I bumped into Edward Chiles from Matrix42 whilst browsing the Exhibition Hall at IAITAM 09.
I was intrigued by their web-shop approach to ITAM and Service Management. In this article Edward explains how ITAM professionals can learn from tactics in the e-commerce world.
Looking back, if any single phrase could sum up the IT industry in this decade, it would most certainly be, “Aligning IT with Business”.
It’s a mantra we’ve heard over and over since the Dot Com crash when IT organizations were thrown money hand over fist with the idea that at least some of it would stick and produce wildly outrageous advantages and profits to the company.
But after the crash, organizations began to look at their IT budgets in the same way as the budgets of other departments, and insisted upon decisive metrics and benchmarks on what their money would produce. Knowing that the typical CIO benchmark on purchases must equal a 5x ROI to be even considered, we find that many projects funds and budgets were slashed. We in the IT world were forced to change our thinking from technology advancement to business alignment. The whole ‘doing more with less’ fundamental came into play.
But we didn’t really know how to align IT, or what it meant to consider it a business in its own right. Pushing software more efficiently or tracking assets electronically did very little in aligning IT with the business. In fact, it actually increased the demand for it, even though our ability to quantify it became even more difficult. Even the push for ITIL compliance has helped us make great strides towards standardization, automation, compliance and governance, but done nothing for IT’s business model.
From an IT organization’s perspective, we had to somehow justify costs to an increasingly demanding user base that didn’t know, and actually didn’t care what those costs and values actually were. When was the last time a user demanded a copy of Microsoft Visio or Project and actually asked how much it cost? Or what the overhead behind packaging, testing, storing and delivering it would be? Or even supporting it? Or if we had an available license for that matter?
We can’t fault the user base. No one expects the engineer, or marketing person, or HR administrator to know or care about these technical hurdles. Our fundamental situation is that while struggling to ‘align IT with business’; we’ve painfully discovered that we don’t know how.
Or maybe we do. The e-Commerce world has a perfect blueprint to establish an IT-Commerce environment. And not only is it an automated model, but it is a highly successful business model as well.
If you’ve ever purchased a book or electronic object from Amazon.com, or sent and tracked something through UPS or FedEx, or even purchased nearly anything on line, you’ve experienced that model first hand. And it is a model that every user understands very well. All of these highly successful and profitable companies use traditional tool sets such as systems management, asset management, contract management, service desks, and many others. But they are not the focal point of their business model. They merely support it. The focal point is delivering the right service, at the right time, to the right place, at the right price.
Now that’s a perfect metric driven model that justifies all costs, expenditures and services, and every user (read: customer) of the system understands precisely what they want, where they want it, when they want it and how much it costs, without any question.
Once again, this is not a new model or idea in the world, but it is a model that has never been considered to use internally inside of our IT organizations. But it fits precisely within all the initiatives, requirements and objectives demanded by the user, the administrator and all the way to the CIO. The model perfectly builds efficiencies, provides delightful service and cuts overhead costs in a truly natural cycle.
Traditionally a user who requests a service begins their process with a phone call or an email to a central location. Be that a service desk product or group, or an IT mailbox, or even a direct phone call to an IT professional. This is merely the beginning of our inefficiencies in a wide-ranging host of areas, and from the very beginning our costs skyrocket in ways that are increasingly difficult to measure and certainly to justify.
It is far easier to provide an IT-Commerce portal of goods and services to our users that they can browse, search, pick and choose. And users that search for Item A, often decide on Item C instead. While an alternative to Item A, may be Item B. And B is cheaper!
When you wish to purchase a number of objects online, or at a store, do you place a number of different, distinct orders? Never. If for no other reason then you want your requests to be grouped and delivered together, and you want to save on overall shipping and handling costs.
What is shipping and handling to an IT organization? Well, it’s infrastructure and personnel of course. What does it cost to cool the server room, or upgrade the fiber back plane, or perform backups of critical data sets, or maintain any of the disparate systems to maintain the information structure of the organization? These are all items that are never factored into the request for a service, and never considered in IT cost justification.
What about the administrator that packages an application to distribute to thousands of machines, or the person who records and manages the hundreds or thousands of contracts electronically in some system and desperately tries to reconcile license counts with supposedly automated inventory reports? These costs are nowhere, but they are the “handling” charges.
When IT is run like an e-commerce operation, we transform IT into IT-Commerce. The advantages of this model in an organization are legion, but they include items such as:
- Continuously improving business processes and workflows by naturally allowing services to mold and model around what users want, when, where and at what price they are willing to pay. At the same time, reducing costs by assigning resources to necessary functions, all the while removing human facing user contact and inefficient one-off practices.
- Increase the use of information and analytics by allowing automated systems to capture all of the data and metrics first hand without having to be assumed by users attempting to justify resource support
- Create new products and services with great innovation by allowing the trends of the user requests to build the model of service offerings naturally and dynamically
- Managing change initiatives directly by matching the user base requests and requirements with the business objectives in a single step
- Consolidate business operations by seamlessly uniting the IT ‘tool’ functions under a shipping and handling model
How coincidental that these happen to be in the top 10 CIO business priorities for 2009 according to Gartner’s July 2009 report. All of them are satisfied not by Aligning IT with Business, but by transforming IT into a business. We like to call it, IT-Commerce.
This article has been contributed by Edward Chiles at Matrix 42.
About Martin Thompson
Martin is also author of the book "Practical ITAM - The essential guide for IT Asset Managers", a book that describes how to get started and make a difference in the field of IT Asset Management.
On a voluntary basis Martin is a contributor to ISO WG21 which develops the ITAM International Standard ISO/IEC 19770.
Learn more about him here and connect with him on Twitter or LinkedIn.