Say you want to build a car to your exact specifications. You don’t want to read the hieroglyphics of technical sketches, stress test results or lists of spare parts in Excel spreadsheets. You want to know the standards and the extras, the combinations and the price tags, and you want it nicely presented in a way that helps you compare prices and performance in the market. In the end, you want a car that meets your needs and your budget.
In this situation, both sellers and buyers depend on a catalog; it is their number one tool for communication and commercial negotiation. So why can’t IT operate this way?
Here are the Top 5 ways to build an effective IT service catalog for a state-of-the-art IT organization.
1. Describe your IT offerings in a comprehensive way that suits different audiences. Most companies have problems articulating their IT services properly to their buyers, but it needn’t be that difficult. A catalog should describe how IT works, how services are bundled and how much they cost in a way that people in different contexts can apply them to their own business needs. Once established, the service catalog can be automated to help better steer demand, size supply, innovate more quickly, and facilitate sourcing initiatives.
2. Use the opportunity to standardize and innovate. A significant portion of the infrastructure and application portfolio should be standardized in both operations and description. Standardization, and the typically lower costs it brings, creates financial headroom to more easily fund and embed innovation. Because the service catalog engenders standardization, it is the perfect discipline to drive substantive portfolio transformation.
3. Keep services commercially competitive through benchmarks and a consumption-based charge-back system. Benchmarking helps create competitive pricing and provides insight into optimal service designs, bundling, service level agreements, volumes and contracting. Think of competitive transparency as a part of the DNA of your fact-based management and consider applying Technology Business Management (TBM), a method that helps improve decision making by delivering transparency on performance and cost. A consumption-based charge-back/show-back model should be easy to understand, transparent to everybody and commercially up-to-date.
4. Pick your battles. Early service catalog projects often missed the mark, describing every single mouse pad, and resulted in a portfolio of more than 600 services with multiple configuration alternatives. This was a waste of effort; end-users thought it too cumbersome to use. The right number of services depends on the level of granularity you wish to design, but if you describe more than 150 “consumable” services in infrastructure, you should consider consolidating.
5. Plan a tiered approach over time. Attempting a big bang service catalog project will surely fail. Start with the infrastructure in a certain division or geography, and use as much boilerplate language for standard services as you can find. There is no need to describe a back-office desktop for the thousandth time. Then expand coverage into certain applications or extend organizational reach. Finally, describe full business services so they include the business processes bundled with the application and infrastructure services for dedicated business users.
A solid service catalog is the primary communication and business interface for clients, and it is a crucial tool for managing services both internally (in maintaining operating level agreements) and externally (in maintaining service level agreements). Because it creates a magic triangle—the customer and internal and external operations—the service catalog is the nucleus of IT. Once the catalog is defined and put to work organizationally, a wave of efficiency washes through the organization. Communication improves with your customers who now see and feel business value. The money flows where it belongs and is more easily tracked. Providers have a roadmap to follow, and you have a market comparison to measure performance. With an IT service catalog, you can begin to run IT as an effective and mature business, the way automakers do.
ISG uses the principles of Technology Business Management to help enterprises create effective IT service catalogs and improve their IT organizations. Contact me to find out more.About the author
Mr. Mueller-Herbst is Partner at Information Services Group US. He heads the US TBM (Technology Business Management) practise and globally the Business Development for ISG’S Analytics Service Lines and, covering the benchmarking, TBM and strategy practises of ISG. He manages clients in the pharmaceutical, chemical, logistics, media and finance industry.