Sunday, May 27, 2007
The Service Organization – Part 4
THE EVOLUTION OF THE SERVICE DELIVERY ORGANIZATION
In this post, I am building on a series of earlier articles dealing with the implications of managing IT services within a traditional silo-based organization.
The premise of these articles is based on the observation that when you define IT services and their supporting ITSM processes across the vertically oriented technology domains you are introducing two new virtual management structures and in essence creating a matrix organization.
If you want to start your reading at the beginning of these articles you will find the series at the following links:
- The Service Organization – Part 1
- The Service Organization – Part 2
- The Service Organization – Part 3
Otherwise you can pick up the thread of the argument here where we discuss the evolution of a new form of shared service organization focused on Enterprise IT Governance and Service Delivery.
The Shared Services IT Function
In ITIL V3 the concept of a Value Service Network has been given a lot of attention. The key premise of this model is that there are three primary types of IT Service Providers that work together in some combination to provide value based service outcomes to the business customer.
The three primary provider types discussed in this Value Network are:
- IT service providers, which are embedded within and are funded by a specific business unit in order to focus on the needs of that customer
- External IT service providers which provide contracted services to either an internal IT service provider or directly to the business customer
- Shared service providers which provide common IT services to several business units at varying levels based on need.
A key message of IT Service Management is that Enterprise IT is made up of a combination of each of these three provider types. One aspect of IT strategy is defining the right mix of all three types and then ensuring that common processes and tools are deployed across the entire Value Service Network in order to ensure each service provider delivers their services collectively in accordance with business requirements and agreements.
An interesting trend that can be observed in many IT organizations today is the evolution of a shared services group that focuses on aspects of Enterprise IT Governance and Service Delivery. One of the primary drivers behind its gradual creation is the challenge of managing a complex Value Service Network without a central governance function which exists and is empowered to work at a level spanning all of the various IT silos managed by the three provider types.
In many companies today the historical context of task segmentation discussed in Part - 1 of this series of articles has left the governance of IT in a largely distributed model. The result of this distribution is that groups, that by right should have an enterprise mandate and authority find themselves in an infrastructure or application based-silo with a conflict of interest on one hand and a lack of authority outside of their particular silo on the other. As IT organizations realize this challenge they begin to extract out of the traditional IT infrastructure and application silos the groups and functions that provide a shared enterprise governance service.
The Evolving Service Delivery Organization
The concept of a shared services organization is not new to IT. For reasons of efficiency and lower transactional costs IT organizations have been consolidating shared infrastructure, networks, data centers and major business applications for several years. However, a more recent trend is the consolidation of professional service groups into a new shared services organization focused not on technology optimization and cost reduction but on ensuring the delivery of business value from strategic IT service assets.
As organizations become aware that services are agnostic to technology silos they also understand that many of the professional services they provide such as project management, consulting, internal audit, application development, IT service management, engineering and architecture need to be centralized for reasons of both efficiency as well as governance. The centralization of these groups and their eventual consolidation under a single shared services model is what I am referring to as the “Evolving Service Delivery Organization.”
For example; many organizations have already established a separate corporate Project Management Office (PMO) or have created an IT Security and Risk Management group as separate IT functions that now reside outside the traditional application and infrastructure silos. Some IT organizations have also moved other groups out of their technology silos, such as IT planning and architecture.
To understand these actions, we need to understand that in each case these groups were separated or extracted from the infrastructure and application verticals for some of the same basic reasons. Each group has an enterprise mandate but often find they struggle with a conflict of interest by being placed within either an application or an infrastructure group with a vertical or domain focus. To resolve this issue, organizations have structurally removed them from their traditional positions in the organizational chart and have created their own management groups specifically focused on servicing the enterprise. An unattractive alternative to this approach would be to create multiple redundant groups in every management silo offering the same services, where in some cases they actually compete with each other for business. For an example of this model I suggest reading the post titled A Risk by Any Other Name is Still a Risk.
The inherent conflict of interest, removal of redundancy and the goal of enterprise Service Delivery that has driven these changes are the same challenges faced by the Service Management roles of Service and Process ownership.
What can be seen occurring over time is the creation of a third executive management silo that houses the enterprise service delivery and governance functions of IT management.
Typically, you see a natural progression of an organization’s move to this Service Delivery model through a very predictable sequence of stages.
- Cost pressures or legislation force consolidation of key services and functions.
- Enterprise IT functions such as a PMO, Security, HR and IT Finance are created or consolidated as separate management structures.
- Initially, these groups report to either the application or infrastructure executives.
- Organizational or authority challenges force consideration that these functions actually belong outside of each of these silos. The individual groups are transitioned as stand-alone functions.
- For a time, these separate functions report directly to the CIO; however, as more and more enterprise functions are defined, a span of control issue is created with too many direct reports to the CIO.
- To resolve the span of control issue and the organizational challenges, a new Senior Executive is established and is given the mandate of IT Governance or Service Delivery which includes the oversight of these enterprise functions, including ITSM.
- Eventually, the Service Delivery organizations represent the enterprise IT function to the business and facilitate the primary business engagement processes between the customer, the IT service owners and IT engagement roles supplied by SLM. This process is front ended by the IT Service Catalog.
Based on this set of observable evolutionary steps, the following picture presents a model of an example of Service Delivery organizational design. It is interesting to note that many organizations have begun to follow this path without perhaps realizing why.
Without a doubt, the move from a Technology focus to a Value Service Network Orientation has impact on organizational design as companies restructure around the concept of being an end-to-end service delivery organization.
For those readers which would like to have the full whitepaper on this subject I have provided the link for your interest. Service Organization Whitepaper
Please let me know if you find this helpful.
Troy’s Thoughts What Are Yours?
“Anything that happens, happens, anything that in happening causes something else to happen causes something else to happen, and anything that in happening causes itself to happen again, happens again. Although not necessarily in chronological order.” ~Douglas Adams