While ITIL, the most widely accepted collection of best practices for IT Service Management (ITSM), has taken an important first step in evolving its guidance on outsourcing within the context of ITSM in its 2007 Version 3 release, it may have fallen short on providing the breadth of advice required in today’s market. Of particular note is the introduction of a few integral sourcing-related frameworks, including Service Provider Types in the Service Strategy core book and Service Delivery Strategies in the Service Design core book. Service Design has also consecrated a separate process to Supplier Management aimed at addressing service provider selection and relationship management activities.
While these additions can be seen as improvements over ITIL V2, the overall approach to engaging with suppliers in ITIL V3 could be construed as overly procurement-focused and lacking in sufficient guidance on the level of integration and governance required across the service delivery value network and service lifecycle. Also unclear is the extent of the intermediation required of the client- retained IT organization to effectively integrate outsourced IT services and translate them into value for its business customer.
To help navigate the new sourcing related ITIL V3 guidance and bridge your ITSM and outsourcing strategies, consider these Top 5 tips:
1. Ensure service management integration is appropriately resourced in the client-retained IT organization. While Supplier Management can serve as the point of contact for relationships with external service providers, these resources typically do not have the skills or capabilities to integrate service management processes across organizations in an outsourced model. When service management remains a client-retained function, we recommend giving ITIL service managers the responsibility to integrate outsourced IT services to ensure effective end-to-end service delivery, separating this from the Supplier Management responsibilities in the organization.
2. Take a pragmatic approach to integrating ITSM processes and tools. When entering into outsourcing agreements, be sure to define the integration points, handshakes and required inputs and outputs across all ITIL processes and functions — particularly Service Desk, Incident Management, Problem Management and Change Management — between organizations in the service delivery model. Bear in mind that external service providers will have their own processes and tools, which will need to align with those of the client-retained IT organization. Do not over-engineer this integration but do consider moving to the service provider’s methodologies if they are more sophisticated. Note that this exercise becomes increasingly complex the more service providers in the service delivery model (see tip number one). At a minimum, make sure all parties are clear on who is ‘leading’ and who is ‘following’ and make sure these roles are documented in the various outsourcing agreements.
3. Implement a business-focused Service Catalog. Define your Service Catalog first in terms of the services delivered to the business customer (Business Service Catalog) and then work backwards to define the contributing IT component-based view (Technical Service Catalog). This will help ensure that the right resources and capabilities to deliver to the business service requirements are identified and will clarify the optimal sourcing mix for the service. Do not use the external service provider’s Technical Service Catalog as your Business Service Catalog.
4. Negotiate a Service Level Agreement with end-to-end service levels. Do not begin service level discussions with suppliers without having first implemented a formal Service Level Agreement (SLA) with your business customer. Formalize end-to-end service levels in a business-focused SLA and define the IT component service level targets in Underpinning Contracts with external service providers and Operating Level Agreements with internal service providers. Always ensure that the combination of these targets will meet the service levels agreed to in the SLA. Lastly, remember that an Underpinning Contract is never a surrogate for an SLA with your business customer.
5. Look beyond ITIL for IT governance. Against the backdrop of corporate malfeasance and recent legislation aimed at preventing it, corporate governance — of which IT governance is a subset — has taken on a renewed focus in business. While ITIL V3 does broach the subject of IT governance, particularly in IT Service Continuity Management and Information Security Management, Supplier Management provides only limited guidance on IT governance related to sourcing. For this, a number of other frameworks can be consulted. Of particular note is COBIT (Control Objectives for Information Technology), which is prescriptive on what to monitor and control and serves as a compliment to ITIL, which advises on how to implement monitoring and control as process activities.
TPI’s certified ITIL Experts can help you achieve your sourcing and ITSM goals through objective advice, knowledge of your industry and experience with arrangements from simple to complex. Contact us to learn more.
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