Running Running IT IT as as aa Business Business How How to to Managing Managing your your Service Service Provision Provision Introduction Introduction of of Improved Improved Service Service Level Level Control Control & & ICT ICT Management Management Control Control SUEGI Paris 2002 Mark Griep © 2002 KPMG Consulting N.V. ak01_101NvG-PCM Sourcing the coming growth market for IT Service Providers … ! Technology firms are expecting a double digit growth for Business Process and Technology outsourcing. However … ! Unsatisfied firms put the screws to US outsourcers. ! Executives say that costs are too high and quality is too low … ! … and drive down providers prices. ! New Term outsourcing focus on Cost Relief. ! Long term opportunities focus on new financial models. Source Forrester, march 2002 © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 2 ….and the Market power shifts from seller to buyer Buyers Buyers Market Market Market SellersSellers Market Euroland GDP Growth 4,0% 10,0% 3,0% 8,0% 2,0% 6,0% 1,0% 4,0% 0,0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 E2001 E2002 2,0% -1,0% EU technology Services Operating Margins 12,0% 5,0% 0,0% -2,0% Euroland GDP Growth EU Technology Services Operating Margins Source: Goldman Sachs 2002 © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 3 The average ICT Service Providers is moving towards service oriented Business oriented pro-active partnership ??? Custom er oriented product flexibiprevenlity tive Service oriented Controlled Technology driven costs/ benefits; volum e flexibility logistical planning and control incident and problem know ledge build-up registration and control quality priority param eter cust om er settings& process level telling m easurem ngt. m ents integral, differentiated partially integrated service level m ngt. service agreem ent m ethods and techniques stable process operational technical ??? 2002 1998 re-active inform al Production fragm ented basic control Incidents & problem s Changes & configuration © 2002 KPMG Consulting N.V. Service level ad-hoc inform al 1990 D evelopm ent & m aintenance SAS-Introduction MSP-020411 / 4 Management & Service Level Control ICT use both same source information but require different reporting ICT Management Control Business Planning & budget Dept. A Dept. B Dept. C Service Management Service Level Agreements Project Management Advisory Purchasing Service Level Control © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 5 Project Benefits are derived from Five different deliverables that fit together and make up the MSP solution… ICT Management Control Service Level Control ! ! ! send out reliable invoices to customers insight in revenues & costs per service & customer calculate and conclude feasible & profitable contracts ! manage your performance on SLA services ! report your SLA performance to your customers Gain insight in performance: ! of internal ICT process ! and individual ICT units Control your cost: ! per ICT department ! per ICT process ! and even per activity Data Administration & Sources ! ! IT Architecture & Tooling ! ! Taylored tool for IT organisations ! Best practice admin. Procedures Design admin and control support Standard data model Standard extraction model ! Non propriety ! Proven collector Approach !Time box with 80/20 rule !100 days incremental planning !Combine mental & Fysical change © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 6 Service Level Management is more than signing the contract " " " " " © 2002 KPMG Consulting N.V. Service Level Control more than agreement Standard Service structure " Services " Components Best Practice “levels” " Reliability " Availability " Service-ability " Response times Benchmarks Pricing & Costing strategy " Estimation contract & project profitability (ABC approach) " Invoicing 02C " Fixed versus variable pricing SAS-Introduction MSP-020411 / 7 Based on the maturity of service level control the feasibility and scope of the MSP solution is defined % MSP € Business Value indicators Innovation Value management Control Business Service indicators Service L Service costing evel Con t r o l Technology service indicators Resource costing Service Process indicators Agreeme nt Technology indicator Process costing Service offering s Ad hoc © 2002 KPMG Consulting N.V. Input costing SAS-Introduction MSP-020411 / 8 The cost management model provides cost information for pricing and for financial monitoring Budgetted Cost/ Actual Cost Human Resources Renumeration IT … ….. Hardware Software Standard Cost price/ Actual Cost per Product/ Servi ce ice © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 9 Management Control requires more than the definition of performance indicators and financial reports ! Archetype business models - Services - Projects - Purchasing - Advisory ! Best practice process models - Service Management - Project Management - IT Governance & Management ! Best practice performance & cost indicators (Balanced Scorecard) - IT Resource costs & indicators - Individual/team/process costs & indicators - Business Balanced Scorecard indicators © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 10 The Information architecture of the organisation needs to be assessed to define the benefits the MSP solution Service Level Control Management Control Business Intelligence Business Applications Service Management / Project Management tools Asset System Management Management Static Dynamic HR tools Static Assets Time Keeping Dynamic Human resources © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 11 IT Architecture & Tooling Decision making and Information content Content: ! Performance mgt./BSC ! Financial control Information Delivery Ways to deliver to users: ! Web, E-mail, Paper ! SAS IT Scorecard & SLM Data Marts Calculation Engines Data modelling Data extraction Storage & Data Manipulation: ! Cost/revenue modelling ! SAS/Oros Standardise data: ! Define & document meta data ! Determine data sources/systems Data extraction: ! SAS Collector Source systems Data source systems: © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 12 Implementation Approach Vision • Business case & program plan • Design the perfomance & Cost management vision • Design architecture & support organisation • Scope pilot area • Implement Pilot area • Manage & Improve based on provided inteligence • Broaden the base Mgt. & control Program Management Performance Processes Systems Current situation Personnel & culture © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 13 Design and Implementation issues ! Decisiveness for key cost & performance indicators ! Unrestrained development of service design & cost allocation ! Gap between ambition and capability ! Quality of source data and admin procedures in the background ! Immature infrastructure for continues management ! Lack of time constraint in project ! Commitment & Need for change © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 14 KPMG Consulting Contacts Steven van Agt Mark Griep KPMG Consulting Netherlands KPMG Consulting Netherlands Telephone +31 30 658 1497 Telephone +31 30 658 1564 Fax +31 30 658 3497 Fax +31 30 658 3704 Mobile +31 6 53714840 Mobile +31 6 52078840 E-Mail [email protected] E-Mail [email protected] © 2002 KPMG Consulting N.V. SAS-Introduction MSP-020411 / 15