Monday, December 10, 2012

I You Want More Value from Your IT Services, I'm Afraid the Time to Shift to ITSM 4Ps Paradigm is Now

You have probably heard about the persistent rumor that IT should be taken out of IT service management. According to that rumor IT service management concentrates too much on the technical side of things and not enough on the business value to deliver to the organization, trying to implement ITIL in its entirety is unproductive and without minimizing the importance of ITIL and other ITSM frameworks, one should expect the emergence of 'pure' service management concentrating more on business value.

Basically Jamie Titchener the author of this post is right, the excessive focus on technology is the problem with today's approach for increasing the business value of IT. Yet, does it justify that IT is set aside any service management effort? Not so sure.


There is a rampant and confusing rumor that IT delivers limited business value. Let me say it straight, this notion is false. IT through providing software, application systems and infrastructures to support buinesses' core processes, increases businesses' operations effectiveness and efficiency. This is a substantial competitive advantage. Can we imagine today's corporation without technology?


As a matter of fact, IT is not the problem, the problem is the way some business and IT leaders perceive IT contribution to value.
Since roughly the early 1980s, IT contribution to value has been considered from the sole perspective of business operations effectiveness and efficiency. The bottom line was and is still to leverage software, application systems and infrastructures to streamline key business processes e.g., sales, customer and business intelligence, and invoicing and billing.
Unfortunately, this technology-centric approach to value has led to the commoditization of IT, a concept popularized by Harvard's Nicholas G. Carr in remarkable article issued in 2003: "IT Doesn't Matter." Simply put, the commoditization of IT is the notion that IT assets e.g., software, servers and networking infrastructures are seen as standardized goods with no meaningful differentiation and that are purchased on the sole basis of price and not of value.


A close look at how some business leaders and IT experts consider the notion of business value shows that the mechanisms underpinning value are (in both the literal and figuratves senses) ignored.
For about two decades, value has been seen from the sole perspecitve of customers' benefits and cost of production; the mantra is to deliver more with little IT costs. The increasing success of IT outsourcing initiatives and more importantly the increasing demand for cloud-based solutions subtantiate that fact.

No one would dispute the fact that delivering more with less is definitely a substantial competitive advantage. However, this perspective stresses the sole cost-effectiveness dimension of value. Other key dimensions, examples, accelerated time-to-market, first-to-market advantages and superior customer experience are unfortunately considered minor factors. The fact of the matter is, these dimensions are value propositions and competitive advantages that help businesses increase their customers' value and differentiate themselves from their competitors.
To that question asked to a business leader proponent of the cost-effectiveness approach to value, I never got a clear answer: "What value would a business derive from the cost-effectiveness of its core operations if it is unable to compete againts its competitors because its services are always delivered late (time-to-market issues) and because of poorly designed online processes that disturb clients (customer experience issue)?"


The overemphasis on software, application systems and infrastructures at the expense of of other value drivers e.g., organizational issues, management practices and even corporate culture has over the years promoted the erroneous idea that technology alone could bring in value.

Generating business value transcends the concerns about reducing IT costs through outsourcing and streamlining business operations through deploying software, application systems and infrastructures.
As a matter of fact, extracting value from IT capabilities builds upon the belief that organizational, managerial and human factors are the key determinants to unlocking the potential value of technology and processes.

The impacts of organizational, managerial and human factors on processes and technology are obvious; the confusion that results from organizational misconceptions disrupts processes execution and prevents from taking advantage of technology. Similarly, the confusion that results from deficient management practices e.g., lack of executive commitment and absence of effective governance mechanisms affect processes execution and prevents from taking advantage of the benefits of technology.

The impacts of the organizational, managerial and human factors demonstrate that in reality extracting value from IT services is primarily a complex change management process that involves the people, process, management, collaboration and technology factors of organizations.


Service-Based  Approach to IT Value is Changing the Relationship between the Business and IT and in General the Way IT is Managed

The introduction of the notion of service in business practices, as defined by the IT Service Management Forum, is definitely changing tge relationship between the business and IT and in general the way IT is managed. Indeed, from the ITSM Forum perspective, a service is set of business assets i.e., people, process, partnerships, suppliers and technologies aggregated into a capability  supporting the achievement of specific business objectives.

A service is something intangible that includes four specific  elements, not one, nor two and three but four including People, Process, Partners / Suppliers and Product.

People relates to the human factors and refers to all human elements e.g., work force and skills needed to design, transition, operate and improve services.

Process relates to the ITSM operations and refers to all elements e.g., activities, methodology, deliverables and performance metrics required to effectively and efficiently design, transition, operate and improve services.

Partnerships / Suppliers relate to the organizational, managerial practices an capabilities required to ensure a high level of collaboration within the organization and with vendors throughout the service lifecycle.

Product relates to the underlying technology required to design, transition, operate and improve services.

Among many others, three areas are fundamentally affected by the service-based approach to value; they include (1) the perspective of IT contribution, (2) the focus of both the business and IT on the value drivers, and (3) the evaluation of IT contribution to value.

The Perspective of IT Contribution Shared by the Business and IT
The notion of service through the 4Ps elements i.e., people, process, partnerships/suppliers and technology offers a rigorous framework that forces the business and IT to think beyond traditional software, application systems and infrastructures concerns.
The effort is focused on jointly fine-tuning  organizational, managerial and human capabilities so as to unlock the inherent potential value of processes and technology.
Through Stressing Value Drivers the Business and IT are Forced to Focus on What Matters: Value Propositions and Competitive Advantages
Service-based approach to value gets the business and IT focused on what really matters: value propositions and competitive advantages.
Unlike traditional strategy planning which is based on an incomplete three-phase agenda i.e., (1) the business defines its goals, objectives and value propositions, (2) the business asks the IT departments to provide the software, application systems and infrastructures to invest in and (3) the business and IT agree upon an investment budget,  the service-based  approach forces the business and IT to jointly work on how to take advantage of IT to turn value propositions into superior customer experience and turn desired competitive advantages into IT capabilities that outperform competitors and increase customers’ value.

An example of value proposition turned into positive customer experience is Amazon's promise to simplify online orders turned into the 1-click ordering process while example of competitive advantage is the implementation of Agile Scrum mechanisms for improving collaboration and accelerating services delivery.
SLAs Faciliate Evaluation of IT Contribution to Value
Evaluation of IT contribution to value is probably the one of the most valuable areas of the service-based approach; the notion of Service Level Agreement (SLA), which is an integral part of service, through expressing requirements, expectations and performance metrics in business terms provides an unprecedented opportunity to properly measure IT contribution to value.
The service approach allows the business and IT to work on and discuss IT contribution in terms that are meaningful to the business. Examples, the notion of time-to-market (TTM) refers to the metrics that measure the extent to which the IT department meets the organization’s desired TTM requirements. Examples of another issues measured in connection with IT contribution to customer experience improvement include cost of new customer, annual customer retention, cost of complaint, customer lifetime value, and on-boarding conversion rates.



Managing IT services requires a balanced approach that considers the people, process, partners / suppliers and technology dimensions of not only the IT department but the entire organization. The ITSM 4Ps for service design provides a solid foundation for implementing such a holistic perspective. The Service Design Matrix illustrates a powerful framework I have been using for 10+ years to support IT services development efforts:

The Service Design Matrix is comprehensive set of questionnaires organized in three sections: the Voice of the Business, the 4Ps and Investment Decisions.
The Voice of the Business

This section is set of questions specifically designed to capture business needs, requirements and expectations as to desires business services (core services) and supporting services (IT services).
The 4Ps 
This section is leveraged by the service designer team to capture the changes in the business assets i.e., people, process, partnerships / suppliers and technology and allows identification of solutions e.g., organizational structures, processes, talents, skills and technology to invest in.
 Investment Decisions 
This section supports the financial and operational evaluation of the assets to invest in in support of service implementations. It leverages proven and valuable industry’s tools e.g., Total Cost of Ownership (TCO), Risk Management, and Quality Function Deployment Matrices.


· Clarifies the mechanisms underpinning IT contribution to value: Organizational, Managerial and Human factors are the key determinants to unlocking the potential value of technology 

· Offers a balanced approach that takes into account the people, process, partnerships / suppliers and technology dimensions of organizations to ensure higher IT Service  contribution to business value



  1. Thank you for the article Philippe. This generated many questions for me, but here are my most interesting:

    a) what would you say is the biggest challenge for organizations transforming their IT management strategy to ITSM?

    b) are companies really trying to go to ITSM, or only kind of partially-trying, or not trying at all? I mean - there's a difference between implementing a few processes such as Incident and Change mgmt, and implementing true ITSM - right?

    In particular, if you had a model or even better, a real example of a real ITSM organization (instead of an IT organization with a few ITIL processes), I'd love to hear about it.


    1. Thanks Louis for your interest. From my perspective the biggest challenge for organizations trying to adopt ITSM is definitely the shift from the tradtionnal technology-centric IT paradigm to a different paradigm that sees the contribution of IT to business value as the result of a combination of factors including adequate organizational design, management practices and human usage.
      The point is the notion that technology by itself generates value is false.
      This is what I'm trying to explain through this post and it is the purpose of the 4Ps for service design promoted by ITSM International Forum.

      As to your question b) I'm not sure businesses are trying to move specifically to ITSM; this notion like many others is promoted by some of the major players within the industry probably to help businesses extract value from their IT investments.
      All I know is businesses are looking for the most effective ways to save their IT costs and increase their IT's contribution to value; ITSM specifically through the 4Ps paradigm provides the proper answers.

      The fact of the matter this basic principles has been ignored for years: Organizational, Managerial and Human factors are the key determinants to unlocking the potential of technology.
      An increasing number of experts are challenging the erroneous belief that technology by itself contributes to value and Dave Gardner and Todd Williams are among them. Check the links at the end of this post.

      Will businesses fully implement ITSM? to be honest I don't think so. The reason is most business and IT leaders are convinced that deploying software, application systems and infrastructures is enough to increase IT contribution to value they underestimate the importance of organizational, managerial and human factors.

      Dave Gardner about the excessive focus on technology and application systems

      Todd Williams about what IT departments and CIOs should do to increase the value of IT

  2. Thanks again Philippe, this is great stuff.