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“Business does not know what services that will require in the next 12 months period, but only that for any given time, wants the IT services needed to be successful, without any trouble or discussion– and in a cost efficient way. Total flexibility – is that even possible?“

Approximately 15 years ago, I travelled to Japan to do an internship at a Swedish company. It was a fantastic period of my life giving me valuable experience. I lived in a small suburb to Tokyo called Hiratsuka, which was larger than almost all Swedish cities. Anyway, one thing I remembered was the local convenience store called Lawson and how they used sales data, on weekly bases, to optimize sales and customer experience. What I remember, they re-arranged all products in the store according to the latest sales figures. The best sellers where placed in the premier positions for customer convenience, while products with weak sales were phased out. New products and service were constantly tested in the same way catching the latest trends and innovations. They also added new services (for example paying bills, getting post parcels, photocopying, cellular phone subscriptions, getting your film developed, etc) that the customers requested for convenience and scored high on evaluations. The whole service offering was managed very dynamically based on local demand – not by central directives. This is for me the ideal system of service management. What can IT learn from the Lawson’s dynamic service management system?

Traditional IT organization uses the IT Service Catalogue to define what and how IT services are provided to business. The performance (value creation) of the services is then linked to the Service Level Agreements dictating how and when the services are available. IT Service Management is generally based on two assumptions. First, that the business demand is constant over a long period of time. This means that service provided today will also be requested tomorrow or in three years. Secondly, that IT success is defined as ITs ability to meet agreed SLAs. This means that “green” SLAs is the ultimate definition of IT success (value creation) since IT delivered what is expected. Great!

But, the demand on the IT organization is undergoing rapid change. The increasing effects of business digitalization and unpredictability are changing business demand – and the validity of the two assumptions. The change is described in the “new normal” rules stating what business request from IT:

  • Business has no patience for non-relevant information (IT reports in IT language)
  • Business requirements will change constantly (unpredictability)
  • Business wants to be approached in different ways depending on situation
  • Business wants the services they need to be successful (not what IT provides)
  • Business wants their services immediately without trouble!

Business does not know what services that will require in the next 12 months period, but only that for any time, wants the IT services needed to be successful, without any trouble or discussion– and in a cost efficient way. This seems to be an impossible equation but necessary for business to compete. That is the new normal situation in a nutshell. The effects of the “new normal” are that the two basic assumptions are clearly wrong. What is the consequence of the failure of the two assumptions?

To fulfill future dynamic business demand on IT services, IT need to work in a similar way as the Lawson convenience store. The Service Catalogue need to be a dynamic document where services are constantly challenged on weekly or monthly based on business value creation and level of demand. Services in high demand will be very convenient for business while service of low demand will be phased out. A stream of new innovative services will be tested and evaluated based on the value it created for business.

A dynamic service management would require a different kind of IT governance and strategy – based on the Lawson concept. The agility of the IT organization (based on Agile IT Performance Management) is key for a dynamic service management in the future. As a countermeasure to the “new normal” rules and displayed earlier in the blog post, The Goodwind Company has defined six rules of Agile IT Performance Management that supports the Lawson concept.

  •  Knowledge and understanding of business strategic objectives and its environment are the key assets of a valuable IT organization
  • Time (to market of value creation) perspective in IT Strategic planning cycle is limited and a function of the unpredictability in business environment (rate of change)
  • Value of IT is based on fulfillment of the business expectations on IT
  • A performance culture is based on innovation, adaptively, self-governance – and TRUST!
  • Performance management is supported by a number of enablers that drive performance in organization.
  • Change capacity is the engine for transforming IT in creating better IT value. Reward business value creation rather than control.

(The Six Rule of Agile Performance Management, The Goodwind Company, 2013)

The idea of dynamic IT management and dynamic service management is to optimize use of IT services and business value to support business competitiveness in an unpredictable environment. The Six Rules of Agile Performance Management are based on this idea and a good starting point.

Recommendations:

  1. Ask yourself three questions: How dynamic is your service management system? What assumptions do you live by? What is the reaction from business?
  2. View Service Management as a dynamic tools to optimize business value. It is possible but will require a more dynamic IT management and performance management.
  3. Contact The Goodwind Company for coaching and support! We have excellent knowledge and experience in setting up Agile Performance Management and Dynamic Service Management systems.

The Lawson convenience store was often very busy and open 24 hours per day. The true convenience and customer driven store was very successful with over 11,000 stores through out Japan and expanding into neighboring countries. Imagine business running into IT using the Lawson concept with the best IT services (based business strategy, demand, and innovation) at the time, at best possible prices and with right capability to deliver. Then IT is truly a business enabler! Sadly, many IT organizations are far from the Lawson concept and would probably go out of business under normal business circumstances.

– Hans Gillior

Hans Legend 1