Develop a Service Catalog

The first step in preparing for sourcing is to define the range of IT services currently being delivered. For many mature organizations this information should already exist in the form of a service catalog. A service catalog defines IT services in terms easily understood by business users. Each service has the following minimum information:

Creating a Service Framework

Traditionally, organizations develop, implement and change IT services in a evolutionary process. Although change management may occur at a functional level (e.g. server infrastructure, software development or network management) to ensure service quality, few organizations have reached the level of having a complete service architecture that integrates all aspects of service delivery and service management. Even fewer are able to integrate this architecture with traditional technology architectures and data models. The result is a collection of processes, delivery teams and infrastructure that have dependancies that are not well documented or understood. In such an environment, the impact of changing to a sourced relationship for service delivery may have a severe negative impact on service quality and performance.

With a good understanding of the IT services being provided by the enterprise through the service catalog, the next fundamental step is to create an architecture for service delivery. The service delivery architecture, or service framework, is made from a collection of reusable modular components.

To identify these modular functional components and build a service framework, enterprises must first understand what processes, input/outputs, service levels, infrastructure and delivery teams are involved in delivering each service.

This information can help easily identify the functional components that are required to create the service framework. A hub must have the following attributes:

The service management hub is the essential hub for every service framework in the enterprise's service catalog. It defines the SLA, customer relationship and service management processes between the IT department and business users.

Using this modular approach for re-engineering existing IT services, enterprises are able to create a unbroken chain of service delivery that includes ownership, measurement and component SLAs. This will help enterprises identify, diagnose and improve their ability to meet SLAs with business users. The service framework provides maximum flexibility to sourcing delivery of entire service frameworks or functional components according to the strategy that best suits the organizational requirements without compromising service quality.

Baselining

One of the most difficult parts of developing a sourcing strategy is identifying what should be outsourced and what level of service should be expected. A key instrument in understanding these areas is the collection of information on the current situation through the process of baselining, establishing a quantitative measure of the current state of service delivery in four areas, including:

The most difficult of these process is financial baselining. The ability to attach cost of delivery to specific services is impeded by the complicated way IT services have evolved. A lack of documentation of resources and processes limits the ability to do a formal service-based costing financial model. As mentioned in the previous section, creating a modular service framework with defined process, input/outputs and service levels is crucial to successful financial baselining. Using the definitions of the services frameworks and functional components, the amount of resources, including technology and people, can be calculated. If it exists, the business continuity plan is also a crucial source of information for assessing the business value of IT services. A business continuity plan should outline the costs of loss of service, including qualitative and quantitative values.

For a mature organization, service quality baselining should be a basic part of IT service management. Organizations should regularly measure and report the critical parameters that contribute to user satisfaction and business value. In addition to this, the input/outputs of the functional components that make up the service framework should also be measured and reported, if only to the internal IT organization. This is essential if the sourcing strategy includes sourcing a functional hub (e.g. network management) but not the entire service framework. These hub measurements will also feed into the Service Improvement Plan (SIP), as improving each hub will help improve the overall framework. In addition, a baselining process should be performed on VOC to understand user satisfaction and requirements.

An assessment of the current service delivery capability is a critical factor in determining the SIP. An audit of service management and delivery processes will identify areas of improvement. These improvements will need to be agreed upon with the provider as part of the sourcing process. An assessment should measure the service management and delivery processes against industry best practices. The Sun IT Management Framework is an example of this, as it combines a number of industry frameworks and proprietary solutions. The assessment should specifically identify areas which require immediate attention prior to, or immediately after, outsourcing occurs.

Finally, but not least important, is a skills assessment and audit. Included in this process is a definition of roles and responsibilities. This allows an organization to clearly define the skills and roles required from the service providers' delivery organization. This baselining process will also contribute to the development of the organizational transformation.

Baselining resolves big issues for both the enterprise and prospective partners. The collection of baseline data allows the enterprise to understand the state of what is being sourced. Accurate information on the current state of delivery reduces risk for both the organization and provider, helping lower risk margins built into pricing and resourcing of a sourcing solution.

Preparing for Change

The implementation of any sourcing strategy, big or small, can have a significant impact on the enterprise. It may threaten employees' views of job stability and lead to the creation of a new organizational culture. This type of change requires a specific focus on change acceptance.

At the heart of any change effort is the people who make commitments to move the change forward. The objective of change acceptance is to have that individual effort mobilized and committed. As outlined in Figure 4 below, all of the other activities touch it, are linked to it, and drive toward it.

From the previous work completed in preparation, enterprises should now have enough information to engage in a complete change acceptance program, which requires the following key features: