Showing posts with label business services. Show all posts
Showing posts with label business services. Show all posts

Wednesday, September 26, 2012

HP Discover Performance Podcast: McKesson Redirects IT to Become a Services Provider That Delivers Fuller Business Solutions

Transcript of a BriefingDirect podcast from HP Discover 2012 on how health-care giant McKesson has revamped it's IT approach and instituted a cultural shift toward services.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: HP.
  
Dana Gardner: Hello, and welcome to the next edition of the HP Discover Performance podcast series. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your co-host and moderator for this ongoing discussing of IT innovation and how it's making an impact on people’s life.

Once again, we're focusing on how IT leaders are improving performance of their services to deliver better experiences and payoffs for businesses and end users alike. This time, we’re coming to you directly from the HP Discover 2012 Conference in Las Vegas. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

We’re exploring some award-winning case studies from leading enterprises to see how an IT transformation approach better supports business goals. And we'll see how IT performance improvements benefit these companies, their internal users, and their global customers.

Our next innovation case study interview highlights how pharmaceuticals distributor and healthcare information technology services provider McKesson has transformed the very notion of IT. We will see how a shift in culture and an emphasis on being a services provider has allowed McKesson to not only deliver better results, but elevate the role of IT into the strategic fabric of the company.

To learn more about how McKesson has recast the role of IT and remade its impact in a positive way, we're joined by Andy Smith, Vice President of Applications Hosting Services at McKesson. Welcome, Andy.

Andy Smith: Thank you, Dana. I really appreciate you inviting me and I am glad to be able to share my experiences with others.

Gardner: Let me start with this notion of IT transformation. We hear a lot about that. I wonder if you have any major drivers that you identified, as you were leading up to this, that allowed you to convince others that this was worth doing.

Smith: What we did, and this started several years ago, was to focus on what our competition was doing, not the competition to McKesson but the competition to IT. In other words, who was the outsourcer or who were the other data-center providers. From that, we were able to focus on our cost, quality, and availability and come up with a set of metrics that covered it all, so that we could know the areas we needed to transform and the areas where we were okay.

Gardner: So, in a sense, you had to redefine yourself as a services provider, because that's who you saw as your competition?

Smith: Exactly, and that's who our customers are talking to -- our competition. When they came to us for a service, they had already talked to third-party providers. And so we realized very quickly that our competition was the outside world, so we had to model ourselves to be more like them and less like an internal IT department.

Gardner: That, of course, cuts across not only technology, but culture and the whole idea of being accountable and to whom. So let's start at that higher level. How did you begin to define what the new culture for IT should be?

Balanced scorecard

Smith: We started out with a balanced scorecard. It really came down to whether the employees and the customers were satisfied. Did we do what we said – were we accountable -- and were the financials right?

So when we started setting up that balance scorecard, that on its own started to change the culture. Suddenly, customer satisfaction mattered, and suddenly, system availability mattered, because the customer cared, and we had to keep the employees trained, so that they were satisfied.

Over time, that really changed the culture, because we're looking at all four parts of the scorecard to make sure we're moving forward.

Gardner: I suppose it's essential, when you're a services provider rather than a technology products producer and deployer, that you understand what are the right metrics to measure. So is it a different set of metrics from IT to a service provider role of IT?

Smith: It really is, because when we were just an internal IT department, we spent more time saying, "The customer gave us an order, we hit the checkbox and finished that order, we're done." We were always asking, "Did we do it, and did we do it on time?"
What we really focused in on were the real drivers. A lot of the measures are more trailing indicators. Even money tended to be a trailing indicator.


That's not really what the customer was looking for. The customer was looking for. "Did you deliver what I needed, which may be different than what I asked for. Did you deliver it at a good price? Did you deliver it at a good quality." So it did switch from being measuring the ins and the outs of an order taker, to whether we are delivering the solution at the right price.

Gardner: As we've seen in a number of companies, when they’ve gone to more measurement using metrics, key performance indicators (KPIs), and working towards service-level agreements (SLAs), sometimes that can become daunting. Sometimes, there is too much, and you lose track of your goal. Is there a way that you work towards a triage or a management approach for those metrics, those KPIs, that allowed you to stay focused on these customer issues?

Smith: What we really focused in on were the real drivers. A lot of the measures are more trailing indicators. Even money tended to be a trailing indicator.

So we went into what's really driving our quality, what's really driving our cost. We got down to four or five that we are the ones that mattered. "Is the system up and running. Are changes causing outages. Are data protection services reliable. Are our events being handled quickly and almost like a first call resolution. Are they being resolved by the first person that gets the event?"

The focus was prevent the outage and shorten up the mean time to restore, because in the end, all of that will drop the cost. It worked, but it was focusing on a handful, rather than dozens.

Gardner: Is it fair to say that doing this well is, in fact, also a cost-saver? Is there a built-in mechanism for efficiency, when you start focusing on that service provider role, that brokering role?

Pulling down cost

Smith: It truly did bring down our cost within McKesson. I'll probably be off by several million, but each year we pull down our cost several million dollars. So every year my budget gets smaller, but every year my quality gets higher, my employee satisfaction gets higher, and my customer satisfaction gets higher.

It can really get both. You don't have to sacrifice quality to reduce cost. The trick was saying that I no longer needed a person to do this commodity factory work. I could use a machine to do that, which freed up the worker from being a reactive commodity person to being a proactive value-add person. It allowed the employee to be more valuable, because they weren't doing the busy work anymore. So it really did work.

Gardner: For those in our audience who might not be familiar with McKesson, tell us a little bit more about the company. Specifically, tell us about the scale of your IT organization to put those millions of dollars into some perspective in the total equation?

Smith: McKesson IT is roughly 1,000 employees. The company is roughly 45,000 employees. So percentage-wise, we're not that big. My personal budget to run the IT infrastructure is about a $100 million a year.

So pulling out a few million dollars a year may be only a few percent, but it's still a pretty significant endeavor. We've managed to pull that cost out, both through the typical things like maintenance contracts and improved equipment, but also by not having to grow the full-time employee (FTE) base. I haven't had to let any FTEs go, but what we've discovered was that, as we did these things, I needed fewer employees.
To get people to stop thinking about the technology and start thinking about the business solution is a slow transition, because it's a real mind-shift.

As employees resigned, I didn't have to replace them. My staff base has been shrinking, but I haven't had anybody lose a job. So that's been also very reassuring for the employees, because they kept waiting for that big shoe to drop, waiting for us to say, "We're going to outsource you," but we've never had to do it.

Gardner: I guess when you compete against the outsourcers better, then you are going to retain those jobs and keep that skill set going. There is a cliché that you're able to take people from firefighting and put them into innovation. Is there a truth to that in what you've done?

Smith: That really is truth. It took time, and we’re not done, but to get people to stop thinking about the technology and start thinking about the business solution is a slow transition, because it's a real mind-shift. In a lot of ways, these employees see the reactive work as the bread and butter work that puts the paycheck on the table. That lets them be a firefighter and a hero, and if you take that away, the motivators are different.

It takes time to get people comfortable with the fact that your brain is worth a lot more doing value-add work than it was just doing the firefighting. We're still going through that cultural shift. In some ways, it's easier for the older employees, because if you go back a few decades, IT was that. It was programmer analyst, system analyst, and business analyst. For me, "analyst" disappeared from all my job titles.

In the last couple of decades, for some reason, we erased analyst, and now you're just a programmer or an operator. In my mind, we're bringing the analyst back, which for the older employees, is easy, because they used to do it. For the younger employees, we've got to teach them how to be consultants. We've got to teach them how to be analyst. In some cases, it's a totally different, scary place to go, because you actually have to come out of the back office and talk to somebody, and they're not used to that.

Cultural shift

Gardner: Maybe there are methodologies that work here that you could discuss, services-oriented architecture (SOA) comes to mind and also ITIL. Have you been using ITIL approaches and SOA to help make those transitions? Is there a technology track is a cultural shift?

Smith: Yes, we went down the ITIL road, because we were manual before. Everybody was doing it with tribal knowledge. The way I did it today might be different than the way I'd do it tomorrow, because it's all manual, and it's all in people's heads.

We did go into ITIL version 3 and push it very hard to give that consistency, because the consistency really mattered. Then, we could really measure the quality. We could be ensured that no matter who did it or when it was done, it was done the same way, and that reliability mattered a lot.

We also got away from custom technology, and we got to where everything is going to be a certain type of machine. It's going to look the same. All the tools are going to be fully integrated and no longer be best-of-breed point solutions. Driving that standardization made a big difference. You don’t have to remember that machine on the left you reboot it this way, and that machine on the right you reboot it a different way. You don’t have to remember anymore, because they're all the same.

We made the equipment and tools standard and more of a commodity so that the people didn’t have to be that anymore. The people could be thought leaders. All those things really did work to drive out the cost and increase the quality, but it's a lot of different pieces. You can't do it with just one golden arrow. You have to hit it from every angle.
We had to increase the transparency to say we’re doing a good job or we’re doing a bad job.

We had to change the technology, the people, and the processes. We had to increase the transparency to say we’re doing a good job or we’re doing a bad job. It was just, "Expose everything you’re doing."

That's scary at first, but in the end, we found out we really are competing with the competitors and we can continue to do it, and do it better. We understand healthcare, we understand McKesson, and we’re an internal group, so we don’t have a profit margin. All those things combined can make us a better IT solution than a third party could be.

Gardner: And as you entered that standardization process, did that services orientation become a value point for you? Did private cloud or an even a hybrid model start to become interesting? How far have you progressed in that “cloud direction”?

Smith: The services orientation helped a lot. We’re on the IT side, so we started out with our service as Unix, our service as data, our service as Windows. Getting us focused on that helped us remember what the service really was. We’re now stepping back even one step farther and saying that that no longer matters.

What really matters is the business solution you’re trying to solve. We’re stepping even farther back, saying that the service is order to cash, or the service is payroll, or the service is whatever. We’re stepping back farther, so we can look at the service from the standpoint of the customer. What does the customer want? The customer doesn’t want Unix. The customer wants order to cash. The customer doesn’t want Windows. The customer wants payroll.

Thinking about cloud

Stepping back has now allowed us to start thinking about that cloud. All the equipment underneath is commoditized, and so I can now sit back and say that the customer wants this business solution and ask who is the best person to give me the components underneath?

Some of them, for security reasons, we’re going to do on our internal cloud. Some of them, because of no security issues, we’re going to have a broker with an external provider, because they may be better, cheaper, or faster, and they may have that ability to burst up and burst down, if we’re doing R&D kind of work.

So it's brought us back to thinking like a business person. What does the business need and who is the best provider? It might not be me, but we’ll make that decision and broker it out. This year we're probably going to pull off our internal cloud and our external cloud and really have a hybrid solution, which we’ve been talking about for a couple of years. I think it will really happen this year.

Gardner: We’re here at HP Discover and HP COO Bill Veghte was on the stage a little while ago. One of the things that he said that caught my attention was that we’re producing the app services and the Web services that are the expression of business processes.

I thought that was a good way to put it, because in the past, business processes had to conform to the applications. Now, we’re able to take the applications in the hybrid delivery model and extend them to form what the business processes demand. Is that also sort of a shift that's come along with your going more towards a service brokering capability?
The other 80 percent is really unique business services that our customers need to improve healthcare, to reduce the cost in healthcare, and those are really unique to McKesson.

Smith: It is a shift that's going on, and it's interesting, because I don’t think part of this is matured. If you’re dealing with the big package products whether it's the Oracles or the SAPs, those people are dictating almost a custom solution in order to keep themselves alive. But that's probably 20 percent of my business, when I think about servers and applications.

The other 80 percent is really unique business services that our customers need to improve healthcare, to reduce the cost in healthcare, and those are really unique to McKesson. What I am finding, when I look at those types of business services, they are the real bread-and-butter that makes our world different.

Having the hybrid capability does let me put together the pieces to optimize what the business need is, but it is the 80-20. For the 80 percent I can do it. For the other 20 percent, those vendors are probably going to lock me into a custom solution, but that's okay.

Gardner: Well great. I am afraid we’re about out of time. We’ve been discussing with McKesson, how they’ve recast the role and impact of IT. I want to thank our guest, Andy Smith, Vice President of Applications Hosting Services at McKesson. Thanks so much, Andy.

Smith: Thank you very much, Dana.

Gardner: And I also want to thank our audience for joining us for this special HP Discover Performance podcast coming to you from the HP Discover 2012 Conference in Las Vegas.

I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of HP sponsored discussions. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: HP.

Transcript of a BriefingDirect podcast from HP Discover 2012 on how health-care giant McKesson has revamped it's IT approach and instituted a cultural shift toward services. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.

You may also be interested in:

Tuesday, July 31, 2012

For Steria, Cloud Not So Much a Technology as a Catalyst to Responsive and Agile Business

Transcript of a sponsored BriefingsDirect podcast on how IT service delivery company Steria standardizes processes in the cloud for improved delivery.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: HP.

Dana Gardner: Hello, and welcome to the next edition of the HP Discover Performance podcast series. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your co-host and moderator for this ongoing discussing of IT innovation and how it's making an impact on people’s life.

Once again, we're focusing on how IT leaders are improving performance of their services to deliver better experiences and payoffs for businesses and end users alike. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

Now, we're joined by our co-host for this sponsored podcast series, Chief Evangelist at HP, Paul Muller. Welcome, Paul. Where are you coming from today?

Paul Muller: Hi, Dana. Today, I'm in a fortunate position. I've been at home now for nearly two weeks running, which is something of a record. I'm down here in Melbourne, Australia.

Gardner: I am glad you can join us from home. We have a fascinating show today, because we are going to learn about how a prominent European IT-enabled business services provider, Steria, is leveraging cloud services to manage complexity and better services to customers. Getting more from cloud services seems to be a huge part of the IT landscape these days.

Paul, is that what you are finding -- that the cloud model is starting to impact this whole notion of effective performance across services in total?

Muller: This is a conversation I've been having a lot lately. The word cloud gets thrown around a lot, but when I drill into the topic, I find that customers are really talking about services and integrating different services, whether they are on-premises, in the public cloud arena, or even that gray land, which is called outsourcing. [Follow Paul on Twitter.]

It's the ability to integrate those different supply models -- internal, external, publicly sourced cloud services -- that really differentiate some of the more forward-leaning organizations from those who are still trying to come to grips with what it means to adopt a cloud service.

Gardner: Maybe a year or two ago, we were focused on the "how" with cloud, and now we seem to be moving beyond that to the "what," what you get regardless of how you do it. Does that sound about right?

Muller: You couldn’t have put it better. The way I had it described to me recently is that it’s moving away from talking about the plumbing to talking about what you're trying to produce. That that’s really the fundamental change that has occurred in the last 18 months.

Business opportunity

W
e've all come to realize that cloud isn’t so much a technology issue, as it is a business opportunity. It’s an opportunity to improve agility and responsiveness, while also increasing flexibility of cost models, which is incredibly important, especially given the uncertain economic outlook that not only different countries have, but even different segments within different countries.

Take something like the minerals and resources areas within my own country, which are booming right now. Whereas, if you look at other areas of business, perhaps media, or particularly print media, right now, they're going through the opposite type of revolution. They're trying to work out how to adjust their cost to declining demand.

Gardner: With that, let’s get to our guest. He's been a leading edge adopter for improving IT service delivery for many years, most recently as the IT Service Management (ITSM) Solution Manager at Steria, based near Paris.

Please join me in welcoming Jean-Michel Gatelais. Welcome to BriefingsDirect, Jean-Michel.

Jean-Michel Gatelais: Thank you very much. Yes, at Steria, I'm in charge of the Central ITSM Solution we provide for our customers, and I am in-charge of the Global ITSM Program Roadmap, including the ongoing integration from ServiceCenter 6 to Service Manager 9. I'm also responsible for the quality of service that we deliver with this solution, and of the transition of new customers on this platform.

Gardner: Let’s start at a high level, Jean-Michel. Because you've been doing this for quite some time with a focus on IT service delivery and ITSM, has this changed quite a bit in just the past few years? If so, what’s different now about IT service delivery than just say few years ago?

Gatelais: It has changed a lot. In fact, few years ago it was something that was very atomic, with different processes and with people running the service with different tools. About three to five years ago, people began to homogenize the processes to run the service, and we saw that in Steria.

In Steria, we bought some companies and we grew. We needed to establish common processes to proceed by a common platform, and that what’s what we did with Service Manager. Now, the way we deliver service is much more mature for all the processes and for the ITSM processes.

Gardner: Paul Muller, how does that jibe with what you're seeing? It sounds like he's very representative of the market in total.

Muller: The desire to standardize processes is a really big driver for organizations as they look to improve efficiency and effectiveness. So it's very similar what we're seeing. In fact, I was going to ask Jean-Michel a question. When you talk about homogenizing processes or improving consistently, how does that help the organization? How does that help Steria and its customers perform better?

IT provider

Gatelais: This allows us to deliver the service, whatever the location or organization, because we're an IT provider. We provide services for our customers that can be offshore, nearshore, in Steria local premises, and even in the plant premises. All the common processes and the solution allow us to do to this independently of the customer. Today with this process, we're able to run services for more than 200 customers.

Gardner: I suppose we should learn a bit more about Steria. You are primarily in Europe and the UK. Tell us a bit about your business, who your customers are, and perhaps some of the high-level goals and strategies that you're pursuing.

Gatelais: Steria is an IT service provider. We are about a little more than 40 years old. Our business is mainly in system integration, application management, business process outsourcing, and infrastructure management services.

We have big customers in all sectors of industry and services, such as public sector, banking, industry, telecom, and so on. We have customers both in France and UK mainly, but in the whole of Europe also. For example, we have British Telecom, Orange, and the public sector in the UK, with police etc.

Gardner: I see among your services that you are delivering cloud Workplace on Command, for example, Infrastructure On Command. Is this a bigger part of your business now? Do you find that servicing your cloud customers is dominating some of your strategic thinking?

We have an industrialized solution, allowing our customers to order infrastructure in a couple of minutes.



Gatelais: Yes. Actually, it’s growing day after day. We launched our cloud offering about 18 months ago. Now we can say that we have an industrialized solution, allowing our customers to order infrastructure in a couple of minutes. And this is really integrated with the whole service management solution and the underlying infrastructure.

Gardner: I suppose this gets to this self-service mentality that we are seeing, Paul. End users are seeking a self-service type of approach. They know that they can get services quite easily through a variety of consumer-based means. They're looking for similar choice and enablement in their business dealings.

It seems that an organization like Steria is at the forefront of attracting that sense of enablement and empowerment and then delivering it through a cloud infrastructure. They're interesting on two levels: one, they're delivering cloud and enablement, but they are also using cloud to power their own ability to do so.

Muller: I don’t know if Jean-Michel has seen this, but we see almost a contradiction within enterprise users of cloud. We see groups that will quite readily go out and adopt cloud services. The so-called consumerization trend is quite prevalent, especially with what I would describe as simple services. For example, office automation tools, collaboration tools, etcetera.

Yet, simultaneously, we see reluctance sometimes, particularly for the IT organization, to let go and cloud source services and applications. I sometimes refer to them as "application huggers" or "server huggers."

Relinquish control

In other words, if they can’t see it or touch it, they're reluctant to relinquish control. The most fascinating part for me is that you can often find those two behaviors inside the very same organization. Sometimes, the same person can have diametrically opposed views about the respective merits of those two approaches. Does that make sense?

Gardner: We should put the question directly to Jean-Michel. Are you selling and delivering cloud services to the IT department or others? Maybe we could call that shadow IT?

Gatelais: We do both. In fact, the cloud today is used both for internal organizations and also for our customers. Then, the cloud offering set-up asks to study a business model to study the way we will sell such service. For us, at the central level at Steria, there is no difference between internal delivery and delivery for our customers.

Gardner: That’s pretty interesting. Do you find that you've had to tailor your services for those non-IT users? Is there something about billing, invoicing, or self-serve that you've put in place in order to better accommodate the non-IT part of the market?

Gatelais: No. In fact, what we're trying to do is to standardize, as much as possible, the basic offering we propose. On top of that, we have additional requests from our customers. Then, we try to adapt our offering to the specific request.

Providing infrastructure services is not so difficult, but providing platform-as-a-service (PaaS) features can be.



Providing infrastructure services is not so difficult, but providing platform-as-a-service (PaaS) features can be. Even software as a service (SaaS) can be simpler than PaaS, because you provide some package services, startup services, instead for platform services. It’s very consumer specific.

Gardner: So you have the opportunity to go with a fairly standardized approach, but then you can customize on top of that. I'd like to hear some more about your different services. I understand that there’s something called Steria Advanced Remote Services or STARS. How does that fit into the mix, Jean-Michel?

Gatelais: STARS is the ITSM platform Steria rolled out about five years ago, and today this is a framework. It's mainly based on HP products, because it's running on HP Service Manager online, Business Service Manager (BSM), and Operations Orchestration.

We see this platform as a service enabler, both service support platform and the service enabler, because we use it to manage and activate the services we propose to our customer, including cloud services, security services, and our new offering, Workplace On Command services.

STARS is the solution to manage value-added services Steria is offering to its customers.

Muller: I have a question for Jean-Michel. When a customer thinks about taking services that maybe they used to run internally and moving those services to Steria, how important is it for them to maintain visibility and control, as they are thinking about moving to cloud?

Depends on the customers

Gatelais: It depends on the customers. You have some customers that are ready to use the services you provide on a common environment, but you also have customers requiring more specific solutions that we can give to them. Steria is developing some facilities to roll out and to instantiate the platforms for dedicated environments.

For example, the STARS solution, with Service Manager in the solution, we can deploy it, instantiate it, when the customer requires it.

Muller: Just following on from that, there's a perception that when you move to cloud services, people don’t really care about visibility, metrics, and service-level reports, because that’s all part of the service-level agreement (SLA). Do you find that customers actually want to see, how their service is performing -- what's the availability and level of security? Do they look for that level of reporting from you?

Gatelais: It depends on the customers. Some are really outsourcing the services. They would only complain if they met some problems on the services.

But other customers want to have the visibility on the quality of service that is delivered by Steria. That means that we need to be able to publish the SLA we have for our offering, but also to publish monthly, for example, the key performance indicators (KPIs) of this platform.

It’s the KPI discussion that is of such great interest to enterprises today.



Muller: And that is certainly a perfect question, because, Dana, it’s the KPI discussion that is of such great interest to enterprises today.

Gardner: Right, and I'm impressed that Steria can manage this variety and be able to provide to each of these customers what they want on their own terms, which is, as you point out, is really what they're calling for.

For you as a provider, that must really amount to quite a bit of complexity. How do you get a handle on that ability to maintain your own profitability while dealing with this level of variability and the different KPIs and giving the visibility to them?

Gatelais: One of the advantages of the cloud structure is that you have to ask these questions in advance. That means that when Steria is designing a new offering, we first design the business model. In fact, that will allow us either to propose some shared services, or for the client that has requested it, some visibility to the services, but based on standard platforms. We try to remain standard in what we propose, and the flexibility is in the configuration of what we propose.

Gardner: How about providing the visibility so that the sense of confidence, which is also so important in these early years of cloud adoption, is maintained? Do you provide specific views, insights, dashboards? What is it that you can provide to your customers so that they feel themselves in control even though they are no longer in a sense running these systems?

Gatelais: We provide the KPIs that are published for the service offering. This will include such information as service availability rates, outage problems, change management, and also activity reporting.

Strategic decisions

Gardner: Let’s look at this for a moment through the eyes of some of your customers, Jean-Michel. They're able to make their own strategic decisions better, knowing what they can do on-premises and what they can do to outsourcing models. They can make determinations about what is core and what’s context for their own capabilities and differentiation. What has that meant for them?

Do you have any anecdotes or insights into some of the benefits to their overall business that they have been able to make, because they can look to an organization like Steria and say, "Here, you do it. We're going to focus on something else?"

Gatelais: Yes. The example I can give is the flexibility the service offering can give to the customers in the software development area.

For example, it allows you to set up some development platforms for a limited period of time, allowing product development. With the service we offer, when the project is finished and you enter into the application management mode, the plant is able to say, "I stopped the server." It's backed up, and if six months later the customer wants to develop a new release of this software, then we would restore his environment. In the meantime, he won't have the use of the platform, but he'll be able to continue his development. This is very flexible.

Gardner: Paul, you must be seeing a lot of this that for many adopters with the test dev, quality assurance, the need for elasticity for those builds and environments around the test and development lifecycle. This sort of provides the killer use case for cloud.

The notion of tying all of that capital equipment up and leaving it idle for that period of time is simply not tenable.



Muller: Yes, but on and off-premises. The interesting part is that the development and test process is such a resource-intensive process, while you are in the middle of that process. But the minute you are done with it, you go from being almost 100 percent busy and consuming 100 percent of the resources, to, in some cases, doing nothing, as Jean-Michel said, for months, possibly, even years, depending on the nature of the project.

The notion of tying all of that capital equipment up and leaving it idle for that period of time is simply not tenable. The idea of moving all of that into a flex up-flex down model is probably one of the single most commonly pursued use cases for both public and private cloud today.

The other one, as Jean-Michel has already spoken to, is that the idea of more discrete services, particularly that of helpdesk, is just going crazy in terms of adoption by customers.

Gardner: Jean-Michel, how about some of the different sectors of the market? Do government clients of yours in Europe and the UK approach this any differently than the private sector? And, do small-to-medium-size businesses (SMBs) seem to be approaching your services or have different requirements than the larger enterprises?

Gatelais: The main difference between government and the private sector is the security issue. Most of governments ask for more confidentiality. They're very often reluctant to share their data or their business, with others. For such clients, we need to have a dedicated offering.

Dedicated offering

F
or example, in the UK, a customer from government didn’t want to run their services on shared platforms and asked for a dedicated environment. Because the whole ITSM offering from Steria is running on just one environment, we were able to instantiate such services only for their use.

Muller: That’s an interesting topic right there, Dana. I don’t know whether you're seeing this a lot in your interactions with clients, but the whole idea that cloud is a shared resource pool works brilliantly on paper.

But as Jean-Michel said, practically speaking, for reasons of data sovereignty, for reasons of security, and in some cases for regulatory reasons, the customer will insist that the service be effectively a hosted solution. It’s not that different from almost a traditional outsourcing situation, would you say, Jean-Michel?

Gatelais: Yes.

Gardner: One of the things I am seeing is some of the vision in terms of cloud a few years ago was that one size would fit all, or that it’s cookie cutter, and that there won’t be a need for high variability. But I think what we are actually seeing in practice, and Jean-Michel is certainly highlighting this, is that the KPIs are going to be different for organizations.

There are going to be different requirements for public and private, large and small, jurisdiction by jurisdiction, regulation and compliance. You really need to be able to have the flexibility, not just at the level of infrastructure, but at the level of the types of services, the way that they're built, invoiced, and measured and delivered.

They're interesting for small organizations, because they don’t have to heavily invest in solutions, and we're able to propose shared solutions.



Gatelais: The way we propose the services is they're interesting for small organizations, because they don’t have to heavily invest in solutions, and we're able to propose shared solutions. This is SaaS, this is cloud, and for them it’s very interesting, because it is much more cheaper.

Gardner: Well, we are going to be coming close to the end of our time. Jean-Michel, I wonder if you have any thoughts for those who might be embarking on something like a STARS capability.

They will be thinking about what they should put in place in order to accommodate the complexity, the security, being able to have granular services that they can deliver regardless of location to the variety of different types of clients. What do you advise others who would be pursuing a similar objective?

Gatelais: With such offerings you have to design and think much more than before, to think before running out your solution. You need to be clear on what you want to propose to what kind of customers, where is the market, and then to design your offering according to this. Then, build your business model according to those assumptions.

Gardner: In North America, we might say that that’s skating to where the hockey puck is going to be, rather than where it is.

Gatelais: Yes.

KPIs that matter

Muller: A question from me, Dana, for Jean-Miche. Right now, I've got a couple of metrics, a couple of KPIs, that matter to me really deeply. From your perspective, are there one or two KPIs that you're looking at at the moment that either make you really happy or that are a cause for concern for you, as you think about business and delivering your services. What are the KPIs that matter to you?

Gatelais: What is very difficult for new services is to evaluate the actual return on investment (ROI). You can establish a business model, a business plan to see if what you will do, you will make some profit with it, but it's much more difficult is to evaluate the ROI.

If I don’t buy this service, it would cost me an amount; if I buy this service, okay, it will cost the service fee, but what would I spend next to that. This is very difficult to measure.

Muller: And it's probably one of the most important KPIs in business, wouldn’t you say, Dana?

Gardner: Absolutely, yes.

Gatelais: It may be basic, but you should take the configuration management process. That is very important, even in cloud offerings. It's very difficult to make evident that if you do some configuration management, you will have higher a ROI than if you don’t do it.

It's very difficult to make evident that if you do some configuration management, you will have higher a ROI than if you don’t do it.



Muller: The cost justification of the investment is the challenge?

Gatelais: Exactly. Today, even internally in Steria, it's much more difficult to get approval to develop and to improve configuration management, because people don’t see the interest, as you don’t sell it directly. It's just a medium to improve your service.

Muller: That’s such a good point. And Dana, it's one of the great benefits. This is going to sound a little bit like an infomercial, but it's worth stating. One of the reasons we've been moving so much of our own management software to the cloud is because it's behind the scenes. It's often seen as plumbing, and people are reluctant to invest often in infrastructure and plumbing, until it has proven its benefit.

It's one of the reasons we've moved to a more variable cost model, or at least have made it available for organizations who might want to dip their toe in the water and show some benefits before they invest more heavily over time.

Distinct line


Gardner: Historically, Paul, it's been difficult to draw a distinct line between technology investments and business payoffs and paybacks, even though we have general productivity numbers to support it.

But now, with that greater insight into the management capabilities along the way, when you do everything as a service, you can meter, you can measure, and you can pay as you go. You're really starting to put in place the mechanisms for determining quite distinctly what the payoffs are from investments in IT at that critical business payoff level. So I think that’s a very interesting development in the market.

Muller: The transparency improves, and because you have a variable cost model, it lowers the pain threshold in terms of people being willing to experiment with an idea, see if it works, see if it has that payoff, that ROI. If it doesn’t, stop doing it, and if it does, do more of it. It's really, really very simple.

Gardner: Right, much less of an art and a bit more of a science, but in a good way.

Muller: Absolutely.

Gardner: I'm afraid we are going to have to leave it there. I'd like to thank you all for joining our discussion, and of course, I'd like to thank our supporter for this series, HP Software, and remind our audience that they can carry on this dialogue with Paul Muller through the Discover Performance Group on LinkedIn.

You can also gain more insights and gather more information on the best of IT performance management at www.hp.com/go/discoverperformance.

And with that, please join me in thanking today's guests, our co-host, Chief Evangelist at HP, Paul Muller. Thanks so much, Paul.

Muller: Good talking to you again, Dana.

Gardner: And also a huge thanks to Jean-Michel Gatelais, IT Service Management Solution Manager at Steria, based near Paris. Thanks so much, Jean-Michel.

Gatelais: You're welcome. It was a pleasure.

Gardner: I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your co-host, and moderator for this ongoing discussion of IT innovation and how it's making an impact on people’s lives. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: HP.

Transcript of a sponsored BriefingsDirect podcast on how IT service delivery company Steria standardizes processes in the cloud for improved delivery. Copyright Interarbor Solutions, LLC, 2005-2012. All rights reserved.

You may also be interested in:

Tuesday, November 29, 2011

HP Discover Case Study: Vodafone Ireland IT Group Sees Huge ROI By Emphasizing Business Service Delivery

Transcript of a BriefingsDirect podcast in conjunction with HP Discover 2011 in Vienna on how a major telecom provider has improved service to customers by shifting from a technology emphasis to business service delivery.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: HP.

Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you in conjunction with the HP Discover 2011 Conference in Vienna.

We’re here in the week of Nov. 28, to explore some major case studies from some of Europe’s leading enterprises. We'll see how a series of innovative solutions and an IT transformation approach to better support business goals is benefiting these companies, their internal users, and their global customers.

I'm Dana Gardner, Principal Analyst at Interarbor Solutions and I'll be your host throughout this series of HP-sponsored Discover live discussions.

Out next customer case study interview highlights how a shift from a technology emphasis to a business services delivery emphasis has created significant improvements for a large telecommunications provider, Vodafone.

To learn more, we’re here with Shane Gaffney, Head of IT operations for Vodafone Ireland in Dublin. Welcome to the show, Shane.

Shane Gaffney: Thank you, Dana.

Gardner: Tell me what was the challenge that you faced when you decided to switch from a focus on technology purely to one more of a business user mentality? Why did you think you needed to do that?

Gaffney: Back in summer of 2010, when we looked at the business perception of the quality of service received from IT, the confidence was lower than we’d like in terms of predictable and optimal service quality being provided.

There was a lack of transparency. Business owners didn’t fully understand what quality was being received and they didn’t have simple meaningful language that they were receiving from IT operations in terms of understanding service quality: good, bad, or indifferent.

Within IT operations, as a function, we also had our own challenges. We were struggling to control our services. We were under the usual pressure that many of our counterparts face in terms of having to do more with less, and downward pressure on cost and headcount. We were growing a dynamic complex IT estate, plus customers are naturally becoming ever more discerning in terms of their expectations of IT.

Transactional and reactive


As a large multinational, we specified a fragmented organization, some services being provided centrally vs. locally, some offshore vs. onshore. With that, we had a number of challenges and the type of relationship we had with our customers was transactional and reactive in nature.

So with that backdrop, we knew we needed to take some radical steps to really drive our business forward.

Gardner: And before we learn more about that, Shane, tell me a little bit about Vodafone Ireland? Tell us the extent of your services and your reach there?

Gaffney: Vodafone is Ireland’s leading telecommunications operator. We have in excess of 2.4 million subscribers, about 1,300 employees in a mixture of on-premise and cloud operations. I mentioned the complex and dynamic IT estate that we manage. To put a bit of color around that, we’ve got 230 applications, about 2,500 infrastructure nodes that we manage either directly or indirectly -- with substantial growth in traffic, particularly the exponential growth in the telecom data market.

Gardner: When you decided to change your emphasis to try to provide more of that business confidence, the services orientation, clearly just using technology to do that probably wasn't going to be sufficient. There are issues around people, process, culture, and so forth. How do you, at a philosophical level, bridge the continuum among and between technology and these other softer issues like culture?

Gaffney: That's a really important point. The first thing we did, Dana, was engage quite heavily with all of our business colleagues to define a service model. In essence what we were looking at there was having our business unit owners define what services were important to them at multiple levels down to the service transactions, and defining the attributes of each of those services that make them successful or not.

We essentially looked to align our people, revamp our processes, and look at our end-to-end tool strategy, all based around that service model.



Once we had a very clear picture of what that looked like across all business functions, we used that as our starting point to be able to measure success through the customer eyes.

That's the focus and continues to be the core driver behind everything else we do in IT operations. We essentially looked to align our people, revamp our processes, and look at our end-to-end tool strategy, all based around that service model.

The service model has enforced a genuine service orientation and customer centricity that’s driven through all activities and behaviors, including the culture within the IT ops group in how we service customers. It’s really incorporating those commercial and business drivers at the heart of how we work.

Gardner: Shane, I've heard from other companies that another important aspect of moving to the shift on services delivery is to gain more awareness of the IT products in total. It involves, I suppose, gaining insight and then analysis, not at the point-by-point basis in the products themselves, but at that higher abstraction of how the users themselves view these services? Has that been important for you as well?

Helicopter view

Gaffney: We’ve taken the service view at a number of levels. Essentially, the service model is defined at a helicopter view, which is really what’s important to our respective customers. And we’ve drilled down into a number of customer or service-oriented views of their services, as well as mapping in, distilling, and simplifying the underlying complexities and event volumes within our IT estate.

Gardner: In order to get that helicopter view and abstract things in terms of a process level, what have you done in terms of gaining insight? What has become important for you to be able to do that?

Gaffney: There are a number of things we’ve considered there. Without having a consolidated or rationalized suite of tools, we found previously that it's very difficult to get control of our services through the various tiers. By introducing the HP Application Performance Management tools portfolio, there are a number of modules therein that have allowed us to achieve the various goals that we’ve set to achieve the desired control.

Gardner: Before we go into any detail on products and approaches, let’s pause and step back. What does this get for you -- if you do it right? What is it that you've been able to attain by shifting your emphasis to the business services level and employing some new approaches in culture? What did you get? What’s the payoff?

Gaffney: First of all for IT, we build confidence within the team in terms of having a better handle on the quality of service that we’re offering. Having that commercial awareness really does drive the team forward. It means that we’re able to engage with our customers in a much more meaningful way to create genuine value-add, and move away from routine transactional activity, to helping our customers to innovate and drive business forward.

Without having a consolidated or rationalized suite of tools, we found previously that it's very difficult to get control of our services through the various tiers.



We’ve certainly enjoyed those type of benefits through our transformation journey by automating a lot of the more core routine and repeatable activity, facilitating focus on our relationship with our customers in terms of understanding their needs and helping them to evolve the business.

Gardner: Have you done any surveys or presented key performance indicators (KPIs) against some of this? Is it still early? How might we look to some more concrete results, if you're able to provide that?

Gaffney: In terms of how we measure success, Dana, we try to take a 360 view of our service quality. So we have a comprehensive suite of KPIs at the technology layer. We also do likewise in terms of our service management and establishing KPIs and service level agreements (SLAs) at the service layer. We've then taken a look at what quality looks like in terms of customer experience and perception, seeking to correlate metrics between these perspectives.

As an example, we routinely and rigorously measure our customer net promoter score, which essentially assesses whether the customers, based on their experience, would recommend our products and services to others.

To give a flavor of the type of KPI improvements at an operational level that we’ve seen improve over the last year, we measure "customer loss hours," which is effectively due to any diminished performance in, or availability of, our services. We measure the impact to the end customer in terms of the adverse impact they would suffer.

Reduction in lost hours

We’ve seen a 66 percent reduction in customer lost hours year on year from last summer to this. We’ve also seen a 75 percent reaction in mean time to repair or average service restoration time.

Another statistic I'd call out briefly is that at the start of this process, we were identifying root cause for incidents that were occurring in about 40-50 percent of cases on average. We’re now tracking consistently between 90-100 percent in those cases and have thereby been able to better understand, through our capabilities and tools, what’s going on in the department and what’s causing issues. We consequently have a much better chance of avoiding repetition in those issues impacting customers.

At a customer satisfaction level, we’ve seen similar improvements that correlate with the improved operational KPIs. From all angles, we’ve thankfully enjoyed very substantial improvements. If we look at this from a financial point of view, we’ve realized a return on investment (ROI) of 300 percent in year one and, looking solely at the cost to fix and the cost of failure in terms of not offering optimal service quality, we’ve been able to realize cost savings in the region of €1.2 million OPEX through this journey.

Gardner: Let me just dig into that ROI. That’s pretty amazing, 300 percent ROI in one year. And what was that investment in? Was that in products, services, consulting, how did you measure it?

At a customer satisfaction level, we’ve seen similar improvements that correlate with the improved operational KPIs.



Gaffney: Yes, the ROI is in terms of the expenditure that would have related primarily to our investment in the HP product portfolio over the last year as well as a smaller number of ancillary solutions.

The payback in terms of the benefits realized from financial perspective that relate to the cost savings associated with having fewer issues and in the event where we have issues, the ability to detect those faster and spend less labor investigating and resorting issues, because the tools, in effect, are doing a lot of that legwork and much of the intelligence is built in to that product portfolio.

Gardner: I suppose this would be a good time to step back and take a look at what you actually do have in place. What specifically does that portfolio consist of for you there at Vodafone Ireland?

Gaffney: We have a number of modules in HP's APM portfolio that I'll talk about briefly. In terms of looking to get a much broader and richer understanding of our end-user experience which we lacked previously, we’ve deployed HP’s Business Process Monitors (BPMs) to effectively emulate the end-user experience from various locations nationwide. That provides us with a consistent measure and baseline of how users experience our services.

We’ve deployed HP Real User Monitoring (RUM), which gives us a comprehensive micro and macro view of the actual customer experience to complement those synthetic transactions that mimic user behavior. Those two views combined provide a rich cocktail for understanding at a service level what our customers are experiencing.

Events correlation

We then looked at events correlation. We were one of the first commercial customers to adopt HP’s BSM version 9.1 deployment, which gives us a single pane of glass into our full service portfolio and the related IT infrastructure.

Looking a little bit more closely at BSM, we've used HP’s Discovery and Dependency Mapping Advanced (DDMa) to build out our service model, i.e. effectively mapping our configuration items throughout the estate, back up to that top-down service view. DDMa effectively acts as an inventory tool that granularly links the estate to service. We’ve aligned the DDMa deployment with our service model which, as I mentioned earlier, is integral to our transformation journey.

Beyond that, we’ve looked at HP’s Operations Manager i (OMI) capability, which we use to correlate our application performance and our system events with our business services. This allows our operators to reduce a lot of the noisy events by distilling those high-volume events into unique actionable events. This allows operators to focus instead on services that may be impacted or need attention and, of course, our customers and our business.

We’ve gone farther and looked at ArcSight Logger, software which we’ve deployed to a single location that collects logged files throughout our estate. This allows us to quickly and easily search across all logged files for abnormalities that might be related to a particular issue.

By integrating ArcSight Logger with OMI -- and I believe we’re one of the first HP customers to do this -- we’ve enriched operator views with security information as well as the hardware, OS, and application layer events. That gives us a composite view of what’s happening with our services through multiple lenses, holistically across our technology landscape and products and services portfolio.

A year ago, we were to a degree reactive in terms of how we provided service. At this point, we’re proactive in how we manage services.



Additionally, we’ve used HP’s Operations Orchestration to automate many of our routine procedures and, picking up on the ROI, this has allowed us to free up operators’ time to focus on value-add and effectively to do more with less. That's been quite a powerful module for us, and we’ve further work to exploit that capability.

The last point to call out in terms of the HP portfolio is we’re one of the early trialists of HP’s Service Health Analyzer. A year ago, we were to a degree reactive in terms of how we provided service. At this point, we’re proactive in how we manage services.

Service Health Analyzer will allow us to move to the next level of our evolution, moving toward predictive service quality. I prefer to call the Service Health Analyzer our “crystal ball,” because that’s essentially what we’re looking at. It’s taking trends that are occurring with the services of transaction, and predicting what's likely to happen next and what may be in jeopardy of breaking down the line, so you can take early intervention and remedial action before there’s any material impact on customers.

We’re quite excited about seeing where we can go there. One of the sub-modules of Service Health Analyzer is Service Health Reporter, and that’s a tool that we expect to act as our primary capacity planning capability across a full IT estate going forward.

Throughout our implementation, partnership was a key ingredient to success. Vodafone had the business vision and appetite to evolve. HP provided the thought leadership and guidance. And, Perform IT, HP's partner, brought hands-on implementation and tuning expertise into the mix.

Gardner: That’s very impressive. You’re certainly juggling a lot of balls and keeping them in the air. One of the things that I've seen in the market when it comes to gaining this sort of pane of glass view into operations is they’re starting to share that as sort of a dashboard, or a graphical representation as a scorecard perhaps we could refer to it, with more of the business leadership.

Have you been able to take some of the analysis, and insights and then not just use that in the context of the IT operations, but provide it back to business, so it would help them manage their strategy and operational decision making?

Full transparency

Gaffney: Absolutely. One of our core principles throughout this journey has been to offer full transparency to our customers in terms of the services they receive and enjoy from us. On one hand, we provide the BSM console to all of our customers to allow them to have a view of exactly what the IT teams see, but with a service orientation.

We’re actually going a step further and we’re building out a cloud-based service portal that takes a rich feed in from the full BSM portfolio, including the modules that I've called out earlier. It also takes feeds in from a remedy system, in order to get the view of core processes such as incident management, problem management, change management.

Bringing all of that information together gives customers a comprehensive view of the services they receive from IT operations. That's our aim -- to provide customers with everything they need at their fingertips.

It's essentially providing simple and meaningful information with customized views and dynamic drill-down capabilities, so customers can look at a very high level of how the services are performing, or really drill into the detail, should they so desire. The portal, we believe, is likely to act as a powerful business enabler. Ultimately, we believe there's opportunity to commercialize or productize this capability down the line.

The portal, we believe, is likely to act as a powerful business enabler. Ultimately, we believe there's opportunity to commercialize or productize this capability down the line.



Gardner: We’re about out of time, but Shane, now that you've gone through quite a bit of this, and as an early adopter, I wonder if you could share some 20-20 hindsight for those users around the world who are examining some of the products and services available, thinking about culture, re-emphasizing the business process issues, rather than just pure technology issues. What would you tell them as advice when they get started? Any recommendations now that you've been through this yourself?

Gaffney: For customers embarking on this type of transformation initiative, first off, I would suggest: engage with your customers. Speak with your customers to deeply understand their services, and let them define what success looks like.

Look to promote quick wins and win-wins. Look at what works for the IT community and what works for the customer. Both are equally important. Buy-in is required, and people across those functions all need to understand what success looks like, and believe in it.

I would recommend taking a holistic approach from a couple of angles. Don’t just look at your people, technology, or processes, but look at those collectively, because they need to work in harmony to hit the service quality sweet spot. Holistically, it's important to prepare your strategy, but look top down from the customer view down into your IT estate and vice versa, mapping all configuration items back into those top level services.

Rationalize and automate

Rationalize and automate wherever possible. We had a suite of over two dozen tools, acting as a cumbersome patchwork solution for operators. We’ve vastly rationalized those tools into a much more manageable single console that the teams use now.

We’ve automated all resource-intensive and transactional activities wherever possible, which again frees up time to allow engineers to focus on the business relationship.

I’d also recommend the people incrementally build on success. We started out with modest budget, but by targeting early wins through that investment, and by building subsequent business cases, particularly with the service model, we were easily able to get the buy-in from stakeholders, because the story was compelling, based on the commercial advantages and the broader business benefits that were accrued from the earlier investment.

Lastly, for IT teams I would strongly suggest that you look to establish a dedicated surveillance capability, whether that’s round the clock or whatever is appropriate for your business model. Moving from a traditional support model to this type of service-oriented view, the key to success is having people managing the eyes and ears across your services at all times. It really does pay back in spades.

We’ve automated all resource-intensive and transactional activities wherever possible, which again frees up time to allow people focus on the business relationship.



Gardner: Excellent. A big thank you to you Shane Gaffney, Head of IT Operations at Vodafone Ireland. This has been a great story, and thank you for sharing it on how a shift from technology emphasis to a business services delivery emphasis has created some significant improvements and has set the stage for yet greater business productivity from IT.

I also want to thank our audience for joining us for this special BriefingsDirect podcast coming to you in conjunction with the HP Discover 2011 Conference in Vienna. I hope you have a great show. I appreciate your time, Shane.

Gaffney: Thank you, Dana.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this series of HP-sponsored Discover live discussions. Thanks again for listening and come back next time.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: HP.

Transcript of a BriefingsDirect podcast in conjunction with HP Discover 2011 in Vienna on how a major telecom provider has improved service to customers by shifting from a technology emphasis to business service delivery. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

You may also be interested in: