Service Oriented Enterprise

Enterprise Service Management (Beyond ITSM)

The Leading Provider of Service Management Solutions

Building a service-oriented enterprise

Enterprise Service Management (Beyond ITSM): Building a service-oriented enterprise

Introduction

Service domains - The common denominators

What is Enterprise Service Management?

The opportunity for IT

The end user perspective

The service domain perspective

The C-level perspective

Making it work: The adoption journey

Benefits of Enterprise Service Management

Moving from strategy to ESM adoption

Conclusions

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Contents

Enterprise Service Management (ESM) is the application of service management models, tools and practices to other non-IT service domains within the business with the objective of achieving higher productivity in those areas. By applying support methodologies you can help the rest of the business gain control over the flow and execution of internal processes, streamline internal service delivery and divert more resources to strategic improvement and transformation projects that will drive the business forward.

The role of the CIO is to drive the use of technology that increases business productivity and efficiency. In a recent survey of business stakeholders, nearly 30% of respondents stated that the CIO was the most important business leader in driving business transformation higher than any other senior executive (including the CEO). The Deloitte CIO survey highlighted that 82% of CIOs are focused on enabling new business requirements. Where business applications drive transformation through the automation of core business processes, ESM drives productivity by improving the flow and execution of back-office work that supports core business. Founded on service management principles that have grown organically within IT, ESM represents best practice techniques and technology to make a real mark on the business.

Executive Summary

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Introduction

The activities that happen across large organizations are complex and diverse. Core business processes deliver outcomes directly to customers. Internal business infrastructure and operations support these core processes. HR, Facilities Management, Procurement, Administration and Legal are all part of the value network jigsaw, even though they dont play a direct part in the supply chain.

Every day, your staff need help from colleagues in other departments to get their jobs done. They all have a part to play in the value network and they often need support from elsewhere in the business to progress tasks. Running a business is all about helping your people to work together to get the job done to create business value as quickly, efficiently and effectively as possible. When you look at the whole phenomenon at an organizational level, it is a vast network of complex workflows. This is the pulse of the organization.

Some of this flow relates to your core business processes, controlled by enterprise software tools like SAP. These core processes are the things you absolutely have to do well to thrive as a company. But that isnt the full picture. Every day there are many hundreds (or thousands) of internal transactions that happen between business functions and individuals at a more granular level: asking for help, requesting information, or letting another team know there has been a quality problem.

This is where Enterprise Service Management (ESM) comes in. ESM formalizes and streamlines the mass of business-facing interactions that usually fall below the radar of the Chief Operating Officer (COO).

Your staff are consumers of a set of multiple internal enterprise services. The services they individually consume will differ between individuals in the end user community depending on the objectives of their specific role, but many are common across the company (e.g. HR, facilities and finance).

At a high level, the people in your organization all want the same thing:

To get support and information from other departments easily.

To know when that support or information will arrive.

To be able to escalate requests to ensure they can meet their own deadlines.

To be able to manage and execute requests from other areas of the business efficiently and effectively so that theyre not tied up all day with other peoples work.

Managers and executives require:

Accurate real-time reporting providing transparency across the business.

Information to enable strategic focus to prioritize change and leverage resources.

A system of management to create efficiency across the business.

Ability to develop and implement innovation and new initiatives.

So how can you facilitate this for people across your organization? Clearly, any such strategic transformation needs to be considered at enterprise-level. Enterprise Service Management is a company-wide strategy for streamlining internal business processes. When every department in your company participates in the construction of an ESM portal it creates reciprocal value.

Having a single portal for interaction with other departments can significantly reduce wastage and drive up business productivity.

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Service Domains - The Common Denominators

A service domain is any business department, team, or unit that provides internal services to other areas of the business. Typically, when talking about service domains, most people will think of HR, Facilities Management, Administration and Procurement, but to some degree every department is a service provider for the rest of the organization. Often, service domains dont think of themselves as such, e.g. Marketing dont think of themselves as a service provider for Sales. Most business functions are not service-oriented and dislike the idea of being a service provider for other departments.

Nevertheless, each department both provides and consumes services from elsewhere in the business. That means they all have something in common.

Many of the operational needs of a service domain are the same:

Better workload management Routine service requests need to be better managed in order to break out of firefighting mode and divert more time and attention to strategic change projects.

Reduced costs Budgets are being squeezed. Leadership demands to Do more with less are heard everywhere in the business and service domains need to streamline execution of business processes to reduce costs.

Faster output The ability to service inbound requests more quickly to deliver the outcomes that other business functions need in a timely manner (with an eye on business priorities, not just who shouts loudest).

Better governance Control over policies and processes to enable management visibility and intervention.

Quantifying the business value of an ITSM tool is challenging for most organizations.All too often, toolsets are purchased to support utility IT capabilities such as incident management, problem and change as opposed to supporting a longer-term strategy with business objectives and business value in mind.

So, value is a vague concept. Outside of the direct cost savings, value is often difficult to measure in clear business terms:

IT cost savings, e.g. reducing the number of required service desk and support staff. Automate work to achieve greater resource efficiency. Do more with less.

IT cost avoidance, e.g. reassigning infrastructure instead of purchasing new devices. Many organizations have too many power-hungry servers that would benefit from consolidation. Others use more application licenses than they own (risking six-figure fines) or own more than they use (wasted budget).

So how do we meet these needs?

Better demand/request management Digital tools to manage inbound demand more efficiently. Get your people off the phones and into execution mode actually sorting out problems and delivering value instead of getting tied up logging an ever-increasing list of issues.

Better queue management Managing the recording and prioritization of inbound requests so that activity can be better aligned with business demand.

Better process/workflow management Supporting consistent quality of output by implementing clear processes which are known to deliver the required result for the service customer - within feasible time and cost constraints.

Better operational visibility & control Nothing works perfectly first time round, so in order to get performance up to an optimized level, you need to measure performance and report on the underlying metrics so you can pinpoint where improvements need to be made.

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The fundamental idea of ESM is to:

Reduce the overheads commonly associated with department-to-department interaction.

Increase predictability in terms of both the quality and timescale of output (e.g. ensuring the desired outcome is delivered right and delivered fast).

Increase process efficiency within service domains to keep the cost of execution as low as possible without compromising the quality or delivery timescale.

Efficiency levels vary across departments, so there are usually at least one or two weak links in the chain that create bottlenecks. Every organization has its own black hole department that has a reputation for slow responses. ESM is a model by which you can transform your organization from a clunky collection of departments into a well-oiled machine.

What is Enterprise Service Management?

Enterprise Service Management is about applying a service-oriented business model to the way your organization works internally. It is an operational architecture where each functional area of the business is defined as a service domain that offers services. These services deliver outcomes for other business functions and help to support them in their ability to deliver results for external customers. Thus, the productivity and profitability of the company will be improved by improving the efficiency of internal operations.

As John Seddon of Vanguard (an advocate of the application of systems thinking to service domains) says, cost is in flow; value is in activity, i.e. costs are incurred through poor flow of work between organizational functions.

By integrating departments more effectively around the many touch points that business processes flow across, you can facilitate better, faster and cheaper operations and better alignment between what one department needs and another delivers.

So what does ESM look like? There are three perspectives that must be considered:

The end user perspective Delivering an easy-to-use enterprise services portal that puts all business-facing services in one accessible location.

The service domain perspective Creating a catalog of business-facing services, supported by automated service execution processes.

The C - level perspective Facilitating the construction of the enterprise service portal and working closely with business functions to define and automate their service execution processes.

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The opportunity for IT is to leverage this knowledge and experience in other areas of the business. But its not as simple as mapping what IT does directly over other departments. Each service domain has its own way of doing things. They have their own internal customer demands, services and execution processes. They have their own people, culture, language and attitudes.

Success in ESM requires a shift in perspective within IT: from the traditional inside-out silo mentality (where IT has something of a them-and-us attitude) to a more holistic business perspective that takes into account the specific challenges and needs of each service domain.

When we examine the common challenges that service domains face, the scope of Enterprise Service Management emerges and the full extent of the opportunity which IT now has (to deliver transformational value to the business) becomes clear. The task is to apply specially-tailored best practices to other service domains, and tie it all together with an enterprise-wide service portal.

IT already has many of the tools (people, processes, technology) that business functions need to make their operations work more efficiently and effectively. The primary challenge lies in adapting what IT does to fit an array of different departments.

The opportunity for IT

The IT department is a center for service management excellence within the business. IT is the most complex service domain, responsible for tens (or hundreds) of thousands of assets and how they interact to create services and business value.Effective IT operations are founded on solid processes and process automation, so the IT department knows a lot about managing activity to deliver value. In more mature IT organizations, service management is a proven methodology for delivering value to the business, based on:

Service-oriented strategy, design, transition, operations and improvement.

Effective demand management using the latest technologies.

Process-driven activity management.

Deep understanding of complex value networks.

Balancing cost and value.

Efficient, business prioritized support structures that solve problems when things go wrong.

It is undeniable that technology is a key driver for businesses today. The use of technology transcends departmental, geographical and hierarchic boundaries. Enterprise technology, once the domain of people in lab coats, now lives out in the business.

There isnt a single corner of a modern enterprise organization where technology hasnt been put in place to automate and streamline at least some of the core work being done. But although many tasks themselves are automated, the processes that thread these tasks together to create value are often handled manually which means requests often get lost, dropped, or executed in first-come-first-served order that doesnt mesh well with actual business priorities.

ESM is an opportunity for IT to apply effective service management and process automation across the business to move the tide-mark of technology up once more - from the level of task automation to business process automation.

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Customer-facing business functions have a number of different interfaces with the outside world (ecommerce websites, mobile apps, email, the call center, supplier portals, etc.) - all designed for optimized interaction with customers and other third parties.

But how do business-facing functions interact with each other? There is no standard interface for internal business functions to work together. External customers get a glossy store front, but where is the glossy store front for customers that are internal to the business? Many organizations have people dedicated to improving the business customer experience, but there are few people thinking about the internal end user experience.

For the end user, Enterprise Service Management is about having a one-stop shop for all of the enterprise services they need to do their jobs as efficiently and effectively as possible.

With an ESM portal, each individual employee has complete visibility of the internal support services and information sources that are available to assist them.

The End User Perspective

To understand one of the main benefits of Enterprise Service Management it is important to understand one key concept: the end user community of IT is also the end user community for HR, Facilities Management, Administration, Finance and any other internal service provider. Everybody in your organization is part of this collective end user community. These are the customers of ESM.

The common need, running across all end users in all business functions is this: They want easy access to the services, tools and information they need to do their jobs better. They may consume different services, depending on their role, but there is a clear need to make the access and consumption of business-facing services as easy as possible.

Large organizations often have multiple internal call-centers or hot-lines. They are fighting the same war on many fronts.

In the ESM architecture, a digital enterprise services portal is complemented by a manned enterprise service desk. This shared service desk is a single point of contact representing all of the internal service domains, covering the full catalog of enterprise services, and capable of handling or routing issues.

For the end user community this is the ultimate in simplicity and consistency. One portal with one interface and one set of login details, accessible via the web and mobile, complemented by one shared service desk with one phone number for when they really need to speak to a human being.

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1. Managing demand more efficiently by presenting a catalog of services to the business - and a means to request and track them.

This takes a significant administrative strain off the department by pushing phone traffic to the web ESM portal. Now the people in the department can focus on executing requests instead of logging them.

However, it must be remembered that an enterprise service portal does not exist purely for the convenience of the service provider. It must work well for the end user as well. Accessibility and usability are critical. People seek the line of least resistance, so if your ESM portal is clunky and difficult to use, people will still pick up the phone or send you an email.

The Service Domain Perspective

A service domain is any business department or team that provides internal services to other departments, teams, or individuals within the same business. So what does ESM look like from the perspective of a business function which provides internal services?

For each service domain, Enterprise Service Management comes in two parts:

2. Streamlining service delivery by establishing clear execution processes and automating the flow

Although solid process management is already embedded in the ethos of IT operations, many other business functions still operate on a haphazard basis. They are neither service nor process oriented. Requests coming from other areas of the business come in via telephone or email and the quality of response is largely reliant on the individual that receives the request.

Often, these requests will fall into a black hole and the requester will spend time chasing them. From the end user perspective, the service is not good. In order to improve quality of services provided, the first step is to define services, outcomes and supporting processes. After this, processes can be modelled, automated and hooked up to the service catalog to connect the two parts the request and the execution.

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The C-Level Perspective

What does the technology look like? A digital portal that enables easy

access to all business-facing services provided by all service domains. This is the interface.

A process management engine to drive process automation, SLA management and escalation structures. This is the guts of the technology, responsible for managing/automating the execution of inbound service requests.

Performance monitoring and reporting to drive continual improvement. Nothing is ever right the first time. Each service domain needs the ability to monitor performance with a view to driving continual improvement, supported by the expertise of the IT department.

Effectively, an Enterprise Service Management portal is a service which IT can deliver for the business, with the support of each of the individual service domains.

In the last few years, the desire to leverage service management principles and practices has spread outwards from IT to encompass other service domains in the business. When buying IT Service Management solutions, many customers are now looking to extend the value they gain from the technology by developing service management capabilities outside IT; most commonly in back-office functions like HR, Facilities Management, Administration and Finance.

As the value of service management principles and practices is now been proven in these areas, there is a growing desire to achieve greater efficiencies and greater economies of scale by applying a more strategic, enterprise-wide approach to service management.

ESM is about taking the expertise, practices and tools that IT has and applying them to other service domains to create a broader architecture for service management across the organization (e.g. IT Service Management, without the IT).

Like many other enterprise-wide strategies, technology is a key enabler. Service management software tools are now mature and flexible enough to make the Enterprise Service Management model practical and achievable.

IntegrationIt is wrong to say that all business departments are green-field sites when it comes to efficient process management.

Some internal business processes will already be supported by existing tools. Where this is the case, the under-the-hood workings of the internal service are already in place, and the task for IT is simply to integrate the management of requests into the Enterprise Service Management portal.

This will require some technical integration to connect the ESM portal (the front end) and the software that currently handles the execution of the process (the back end).

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As every organization has a different structure of departments, there is no off-the-shelf roadmap for which departments and services should be tackled first, but experienced guidance is a must.

If you plan to implement ESM sequentially, the first department you select will become a template for further roll-outs; useful evidence of the value of service management beyond IT that will help you to sell the value to the next department in the roadmap. Bear in mind that the relationship with each business function does not end with the inclusion of their services in the ESM portal. There will be an ongoing need to help them optimize their service portfolio over time, so the IT department cannot simply cut and run after the initial implementation.

A prioritized approach that picks out key services from across the full spectrum of internal services will deliver more value to the end user community more quickly, but you will have to deal with a larger number of departments and stakeholder simultaneously.

Making it Work: The Adoption Journey

We have been at the forefront of Enterprise Service Management since its evolution out of the traditional IT Service Management sphere. With organizations operating multiple legacy systems in the majority of functional areas, the big bang approach for ESM is in the minority. From our experience of delivering ESM in large organizations and the international best practice research which we conduct, there are two mainstream approaches for the ESM adoption journey:

Sequential Working across the company to implement ESM, department by department.

Prioritized Selecting a small bundle of key services from across a number of different departments to tackle ESM in order of business priority. This gives the end user community the highest possible value version 1.0 that can be built upon over time.

A staged approach is recommended as more realistic and likely to succeed, but it is still a long journey. Like many other strategic technology-driven change projects, you only really get one shot at making it work. If it fails, a second shot will meet with much increased resistance.

The success of ESM is largely reliant on the expertise and attention of your IT staff, so your adoption strategy should take the bandwidth of your IT people into account. The most obvious starting points are the departments that are almost entirely back office functions (and therefore have the largest portfolio of internal business services) HR, Facilities Management, Administration, Procurement, Finance and Legal. As such, this is where the greatest value is to be gained from an ESM program.

Departments such as Sales, Marketing and Customer Service are more customer-facing, have fewer business-facing services, so these should be brought into the ESM program later in the process. It is essential to draw up a high-level roadmap that shows the order in which you will build up your ESM program.

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Making it Work: The Adoption Journey (Continued)

General implementation processIdentify the service domains in your business the distinct departments in your organization which provide internal services to other departments. This list is the starting point for building a roadmap. From here, you should engage with business function stakeholders to identify the standard services they offer internally to the business. IT needs to develop an understanding of what the business function does, for which internal customers, and how they do it. IT also needs to use domain-specific terminology, i.e. speak the language of the business department you are engaging with. Terms like ESM, service catalog, ITIL and ITSM will be unknown to them, and technical terminology and abbreviations are a turn-off for all but a few outside of IT. Sometimes there are direct conflicts between IT terminology and terminology in other domains that IT people must be aware of. For example, IT uses the word incident to describe a break in a service, whereas HR people will think of an incident as a physical accident.

1. Sell the benefits of having an overall enterprise-wide system, but also sell the specific benefits to each business function. Create evidence with a proof of concept.

2. Compare and contrast what the service domain does with what IT does. What is the same? What is different? Find the common ground but also what is unique about the particular department.

3. Identify the demands that other departments make of them. These are often difficult to define as many business functions are not service-oriented and have an ad-hoc approach to external demands.

4. Draw up a list of business-facing services and agree which should be added to the enterprise service portal. If necessary, lay these out in phases for staged inclusion in the enterprise service catalog.

5. Model the processes by which these services are executed, adding in SLAs and escalation structures to ensure smooth operation in a way that meets the expectations of internal customers.

6. Add these services to a test area in your Enterprise Service Management portal.

7. Test with a selected group of stakeholders taken from the end user community. Make refinements until it is accepted by the test group.

8. Move the test version into the live environment, making it accessible to the wider end user community by publication in the enterprise service portal.

9. Help the service domain to adapt the interface and supporting processes, establish reporting, and institute continual improvement by listening to internal service customers.

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Benefits of Enterprise Service Management

Achieve operational visibility ESM lets you see the value that each department adds to the business. When you define what a department is to the rest of the business you are also defining the edges. You can see where one department ends and another begins. Once you know where the boundaries are, you can make them more fluid and responsive to changing patterns of demand. Essentially, ESM gives you a map of where value is created in your organization and the processes that support it, allowing you to find and eliminate bottlenecks and inefficiencies.

Support better governance When you have better visibility of operations, its easier to govern what departments are doing to ensure they are in line with overarching strategic objectives (e.g. are they providing the right set of services?).

Institute functional excellence

ESM streamlines the process of managing and executing internal business service requests, creating greater efficacy and efficiency across all service domains achieving higher quality of output at a lower cost.

Support value transformation By streamlining the execution of internal business services, departments can reduce their day-to-day operational overheads and devote more time and resources to change and improvement projects that enhance value creation. The companies that will succeed in the next decade are those that realize that they must break out of firefighting mode and become more pro-active and agile.

Manage interaction By bringing the interactions that happen between departments into a system or record, these interactions can be measured, managed and optimized. Deployment of a digital interface reduces operational overheads by reducing inbound phone calls and emails with requests being automatically routed to the right teams. ESM is a good strategy for reducing inbox overload and weaning staff away from using the email system as a work queue.

Reduce technology costs Enterprise-wide technology programs are an opportunity to take advantage of economies of scale. The implementation of a single enterprise-wide digital portal and back-end process management, supported by one software solution, ensures that the cost of the supporting technology is minimized (versus having a number of different point solutions catering for each domain).

Break down silos ESM is, by nature, an antidote to the siloed nature of many large organizations. It embodies a more transparent, integrated and cooperative mentality where business functions think more deeply about how they work with other departments to increase business productivity. By turning barriers into interfaces, the walls between business functions become windows, and departments become more tuned-in to the wider business ecosystem.

Ensure internal business alignment

By providing clarity on which internal services business functions provide for each other, it is easier to align services provided with demand from other departments.

Increase end user satisfaction and productivity

The availability of a one-stop-shop for all internal services and information sources means faster access to the tools that your people need to be the most productive.

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Executive buy-inWhen IT is pitching the concept of a digital portal and process automation to a service domain, the business function managers may begin to think about seeking alternative solutions, e.g. buying their own distinct portal and process engine. But this would have a negative effect on the total cost, the consistency of end user experience, integration, and the ability to monitor and manage operations across all service domains. So, it is critical to get executive buy-in to support the idea of ESM as a strategic company-wide technology platform.

Business relationship managementMaking ESM work requires strong communication between IT and all of the other business functions, so relationship management is critical to success. Traditionally, this is not something that IT is good at, so it is important to find (or hire) people who can liaise effectively with business functions. The relationship doesnt end when the technology is launched to the end user community. ESM is not a fire and forget technology project. IT needs to maintain relationships with the business community in order to support continual improvement and increasing value over time. Effectively, relationship management between IT and outside IT service domains will become an ongoing burden for IT.

Moving from strategy to ESM adoption

End user adoption is criticalLike any other technology, usability is the key to adoption and adoption is the key to success. Levels of computer literacy will vary greatly across the organization, so ease of use is critical to adoption. Effectively, a digital portal must cater for the lowest common denominator of technical ability. Familiarity is the better part of usability, so making use of common consumer ecommerce features (like a web shopping cart), with which most people will already be familiar, will improve intuitiveness of the system.

Data security issuesBusiness departments such as HR and Finance are very sensitive about their data and reluctant to let other departments (such as IT) get too close. Instead, it may be necessary for IT to train people in these departments to work with their own data. IT should be aware of any such requirements in advance of the implementation so that they can be factored into the project timeline.

Transformation projects are challengingA recent report from Forbes Insights/KPMG indicates that 93% of businesses are currently planning/delivering a business transformation project, but more than half of transformation projects fail to achieve the stated objectives. As with any large-scale organizational change, the pitfalls are many. Primarily, an ESM implementation is one of engagement first and technology second, but the sheer number of stakeholders that must be involved can make it difficult to gain consensus to the plan and the timeline. It is critical for IT to get under the skin of each service domain before embarking on any technology build work. When run as a technology project, ESM wont deliver the right technology. It starts with people first, then processes, then tools.

ESM is for large organizationsEnterprise Service Management is for enterprise-scale organizations with large numbers of staff spread out across departments and geographies. If youre a small or medium size organization, the chances are that ESM will be a sledgehammer to crack a nut and will not be a priority.

Service maturity issuesThe desire to improve is a prerequisite. Service management will create both standardization and serve as a catalyst for improvement. The adoption journey will create the proof points to the benefits of the transformation process and will require multiple champions across business functions. The ultimate goal is to rollout these benefits across the business. For organizations not committed to improve, ESM may be a step too far until the basics of service management are adopted.

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Conclusions

While customer-facing business services are scrutinized and optimized by the COO, internal business-facing services often operate below the radar. As a result these non-strategic processes are often undermanaged and underfunded yet they represent a significant chunk of the work being done by your staff.

In many departments, internal support activities (servicing the needs of other departments) take up too much of the working day - to the detriment of strategic change and improvement projects that drive the business forward.

The application of service management practices (commonly used within IT) to other business functions is a route out of this operational rut using tried-and-tested best practice frameworks like Information Technology Infrastructure Library (ITIL) to streamline day-to-day operations and release more resources for improvement.

Enterprise Service Management represents a clear strategic vision for how IT can add measurable value across the whole of the business.

By building a more efficient internal business model, ESM delivers in three key areas: cost reduction, increased efficiency and quality, and higher end user satisfaction translating into improved support for the core business processes that generate revenue.

The application of what IT knows to other areas of the business will drive a step-up in productivity across the board.

Fundamentally, ESM enables a shift in focus from reactive firefighting to proactive strategic development, by minimizing the time and effort spent serving day-to-day utility functions. As a result, all service domains within the business can optimize the value they deliver.

Enterprise Service Management is an opportunity for IT to lift up all of the service domains across the business with a knock-on effect on cost, agility, productivity and profitability.

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AxiosFor more than 25 years, Axios Systems has been committed to innovation by providing rapid deployment of Service Management software. With an exclusive focus on Service Management, Axios is recognised as a worldleader, by the leading analysts and their global client base.

Axioss enterprise software, assyst, is purpose-built, designed to transform IT departments from technology-focused cost centers into profitable business-focused customer service teams. assyst adds tangible value to each clients organization by building on the ITIL framework to help solve their business challenges.

Axios is headquartered in the UK, with offices across Europe, the Americas, Middle East and Asia Pacific. For more information about Axios Systems, please visit us:

About the Author

www.axiossystems.com

@Axios_Systems

/axiossystems

Nigel Martin has more than 20 years of experience in global enterprise software. Nigel has written multiple research papers on organizational strategy and holds a doctorate in strategy and organizational brand development.

Nigel can be contacted at [email protected]

Dr. Nigel MartinVP of Global Marketing

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Service Oriented Enterprise