First in a Ten Part Series
By Chad Greenslade
I have often been asked about my lessons learned in implementing an IT Service Management (ITSM) tool. Below is the first in a ten part series examining my ITSM lessons learned. I hope that these lessons help you on your journey to ITSM nirvana.
Lesson #1: Beware of the Integrators. An “Integrator” is a third party professional services firm that will help you to setup and deploy your selected ITSM tool. Unless you have requisite development, configuration, and strategy skills & expertise in your organization, you will need to contract with an integrator to get your ITSM platform launched. The key thing to remember is that the contract between you and your selected integrator is no different than any other professional services consulting engagement; you must clearly define scope, deliverables, acceptance criteria, etc. Most of these agreements will center on the modules you want to develop and deploy. Keep in mind that the overarching strategy is YOURS! Don’t rely on the integrator to tell you how the modules you’ve asked them to develop and deploy will fit with your overall strategy. While some integrators can offer some level of strategy expertise, the strategy completely depends on your organization’s dynamics and the desire to bring selected modules to market. The bottom line is that the modules defined in the integrator agreement will be the sole focus of the integrator. They will attempt to finish the development and release of the contracted modules as quickly as possible, and then move on to the next engagement. If your organization is not ready to accept their work and deploy into production, your organization may incur additional cost or rework as the overarching strategy evolves.
An Important Policy Decision
By Chad Greenslade
An important policy decision to be made is whether IT will be a profit or cost center. This is a decision made by the organization’s executives, not by IT management. This is because IT, as a business unit, is subject to the same governance as any other business unit. Although IT executives may be asked to participate in making that decision, this is ultimately a matter of enterprise financial policy. Definition of these two options are:
(1) Cost Center: Two (2) definitions for the term “cost center” are commonly used in business. Although they appear close in meaning, they are different. In this context, the term is used to indicate a business unit or department to which costs are assigned, but which does not charge for services provided. It is, however, expected to account for the money it spends, and may be expected to show a return on the business’ investment in it. A cost center is able to focus awareness on costs and enable investment decisions to be better founded, without the overheads of billing. However, it is less likely to shape users’ behavior and does not give the IT organization the full ability to choose how to financially manage itself (for example, in funding IT investment). The other definition for the term “cost center” is used in the context for accounting. In this context, a cost center is anything to which a cost can be allocated (for example, a service, location, department, business unit, etc.). They also provide meaningful categories for allocating and reporting costs so that they can be understood and influenced by a wide audience. Care should be taken to read the context of the term to ensure the correct meaning is inferred.
(2) Profit Center: A business unit that charges for providing services is a “Profit Center”. A profit center can be created with the objective of making a profit, recovering costs, or running at a loss. As a profit center, IT is able to exercise greater autonomy, even to the extent that it can be operated as a separate business entity, under the ownership and direction of the corporate entity. IT will also be able to achieve better cost control over service provision and calculate the true costs of IT by customers. Charging other business units in the same organization can be useful in demonstrating the value that the service provider delivers, and in ensuring that funding is obtained from an appropriate source (i.e. the customer that uses the services).
Chad Greenslade studied Information Systems at the University of Texas at Arlington and graduated Magna Cum Laude.