
_***2nd generation***_ - the heaven on earth
- soft wording, business oriented, value versus costs, “worst case targets”, over-measured, 30 pages, over-ambitious
_***3rd generation***_ - the common sense
- 1-4 pages
- clear description in business terms
- few key measures
- statement of intent

## IT Service Level Management

***Service Level Management*** is the process of managing the quality of IT services according to mutually agreed-upon Service Level Agreements or *contracts *between IT Service Management and the user community.
- The Service Level Management*** process*** ***defines***, ***negotiates***, ***monitors***, ***reports***, and ***controls*** customer-specific service levels within predefined standard service parameters.  This process also generates a custom service if the customer's ***Service Level Agreement (SLA)*** requires it.

## Other key SLM terms

**SLA** - A ***Service Level Agreement*** is an agreement between IT and the user community which defines the responsibilities of all participating parties and which binds IT Service Management to provide a particular service of a specific agreed-upon quality and quantity for a specific duration, and constrains the demands users may place upon the service to those agreed-upon limits defined by the contract.
**SLO** **- **A ***Service Level Objective*** is an agreed-upon, measurable service metric “target” between the IT organization and one or more of its customer communities, applied to the services provided to those communities.

## Other key SLM terms

**OLA** - An ***Operational Level Agreement*** is an internal IT agreement between the Service Manager and an INTERNAL service provider (e.g., Network Support, Help Desk, etc.) that defines the responsibilities of the service provider to deliver a particular service component (e.g., network, support, database, etc.) of a specific agreed-upon quality and quantity for a specific duration. The OLA should include the technical details and metrics required to support a specific SLA.
**UC – **An ***Underpinning Contract*** is a contract that binds IT (on behalf of the business) and one or more EXTERNAL vendor suppliers or that defines the responsibilities of the vendor to deliver a particular service component (e.g., hardware, application/ system support, etc.) at a specific agreed-upon quality and quantity for a specific duration.

## Organizing IT to support SLAs

- Customer Support  Mgt

- Server Mgt

- ApplMgt

- Storage  Mgt

- Network Mgt

- Desktop  Mgt

**Customers**

- E-mail Service

- Business/Mission Applications

- Office Automation

- Admin Applications

- IT Governance – Oversight & Contract Management

- SLA

- Supporting Functions – ITIL® processes, Enabling technologies, Metrics, Performance Measurements

- HP Intellectual Property

- October 2003

## ITIL Recommendations for PBSC

- Use ITIL’s SLM as a guide for government contracting. Will ensure better support, real metrics, contractor accountability, and facilitate working with multiple vendors for a single IT function
- Build ITSM framework into your organization – government needs to own this – do not outsource business management of IT
- Contracts, IT, and Customers need to work together early on to determine metrics – meaningful and technically measurable – have SLAs with your customers and PBSCs with your contractors

## Objectives, Benefits, and Resources

## SLM Objectives

- Maintain and improve IT serviced quality through a constant cycle of agreeing, monitoring and reporting upon IT service achievements and instigating actions to eradicate poor service.
- Manage the relationship between service providers and customers, thereby improving business-IT alignment.
- Ensure that cost-justified service quality is maintained and improved over time.

## SLM Benefits

- Stabilizes the relationship between IT and the customer
- Clarifies customer and IT expectations
- Increased productivity due to increased service quality
- Highlights IT value-added activities to the customer through service performance review meetings on a regular basis

- Consistent, measurable service standards
- Ability to balance service level against cost and complexity
- Long-term cost benefits due to IT ability accurately specify required IT resources
- Services no longer subject to unpredictable demands affecting IT ability to deliver quality services

## Key Resources

- Roles:
- SLM Process Owner
- Service Level Manager
- Service Coordinator
- Customer Relationship Manager
- Supplier Manager

- Tools:
- CMDB Query Tool
- Data Manipulation and Reporting Tools
- SLA/OLA Templates
- Service specifications

## Best Practices, Critical Success Factors, and Roadblocks

**Notes:**
HP Services experts tailor your solution to meet the unique needs of your business, regardless of industry.

## Best Practices

- Emphasize contribution to business success as opposed to IT realities.
- Distinguish clearly between Service Level Management (process) and Service Level Agreements (contract).
- Base cost recovery on SLA as opposed to uniform charge-back.
- Construct SLAs with and for business units using their language.

- Implement Service Level Management to start at design and end with measurement of a service.
- Establish SLAs only within the context of a Service Level Management discipline.
- Formulate contractual relationships with (internal) suppliers to be consistent with SLAs.

## Critical Success Factors

- Support from upper management
- Participation of other IT managers
- Having a well-defined and documented IT service catalog
- Technology in place to monitor service levels and report results
- Close integration with Incident & Service Request Management and Service Planning

## Common Roadblocks

- Customers have difficulty identifying requirements
- IT over-commits
- Necessary supporting disciplines are often not in place or not integrated with Service Level Management
- Investment often in a broad-based budget and not focused on a specific SLA, makes improvement difficult
- Managers often over-ambitious but not willing to invest in underpinning processes
- Lack of discipline in support teams

## Planning for Service Level Management

## SLM Process

**Phase 1: **
**INITIATE**

**Phase 2: **
**NEGOTIATE**

**Phase 3: **
**PERFORM**

**Phase 4: **
**MONITOR &**
**             ****REVIEW**

**Phase 5: **
**COMPLETE**

**Close SLA**

## Phase 1: Initiate

** ****Identify executive sponsors, stakeholders**
** ****Educate IT and customer on key components of Service Management, and**
**  ****gather initial data**
** ****Understand business drivers, metrics and ROI**
** ****Define customers, communities, and users**
** ****Determine customer needs (and wants)**
** ****Evaluate current customer - IT relationship**
** ****Determine customer’s perception of current IT service delivery**
** ****Determine services required based on customer’s operational needs**
** ****Define customer timetable**
** ****Identify customer issues**
** ****Identify special requirements (e.g., development systems, etc.)**

**The Initiate phase involves assessing the customer situation and**
**understanding the customer’s issues. This step defines what**
**information is required to initiate the development of SLOs. This**
**phase is comprised of the following activities:**

## Phase 2: Negotiate

** ****Determine the services that should (or should not) be negotiated I.e., determine**
**  ****how desired service levels can be met and maintained**
** ****Calculate the cost of providing the service levels**
** ****Determine accountability (customer and IT)**
** ****Identify service requirements and prioritize them**
** ****Conduct a cost/benefit analysis**
** ****Negotiate appropriate SLOs based on cost/benefit analysis**
** ****Present outcomes and approve next steps**

**Negotiations occur between IT and the customer on what services**
**are required. This phase defines the areas of service that can (or**
**cannot) be negotiated in establishing an SLO. This phase contains **
**the following activities:**

## Phase 3: Perform

** ****Define design objectives, requirements, solution models that support SLOs**
** ****Develop/update technical infrastructure to support SLOs**
** ****Develop/update IT processes to support SLOs**
** ****Define how services can be measured by identifying measurement parameters**
**  ****(metrics)**

**The Perform phase involves the design and implementation of the**
**SLO infrastructure that will deliver the SLOs and allow the**
**creation of the SLA. This phase contains the following activities:**

**Developing the SLO Infrastructure**

** ****Define the methodology required to facilitate the measurement of services (incorporating tools as necessary, to support the collection and reporting of service level information)**
** ****Define remedial actions where required**
** ****Identify IT operational metrics and IT process metrics that must be monitored**
** ****Identify process for incident and problem management**
** ****Identify customer training**

**Write the SLA/OLA**

## Phase 4: Monitor & Review

** ****Monitor service levels**
** ****Report service levels**
** ****Review SLAs. Over a period of time, a customer’s business requirements may**
**  ****change and the service levels defined earlier in the negotiation phase may no**
**  ****longer be suitable**
** ****Modify SLAs**
** ****Evaluate the customer’s perception of the service being provided (e.g., user**
**  ****satisfaction reviews/surveys)**

**This phase monitors service levels, creates service level reports,**
**reviews the customer services provided and modifies an existing**
**SLA to incorporate new services or remove old services. This**
**phase contains the following activities:**

## Phase 5: Complete

** ****Steps for handing the support of an application back to the customer**
** ****Steps for notifying the relevant people regarding changes in the support structure**

**An SLA exists for a specific time period agreed to by the customer**
**and IT. When an SLA is nearing the end of its life, a formal review**
**of the SLA is conducted with the user community and IT. Metrics**
**are reviewed and action plans are established to help improve IT**
**processes and customer relationships, if required. This phase **
**contains the following activities:**

**Procedures for terminating an SLA. Procedures would include:**

## Improve the efficiency of the organization, IT staff and IT customers

Improve the effectiveness of the processes

Improve the ability of the technology to automate the processes

Enable better measurement and control of the IT environment  - key to meeting contractual agreements

- Improve the effectiveness of the processes
- Improve the ability of the technology to automate the processes
- Enable better measurement and control of the IT environment  - key to meeting contractual agreements

- ITIL® Value Proposition

## Questions?

## Slide 35