IT service management: process capability, process performance, and business performance

As technology is at the core of almost every leading industry, organizations are increasingly scrutinizing their Information Technology (IT) group’s performance so that it is more in line with overall business performance and contributes to the business’ bottom line. Many IT departments are not equipped to meet these increasing IT service demands. They continue to operate as passive-reactive service providers, utilizing antiquated methods that do not adequately provide the quality, real-time solutions that organizations need to be competitive. Organizations need efficient Information Technology Service Management (ITSM) processes in order to cut costs, but ironically, in order to implement highly capable processes, there are significant costs involved, both in terms of time and resources. A potential way to achieve better performing and higher capable processes is to employ methods to compare an organization’s processes against best-practice standards to identify gaps and receive guidance to improve the processes. Many of the existing methods require large investments. Holding back progress towards best practice for financial benefit in the IT industry is the reluctance of many IT organizations to embrace the business side (specifically Service Portfolio Management and IT Financial Management) aspects of ITSM. Service Portfolio Management (SPM) is used to manage investments in Service Management across an organization, in terms of financial values. SPM enables managers to assess the quality requirements and associated costs. IT Financial Management aims to provide information on the IT assets and resources used to deliver IT services. Providing a Service Portfolio and practicing IT Financial Management requires a high level of maturity for an organization. It seems reasonable and logical that the organization’s Chief Information Officer should be able to articulate and justify the IT services provided, report the costs (by service) incurred in delivering these services, and can communicate the demand for those services, that is, how they are being consumed and projections on how they will be consumed in the future. However, a major investment in terms of time and resources may be needed to catalogue such information and report on it. The research problem that this paper addresses is the lack of a pragmatic model and method that associates ITSM process maturity (process capability and performance) with financial performance for organizations that lack mature ITSM processes. Previous studies have reported on cost savings, but there is currently no measurement model to associate ITSM maturity with financial profitability; which in turn prompts the research question: How can the association of ITSM process capability and process performance with financial performance of an organization be determined? This research iteratively develops and applies a measurement model that presents a pragmatic and cost-effective method to link ITSM process capability and process performance with business performance by operationalizing Key Performance Indicators (KPIs) to support Critical Success Factors (CSFs) and associating CSFs with business risks to determine business performance. This study employs a scholar-practitioner approach to changing/improving processes using action research and an adaptation of the Keys to IT Service Management Excellence Technique (KISMET) model to guide the process improvement initiative. This technique leads to the second research question: How can the ITSM measurement framework be demonstrated for CSI? The research was based on a single case study of a global financial services firm Company X that had implemented the ITIL® framework to improve the quality of its IT services. The study found that the measurement framework developed can be used as a starting point for self-improvement for businesses, identifying gaps in processes, benchmarking within an organization as well as guiding an organization’s process improvement efforts. The measurement model can be used to conduct What-If analyses to model the impacts of future business decisions on KPIs and CSFs. The measurement model presented in this study can be quickly implemented, adapted and evolved to meet the organization’s needs. The research offers an example from which other organizations can learn to measure their financial return on investment in ITSM improvement.