Heartland LIG: Business & IT Alignment? Time for ITSM 2.0
Key conclusion: It is time IT raised it’s game. ITSM 2.0, we cannot carry on like this!
Kevin Ritter of Statefarm and president of the itSMF Heartland Lig organized a Business & IT alignment workshop, using a business simulation game as an instrument to help delegates explore and capture common fail factors and success factors for aligning IT and the Business. The workshop would explore how best practices such as ITIL and Cobit need to contribute to realizing ‘effective’ alignment, and would explore how a simulation can help translate theory into practice.
Why did the itSMF organize this event? Kevin explained ‘We often talk a good game in ITSM about aligning Business and IT, but what does that really mean and look like in practice. The Grab@Pizza simulation was brought in to give our members the opportunity to learn what is involved in making that a reality and to practice doing it’.
Why this subject? Business & IT alignment…or integration…or fusion, or whatever you want to call it is becoming increasingly critical as the explosive growth of, and dependency upon IT increases. For more than 10 years this has been a top CIO concern. Despite the enormous amount of investment and training in frameworks such as ITIL, Cobit, ISO2000 we still consistently fail to achieve this ‘alignment’. Indeed an InformationWeek article this week ‘CIO worries: Security, Talent and (Sadly) Alignment‘ also revealed ‘Alignment’ was a TOP 3 issue for the CIO….still!.
Grab@Pizza is a dynamic, business simulation in which IT and preferably Business managers can come together to explore Business & IT alignment. In this simulation a team of players plays the business and IT management team of an international Pizza corporation Grab@Pizza. The business wants to realize an ambitious set of business targets for revenue growth and customer loyalty through the successful adoption and deployment of IT.
In the simulation IT must also manage and maintain the Infrastructure to ensure that it poses no risk to business operations and continuity. The game simulates a year in the life of the Grab@Pizza organization. The first fictive 6 months were dramatic in terms of IT and business performance. A Transformation is required. The delegates must work as one team to prioritize their IT investments and IT project portfolio for the remaining 6 months of the year. Failing to align business and IT will cause wasted costs, lost business opportunities and revenue, lose customers and damage the company reputation. Between game rounds the team will apply CSI (Continual Service Improvement) and assess their alignment capability, agreeing executing improvements. At the end of the session the team will discuss and explore success and fail factors they experienced and identify actions they can take away and apply into their own organizations.
What happened at the Heartland LIG?
The IT team dived into a small huddle and started discussing their investments and their processes…..the business looked on and suggested ‘wouldn’t it be an idea if you guys knew a little about what WE NEED before making all your plans’…..they were politely ignored, and were given the ‘Hand’ by IT ‘Not now we are busy!’
In the first month of the simulation the business strategic initiatives aimed at realizing revenue growth were not realized. Instead of $19 million profit the business had made only $5 million. $14 million was lost because of IT outages and changes not being realized. It was clear that the team had displayed one of the top ABC worst practice cards chosen world-wide. ‘IT has too little understanding of business impact and priority’.
They were too internally focussed, processes were not aligned – causing wastage and additional support costs.
Err….. is not an effective governance response, neither is guessing or assuming
The CEO asked the business what had they agreed with IT as a Strategy for reducing risks and outages? ‘Err…we told them which projects we needed to make revenue growth’.
‘Yes’ said the CEO ‘that is what COBIT describes as “benefits realization”, but COBIT also talks about ‘RISK optimization’….and indeed ITIL talks about Risks, what did you agree about reducing risks and outages in IT’………..
’Err’ was the answer. The CEO prompted further ‘Governance is all about DIRECT AND MONITOR….what reports, such as Service Level achievements have you asked for from IT to demonstrate control’? …..
’Err’ was the answer. It was clear that business was not taking its role in governing IT decision making properly. All-in-all the team had created exactly the reason we were here today. Poor business and IT alignment. The CEO of Grab@Pizza was not amused!
What did we experience and discover?
It appears that ITIL was the OBJECTIVE!…not what it should achieve!
The delegates, the majority of who were somehow involved with using or deploying ITIL solutions were asked ‘What is the definition of a service?’ – because this sums up what business and IT alignment is all about and demonstrates why we keep failing. Only 3 people knew! We looked at the definition.
‘A means of delivering Value to Customers in terms of Outcomes they want to achieve without the ownership of specific Costs and Risks’. (VOCR)
“Did anybody Understand what I wanted as CEO in terms of Value, Outcomes, Costs, Risks? Did anybody use this in prioritizing? In making investments? In making decisions“?
‘No!’ was the answer. It would appear that ITIL was the OBJECTIVE not what it should achieve!
Is it any wonder we struggle with alignment! The team then explored success and fail factors for making Business & IT alignment work.
Discoveries:
Assuming is not a effective priority mechanism
- The Service Desk had no idea of the impact and therefore the priority of Incidents, in terms of impact on Value and Outcomes, e.g lost revenue, loss of business productivity. They were also unaware of the SLA and did not use this to prioritize their work and resources.They ‘assumed’ they knew which one were most important.
- The Business did not help IT understand the business processes, critical periods of business activity and the impact of outages.
- It was concluded that BRM and SLM play an essential role in both understanding and translating business knowledge into process delivery capabilities.
- IT resources are scarce, business demands are increasing. COBIT stresses the need for resource optimization. Did change management know the category of changes? Which ones were for achieving business benefits and value/outcomes – revenue growth? Which ones were for reducing risks, outages and wasted costs? NO. There was no clear classification or AUTHORIZATION for deciding change resource allocation and implementation priority.
- We explored how the Help desk decided to ‘invest in resources and training’ what information MUST they know to be able to effectively allocate resources?
- Historical information such as trends and growth in incidents. This they did know and use.
- Business plans? Which new business functionality? This they did not know.
- Priority/impact to decide where first to allocate resources. This they did not know.
- Types of changes. E.g type 1, fully documented, tested, trained, or type 2 – less documentation, testing , ‘Agile’ type changes. This they did not know.
- Changes carried out for capacity management and problem management. This they did not know.
- Changes NOT carried out for capacity management and problem management. This they did not know.
- The team concluded that it was NOT POSSIBLE to have effective resource allocation without the integration of ITIL processes!! they agreed that too many ITIL implementations were silo (process) based without adequate integration.
- The Business did not Direct or Monitor and did NOT balance decisions and investments based around Benefits realization, risk optimization and help IT with resource optimization. And IT did not help the business understand this. IT did NOT ask the right questions about this OR about Value, Outcomes, Costs, Risks.
- The team concluded that the ‘maturity’ of business AND IT must be understood and managed – Alignment means they MUST be operating at a mutual level of maturity. If IT wants to be seen as a mature partner it must gain trust and credibility. To protect business risks adequately the business MUST take on its role for Governing IT decision making and investments.
- The Capacity Management, Change Management, Problem Management did not understand or communicate in business terms. Value, Outcomes, Costs, Risks. IT Finance operated as a SILO was primarily focused on managing costs and budgets.
- It was concluded that the IT financial role could help the other process managers make a business case and communicate in terms of value and ROI towards the business, help IT people develop more business focused skills.
Finally It was concluded that IT MUST raise it’s game. It is time for ITSM 2.0. This means taking ITIL away from the operational level. Key instruments were seen as Service Portfolio management, Business Relationship management, A new focus and set of skills for SLM and COBIT as a dialogue instrument for helping improve the alignment in maturity between business & IT and help ensure that the business effectively govern IT.
Perhaps this is one of the possible reasons that ITIL examinations are down by 11% in the first half of 2014. It is time to raise the ITIL focus to the strategic alignment and value, use it as it SHOULD have been used and not simply as the great hunt for the ITIL certificate! This requires ALL involved in ITIL , including itSMF chapters to start posuitioning it differently and ensuring these themes and issues are addressed at conferences.
Finally: Business & IT alignment is a ‘people’ and ‘relationship’ issue. Its success or failure is dependent upon ABC (Attitude, Behavior and Culture). For more than 15 years we have been conducting surveys of the top ABC barriers to Business & IT alignment. For 15 years we have been seeing consistently the SAME results. It is time for change!
What did the delegates think of this type of event?
“After participating in Grab@Pizza, I am firmly convinced that learners taking ITSM classes in the areas of Service Strategy (SS), Continual Service Improvement (CSI), and Managing Across the Lifecycle (MALC), this simulation is a must to really bring those learning experiences to life. Additionally, if the objective is the bring to light the challenges and visibility associated with establishing and maintaining an IT Service Management practice, Grab@Pizza creates great insight for both business partners and the IT service provider. Of the many simulations I have participated in over the years, this is the one that operates at a strategic level.” Keith D. Sutherland, Service Management Dynamix
“I found Grab@Pizza – Aligning Business and IT to be excellent opportunity to put into practice service management processes in a gaming/simulation setting. It was intense, and I as the IT Director, I felt the pressure from the CEO and the Business Directors. The feedback and debrief after the simulation was also very helpful.” Bill D Pence