Show me the value!

With companies spending millions, sometimes billions, on IT, HR and other business services, management needs greater oversight and accountability for both outsourced and insourced services. Business units want assurance that they’re getting charged correctly for services, and want to see detail on service consumption. Service organisations want to be able to demonstrate how they’re adding value to the business. Upper management wants to know how business services are impacting business objectives, how their actual costs compare to budgeted costs, which services are delivering the most business value – in short, how they can get the most value for each service euro spent.

All of these needs can be addressed through the automation of service level agreements (SLAs) – the business and contractual obligations that define the specific service levels and expectations between business units and their internal service organisation with mutual agreements, and using contractual agreements between the enterprise and their outsource service providers. SLA management automation has emerged as one of the best ways to successfully manage business services, whether insourced or outsourced.

“Service level agreements are one of the most critical factors for success in managing services since they clarify the business and contractual obligations between the provider and enterprise customers, thus laying the foundation for mutual trust between these partners,” says Linda Cohen, Vice President and Distinguished Analyst, Gartner.

Software that automates the management of service level agreements provides a shared system of record or ‘single version of the truth’, ensuring that all parties are working toward the same performance goals, providing a platform for collaboration and a host of key management reports and processes essential to achieving maximum business value from your IT, HR and other business services.

Through SLA management automation, business leaders can keep their fingers on the pulse of service delivery, with online dashboards that are continually refreshed and automatically generated reports that provide metrics, summaries, ratings of service delivery, and service cost information. For the service delivery teams, proactive alerting is invaluable to stay ahead of problems before customers experience service problems. When issues arise they have the ability to drill down to find the root cause of any issue with multi-dimensional analysis to look at business services from any perspective, such as individual services by geography, business units, functions, time and performance categories.

SLA management automation brings additional capabilities for baselining, which means that management can budget cost-effectively for business services based on detailed past consumption. In addition, through benchmarking capabilities, management can make informed decisions on the optimal mix of insourced versus outsourced services and resource allocation.

A number of SLA management characteristics are important to truly measure, control and communicate business value being delivered from your service organisations today:

Market service offerings through a service catalogue

Service catalogue capabilities in advanced SLA and cost management systems can yield significant benefits in standardising service offerings and marketing these services across the business. This enables service organisations to more effectively market available service offerings to business units. In addition, these service organisations can reduce the cost to serve through powerful capabilities for better analysing their service offerings in detail, understanding the basis of service costs, and devising new, less expensive alternatives.

Manage business value delivered

Armed with granular performance and cost information, both by service lines delivered and by customer, service organisations can better manage the value they are delivering to the business. As a result, organisations can better leverage customers and services that are performing well, and take steps to improve in areas where business value is weaker.

Sophisticated service (chargeback) billing

Service billing (also known as departmental chargeback) splits the overall service costs and overhead/operating margin among the business units that consume the services. By harnessing sophisticated consumption-based service billing capabilities, business unit managers, regional managers and other executives gain greater insight into their usage and become more accountable for the services their groups consume – and better identify opportunities for savings and optimised resource utilisation.

Enable management of actual service cost vs budget

Effective cost management capabilities enable specific business units to be much more proactive in managing their service usage. Armed with the ability to understand actual service cost versus budget on an ongoing basis, business unit managers are more involved in staying on budget and guiding service consumption to deliver more value to their business operations.

Reduced service costs

With better control over service performance and service costs across the organisation, companies can reduce the following:

• Cost of service infrastructure
• Report preparation costs
• Unnecessary consumption of services
• Dispute resolution costs (internal and with outsource service providers)
• Inaccurate service bills

Improved budgeting, cost control and forecasting

With sophisticated service cost management and reporting capabilities at their disposal, key decision-makers such as the CIO, CFO and shared services officer can instantly get up-to-date reports on service cost status, and not only identify areas for potential savings, but far more quickly take steps to realise those savings – for example, by reducing unnecessary service consumption or over provisioning, or reallocating saved resources to where they’re most needed. Further, these tools enable various business units and service organisations to collaboratively develop budgets based on more granular, dependable data – improving accuracy and timeliness in financial reporting.

In search of a solution

Digital Fuel is a leading provider of business service management (BSM) software solutions, helping service providers and enterprise service organisations to manage the performance, financial and regulatory aspects of IT, telecommunications and business process services. The company’s ServiceFlow SLA management and service cost management business applications automate and facilitate the critical services organisation needs for service definition and standardisation, service performance management and reporting, service budgeting and cost management, service billing and chargeback, usage monitoring and service analysis. ServiceFlow has a patented software approach to allow service organisations to easily describe customer obligations and visually align them with metrics that drive business value.

ServiceFlow’s capabilities address the needs of virtually any IT and business service organisation, the highlights including:

Service definition and standardisation – ServiceFlow supports the services organisation by providing a business application to describe and promote IT, HR and other business services, standardise these services with flexible pricing based on tiered performance options, and to analyse services for new ways to improve business value. This helps manage customer expectations, and promotes understanding and standardisation of the IT and business services, pricing and service levels within a single source of information.

Proactive performance management – The application provides the services organisation with a proactive and collaborative business application to manage service performance and business value contribution. It automates preventive alerts to avoid service issues, reinforces compliance to service obligations through effective workflow, automates fix plan resolution processes, simplifies communication through automated reporting capabilities and much more.

Budgeting and cost management – ServiceFlow helps the services organisation maintain and manage the service budget, establish cost formulas for services, and monitor actual spend with predefined alerts to identify potential over-budget situations. The services organisation managers and business unit teams can set their own, ad hoc thresholds and metrics as needed to monitor service costs for each service and customer.

Service cost billing and chargeback – The solution supports the services organisation financial manager and CFO by providing detailed online chargeback to the business units with supporting documentation and utilisation statistics that facilitates customer review and acceptance of chargeback allocations. The system facilitates the review and approval of the chargeback billing report.

Service analytics – ServiceFlow allows both the business unit and services organisation decision makers to analyse service performance usage patterns and trends, so that utilisation can be appropriately managed. ServiceFlow has role-based security that allows authorsed users to view the service universe in various ways, such as by organisational structure, geographical location, service line, and time to identify past usage patterns and current trends.

There are many ways in which the services organisation can be managed, and many different sourcing options, but there is no doubt that the organisation must deliver flexible service offerings and services at lower costs than the business units or enterprise customers can afford to make or buy for themselves. Digital Fuel has years of proven experience helping service organisations manage IT, HR and other business services for maximum value to their customers and to their businesses.
For more information please visit: www.digitalfuel.com