The Best of Service Strategy, Part 3
The Fundamentals of Portfolio Management
Originally Published June 14, 2011
IT must begin to align with drivers of business value other than just managing infrastructure and applications. In order for IT to organize its activities around business objectives, the organization must link to business processes and services, not just observe them. IT leadership must engage in a meaningful dialogue with line-of-business owners and communicate in terms of desired outcomes. We have to become a Business & Service oriented organization.
The transition from managing infrastructure to managing services is a fundamental cultural shift for many organizations. Managing infrastructure requires a focus on component operational availability, while managing services centers on customers and business needs. In order for us to link service assets to business services we must first begin to develop a portfolio of services using the following work methods.
Define: Begin by collecting information from all existing services as well as every proposed service. Every proposed service would even include those in a conceptual phase. Document all services the organization would pursue and develop if it had unlimited resources, capabilities and time. This documentation exercise is to understand the opportunity costs of the existing portfolio. If a service provider understands what it cannot do, then it is better able to assess if it should keep doing what it is doing.
Analyze: This step must be understood and documented at the beginning of the define phase of this exercise. If we do not understand what analysis will be performed then we will collect inaccurate, incomplete and irrelevant data.
This is where we begin to align our IT strategy to the overall business strategy. We do this with the following questions.
- What are the long-term goals of the service organization?
- What services are required to meet those goals?
- What capabilities and resources are required for the organization to achieve those services?
- How will we get there?
Approve: This is where we authorize new or existing services and resources. The approval or disapproval of this future state takes place. Approval of these new or existing services will fall into six categories:
- Retain – largely self-contained, with well-defined asset, process and system boundaries, these services are aligned with and are relevant to the organization’s strategy.
- Replace – these services have unclear and overlapping business functionality.
- Rationalize – often organizations discover they are offering services that are composed of multiple releases of the same operating system, multiple versions of the same software and/or multiple versions of system platforms providing similar functions.
- Refractor – often services that meet the technical and functional criteria of the organization display fuzzy process or system boundaries. An example would be a service handling its own authentication or continuity functions. In these cases, the service can often be refactored to include only the core functionality, with common services used to provide the remainder. Refactoring is also useful when a service embeds potentially reusable business services within itself.
- Renew – these services meet functional fitness criteria, but fail technical fitness. An example may be a service whose fulfillment elements include a mainframe system and frame relay network that still supports business critical processes where the strategic direction of the organization is to retire the mainframe platform and source an MPLS (Multi-Protocol Label Switching) WAN.
- Retire – services that do not meet minimum levels of technical and functional fitness.
Once this has been accomplished the expected value of each service should be built into financial forecasts and resource plans. By tracking each of these metrics we should be able to track the progress of our investments.