Success Factors and Key Performance Indicators of IT-Service Portfolio Management
IT-Service Management in the age of digitization
In the age of digitization, the number of IT-services to be managed in organizations is heavily increasing. Value creation is founded on value driven IT-Service Management and effective holistic IT decision making requires high-class IT-Service Portfolio Management (IT-SPM) capabilities. The study sheds light on advanced IT-SPM cross-industry best practices, with experts and tool providers sharing valuable insights and success factors.
Based on 3DSE cross-industry consulting experience, best practices regarding the application of IT-SPM have been identified and structured. In doing so, scoping key insights on status quo and latest trends in IT-SPM application, expert-interviews have been processed. The study’s participants come from the ranks of the market leaders in automotive, industrial, semiconductor, chemistry, home appliance, defense and space, complemented by IT-tool, service and solution providers.
In this study, two main aspects were examined in particular. Firstly, a rather operative aspect of IT-SPM was considered, namely the role of Key Performance Indicators (KPIs). Here, some of the core questions were: Which specific KPIs should be selected for IT-SPM? How do operational and financial KPIs correlate? What implications can be derived from the results? Apart from this, insights were gained on which new technologies or innovations will shape future IT-SPM. Secondly, IT-SPM was approached in a more strategic and holistic manner. Therefore, five dimensions have been identified, which need to be considered for heading towards a high-class IT-SPM. For each dimension, respective recommendations have been mapped out.
Key insights regarding the usage of KPIs and new technologies in IT-SPM
Valuable IT-service portfolio management KPIs are those that answer the following key question: How does the overall IT service portfolio improve the business products, services and processes? For example, such qualitative and quantitative KPIs give indications on: “Will we as a company increase business value, be faster, reduce our costs, make life of our customers easier and differentiate in the market?”
The study indicates that there is no “one best” correlation of operational and financial KPIs. Instead, the best correlation and related informative value is strongly depending on the overall company, market and IT service portfolio strategy. In highly mature companies, IT-SPM automatically provides the KPIs and correlations for effective decision making and tradeoffs. It enables real-time deep dives on relevant operational and financial data.
Senior management uses these KPIs as recommendations to get a better understanding of IT service value. The goal is to optimize the overall IT service portfolio by making conscious decisions based not only on gut feeling and common sense but the best available data-set. Several highly mature IT-SPM users design proprietary tool solutions showing potential for further innovation in the IT-SPM tool market, since specific aspects are not covered by available commercial solutions. Most frequently, study participants mentioned artificial intelligence and business process automation as technologies for future IT-SPM.
Five dimensions for achieving high class IT-SPM
Applying a high-class IT-SPM means considering it in five different dimensions. Those are: portfolio strategy, IT-Technology, process & working model, organization and culture.
Establishing a portfolio strategy means first of all mapping out the point of departure by identifying the current IT-SPM status quo, trends and upcoming or expected business capabilities. Based on this analysis, an individual IT-service portfolio strategy and roadmap needs to be set up. This strategy should align smoothly with the company’s digital strategy and prioritized business objectives. It is crucial to understand the decision-making process of KPI-users (executive users) and to establish major reporting and steering (leading) KPIs/correlations. In order to become a value business partner, IT-SPM must be thought in terms of value. Furthermore, digital business opportunities and business models must be investigated.
Concerning the dimension IT-Technology, the first step consists of creating transparency on IT structure, IT cost structure and IT consumption. This goes in hand with, e.g., identifying cost drivers, consumption of services and services variants. Creating visibility and transparency, especially with regards to IT-SPM, further means opening up the service catalogue. It must be clearly understood, which services are available, which user groups are targeted and who is in charge. IT-SPM must consider user experience and enthusiastic customers. Hereby, agile and DevOps techniques achieve continuous value delivery. To fully leverage this dimension, it is crucial to maximize performance, implement scalability and IT-security, raise efficiency and enable automation.
High-class IT-SPM further builds on processes & working models. The basis thereof is high process maturity, consequent standardization and reliable data quality. While improving this dimension, it is recommended to start small and scale on demand. It is best practice to establish End-to-End responsibilities such as empowered teams, service managers, business relationship managers or agile roles. To become partner of the business, with regards to this dimension, it is vital to link IT and business in cross-functional teams and set up strategic team incentives.
Approaching the dimension Organization begins by structuring the backbone of the IT-Service portfolio, e.g. service-clusters, the IT-product structure or the business capabilities structure. Here, too, it is indispensable to provide transparency covering organizational structures, responsibilities, processes and working models. Based on these fundamentals, more advanced practices can be established such as agile budgeting and resource-planning or BizDevOps and close IT-to-business collaboration. Lastly, organizations must be built around value. In the long term, this requires understanding the business value chains and their potential for automation.
The dimension Culture is often underrated yet nonetheless necessary to complete the holistic view on IT-SPM. Similarly to Peter Drucker’s statement: “Culture eats strategy for breakfast”, improving this dimension first of all requires communication and raising awareness of the importance of IT-SPM in a “Digital Enterprise”. However, it also means balancing process compliance with breakthrough innovation and entrepreneurship. This can be achieved by actively creating opportunities for conversation and exchange. Addressing improvements with regards to culture necessarily requires growing with internal and external partners. Means of doing so are establishing digital leadership, empowerment, digital learning culture and inspect-and-adapt opportunities. Finally, a culture facilitating IT-SPM is topped off by customer centricity and 360° feedback loops aiming towards business, customers, developers and services.
In short, these five dimensions can be understood as the breeding ground for a sustainable implementation of advanced IT-SPM. That said, users should keep in mind that customized application is key, since there is no “one-size-fits-all” solution.
How to get started with setting up an advanced IT-SPM
Even though there is no single “one-size-fits-all” solution, neither from an operative nor from a strategic perspective, there is a rather generic approach for companies to get started and figure out their very own solution. Implementation thereof should be approached in four steps.
- Analyze maturity of the current IT-service portfolio management.
- Determine as-is-business value of IT-service portfolio.
- Define vision and identify optimization potential in IT-service portfolio.
- Optimize IT-service portfolio to you own needs based on the insights described above.
These days, nearly all industrial companies are forced to consider some IT service management fundamentals. Only few of them address holistic IT service portfolio management as well. In light of the digital economy, however, IT-SPM is becoming increasingly important in terms of value creation and strategy. We see IT-SPM as an integral and indispensable part of every corporate strategy and support our customers in its realization and establishment.
Are you interested in more details on the topic? Please see the whole study report of our IT-SPM Study.