Executive Briefing: The Benefits of ITIL


®

Maggie Kneller, Independent Consultant

White Paper

September 2010

© The Stationery Office 2010

2 Executive Briefing: The Benefits of ITIL®

© The Stationery Office 2010

Contents

1 About this white paper 3

2 IT service management – the key that unlocks the value from
your IT investments 3

3 ITIL – global best-practice IT service management 3

4 The benefits of adopting ITIL 4

5 Benefits and features associated with the ITIL lifecycle stages 4

6 How to recognize good and bad IT service management 6

7 Some common mistakes 8

8 Achieving quick wins 8

9 How to access ITIL and where to start 9

About the author 10

Reviewers 10

Acknowledgements 10

Trademarks and statements 10

Executive Briefing: The Benefits of ITIL® 3

© The Stationery Office 2010

1 About this white paper

This white paper is for senior executives, managers and
decision makers whose businesses make use of information
technology (IT).

It is relevant for any size or type of organization – whether
small, medium or large; local or multinational; public sector,
private sector or not-for-profit. It is essential reading for anyone
who wants to maximize the value from their IT.

This white paper will explain:

• How IT services provide business value, and why good IT
service management is essential in order to unlock this value

• How to recognize when IT service management is being
practised well, and when it is in need of improvement

• Why ITIL enjoys worldwide recognition as the leading
framework of good practice in IT service management

• How ITIL has enabled organizations across the globe to
maximize value from their IT investments

• How ITIL can help your organization maximize its investment
in IT

• What you need to do to find out more about ITIL and where
to start.

2 IT service management
– the key that unlocks
the value from your IT
investments

Most organizations today rely upon IT to enable them to
achieve their company vision, business strategy and goals.

Organizations use IT to:

• Revolutionize the way they operate, communicate and do
business

• Develop and innovate, gain market advantage and
differentiate themselves to their end customers

• Drive increased productivity and efficiency, improve business
processes, make cost savings, and increase sales and growth

• Communicate with a larger, more global marketplace.

The quality of an organization’s IT is reflected in its reputation
and brand, and has direct impact upon sales and revenue. The
cost of IT is never insignificant – it is essential to get good value
from IT investments, but often this value is not realized. For an
IT investment to provide benefit, the resulting IT service must be
well planned, well designed, well managed and well delivered.
That is what the practice of IT service management is about.

IT service management is:

• The professional practice of planning, designing,
developing, delivering and optimizing IT services that
are both fit for purpose and fit for use, thereby providing
best value and return on investment for the organization
that uses them

• A specialized discipline, which includes the processes,
methods, activities, functions and roles that a service
provider needs in order to deliver IT services which provide
business value for customers

• A growing profession of people, skilled and committed to
delivering high-quality IT services which bring measurable
value for businesses.

Good IT service management is essential to achieve business
benefits from IT at an agreed and controlled cost. Without
good IT service management, it is common for IT projects to fail
or go well over budget at project stage, for ongoing IT costs of
ownership to spiral out of control, and for businesses to fail to
achieve the benefits they expected.

Good IT service management is the key that unlocks the
value from your IT investments.

3 ITIL – global best-
practice IT service
management

ITIL is the most widely adopted guidance for IT service
management worldwide. It is non-proprietary best
practice that can be adapted for use in all business and
organizational environments.

ITIL was created by experts who incorporated the learning
experiences and practices of leading organizations, ‘best-in-
class’ practitioners and IT service providers from around the
world. Since its introduction in the early 1990s, ITIL has proved
itself through the positive impact it has brought to businesses
that adopt its practices.

ITIL provides an extensive body of knowledge, capabilities and
skills. It is accessible through publications, training, qualifications
and support tools, and is available in many languages.

ITIL’s value proposition centres on the IT service provider
(internal IT or external supplier) understanding a customer’s
business objectives and priorities, and the role that IT services
play in enabling these objectives to be met. ITIL adopts a
‘lifecycle’ approach to IT services, focusing on practices for
service strategy, service design, service transition, service
operation and continual service improvement:

• Service strategy: collaboration between business strategists
and IT to develop IT service strategies that support the
business strategy

• Service design: designing the overarching IT architecture
and each IT service to meet customers’ business objectives by
being both fit for purpose and fit for use

• Service transition: managing and controlling changes into
the live IT operational environment, including the
development and transition of new or changed IT services

• Service operation: delivering and supporting operational IT
services in such a way that they meet business needs and
expectations and deliver forecasted business benefits

• Continual service improvement: learning from experience
and adopting an approach which ensures continual
improvement of IT services.

4 The benefits of
adopting ITIL

From a business perspective, the adoption of ITIL practices by
IT service providers – whether in-house providers or external
suppliers – ensures many benefits, including:

• IT services which align better with business priorities and
objectives, meaning that the business achieves more in terms
of its strategic objectives

• Known and manageable IT costs, ensuring the business
better plans its finances

• Increased business productivity, efficiency and effectiveness,
because IT services are more reliable and work better for the
business users

• Financial savings from improved resource management and
reduced rework

• More effective change management, enabling the
business to keep pace with change and drive business
change to its advantage

• Improved user and customer satisfaction with IT

• Improved end-customer perception and brand image.

Real organizations have benefited from ITIL practices in a
number of ways – for example:

• A nationwide retail organization made savings in excess of
£600,000 per annum by adopting service strategy practices
for its financial management.

• An organization identified that most of the cost of delivering
IT support came from resolving customer issues. By adopting
ITIL approaches to knowledge-based information and
self-help, it was able to reduce costs of support by over 75%
while at the same time increasing user satisfaction with the
service, and improving user productivity.

• A medium-sized IT service organization invested e2.6m in a
two-year programme to improve its IT service management.
It recouped the investment within the first year, and achieved
annual savings of e3.5m mainly through rationalizing unused
and under-used resources (people, software licences, IT
hardware etc). It also reduced IT incident resolution times
and improved customer satisfaction by over 11%.

• A large multinational company made annual savings of
£5m by introducing ITIL service design practices to its IT
supplier management.

5 Benefits and features
associated with the
ITIL lifecycle stages

Each of the five lifecycle stages has certain benefits and features
associated with it (see Figure 5.1).

Service strategy

• A portfolio of IT services support business strategy and align with business objectives.

• IT investment decisions result in tangible and quantifiable business value.

• Focus on the value of IT services in relation to business objectives.

• IT costs (one-off project costs and ongoing costs of ownership) planned, understood, agreed with the
business and kept under control.

• Priorities, demand, resources and costs managed in line with business needs.

• IT services benefit from industry knowledge and corporate learning, through applying a strategic
approach to service development.

Service operation

• Live IT services delivered
and supported to meet
business needs and
expectations.

• IT services operated
securely and reliably,
avoiding failures and
unexpected disruptions.

• Business customers able
to achieve expected
benefits and get
required value from
their IT.

• Incidents and problems
dealt with professionally,
responsively, so
the root cause
is addressed.

• Costs kept under control.

Service transition

• IT changes managed
and controlled.

• Failures and service
disruptions resulting from
change are reduced.

• Unexpected impact
to day-to-day business
operations avoided.

• Cycle time for change
reduced significantly.

• More change achieved faster
and cheaper, driving
additional value.

• Pace of change creates
organizational agility.

Service design

• IT services designed to
meet business objectives.

• Services designed to be both
fit for purpose and fit for use.

• Cost of ownership planned to
achieve return on investment

• Balanced functionality, cost
and performance.

• Potential risk mitigated, so the
IT service is protected from
security threats.

• IT services more stable
and predictable.

Continual service improvement

• Learning from experience.

• IT services reviewed regularly to ensure they remain aligned with changing business priorities.

• Focus on improving quality, reducing costs, improving effectiveness and efficiency of IT services.

• IT services adapted to changing business needs.

• Advantage taken of technology improvements where appropriate.

• Organizational agility created through improving quality and reliability of critical IT.

Figure 5.1 Benefits and features associated with the ITIL lifecycle stages

6 How to recognize
good and bad IT
service management

Does your IT really provide what your business needs?
Do your IT projects always deliver what you expected, and
at the right cost? Is your IT flexible enough to keep pace with
business change?

If you answered ‘no’ to any of these questions, it could be the
result of poor IT service management. Table 6.1 will help you
recognize when IT service management is being practised well
and when it is in need of improvement – in which case adopting
ITIL best practices will help.

Table 6.1 Indicators of good and poor IT
service management

Indicators of poor IT service management

Indicators of good IT service management

Misalignment between IT and the business:

• It is unclear what IT services exist and what business
purposes they serve

• There is no service catalogue

• IT priorities are not in line with business needs and priorities

• Urgent business needs are not responded to in a timely
manner

• IT services seem focused on technology rather than
business priorities.

This indicates poor service strategy practice.

Alignment between IT and the business:

• A close relationship between the IT service provider and
business customers at all levels, which feels like a trusted
partnership

• A clear service catalogue explaining the services available
and what business purposes they serve

• IT services focus on the priorities and needs of the business

• IT staff understand the importance of IT services, the value
the business gets from each service and they react to
requests, incidents and problems in a way that reflects
this value.

IT is generally considered poor value for money:

• IT is considered expensive and poor value for money

• IT services cost more on a day-to-day basis than
was expected

• Costs appear to be uncontrolled.

This indicates insufficient focus on the ongoing operational
cost during service design and development.

IT is generally considered good value for money:

• Both cost and value are understood by stakeholders

• Each IT service’s cost of ownership has been designed and
agreed in advance by the business customer that pays for it

• Changes to the cost of ownership are jointly planned and
agreed between the service provider and the business
customer.

Indicators of poor IT service management

Indicators of good IT service management

Lack of IT service skills involvement during development
and transition:

• Projects focus on application development with little
consideration for the end product – the IT service

• IT service management practices and people are not used
during design and development

• The developers ‘handover’ the ‘service’ to operational staff
in the expectation that it is ready, but the service initially
fails to provide benefits

• Additional work or rework is required before the IT service
performs correctly.

This indicates poor service design and service
transition practices.

IT service skills involved during development and transition,
resulting in a well-designed IT service:

• People with IT service management skills are involved in the
design and development of new IT services

• When the service goes into operation it is ready to operate
as a complete IT service

• Any shortfalls in service design and development are picked
up during service transition, and the service is not accepted
into operation until it is ready

• Developers provide early life support when the service first
goes live to ensure that any issues are resolved quickly.

Over-focus on functionality at the expense of usability:

• Unexpected IT service outages are frequent

• When problems occur it takes longer than expected to
recover the situation

• The IT services perform badly and sometimes run out of
data or processing capacity, leading to ‘panic’ purchases of
hardware and software, often at inflated unexpected cost.

This indicates poor design of the IT service.

Focus on both functionality and usability:

• IT services are designed to work in operation, available
when required, performing as expected

• Security threats are dealt with quickly and effectively

• Unexpected incidents are resolved effectively, ensuring
business users are involved in decisions and always
kept informed.

Capacity is monitored and any purchases to increase capacity
are planned well in advance and budgeted.

Poor change management:

• Changes happen without users and support services
being informed

• New or changed IT services are fraught with problems, and
often lead to unexpected issues with other services

• Operational resources are distracted from day-to-day work
by the problems caused by change.

This indicates poor service transition practice.

Good change management:

• Clearly communicated release schedules that identify the
introduction of new and changed IT services

• The risks and potential impacts of change are discussed
with business users before the change takes place

• Changes are agreed, well planned and implemented in a
timely fashion with minimal disruption to the business.

Too many incidents and problems:

• There are many failures and IT service disruptions

• IT support staff appear to be always ‘firefighting’ (reacting
to problems and failures) and do not have time to make
progress in other areas

• The failures have a disruptive impact on business functions.

This indicates poor service operation practice.

Incidents and problems under control:

• Failures sometimes occur, but they are resolved effectively
and users are kept informed

• A proactive approach is taken to problem solving,
anticipating and preventing problems wherever possible

• Lessons are learnt, problems are rarely repeated.

Users are confident that issues will be resolved before they
adversely impact the business.

Indicators of poor IT service management

Indicators of good IT service management

Problems using external suppliers:

• IT issues are often blamed on third-party suppliers

• There are additional unexpected charges from external
suppliers and occasional contractual disputes

• Internal service providers have little control over their
third-party suppliers.

This indicates poor supplier management practices.

Good supplier management:

• The internal IT service provider owns problems with IT
services even when a third-party supplier is involved

• Contracts to deliver underpinning services and components
are managed effectively and seamlessly by the service
provider without needing to be brought to the attention of
business customers.

• Third-party costs are known and controlled.

Poor communication between the business and IT:

• Communication is difficult between the service provider
and business customers

• IT services do not meet customer expectations

• The business has a poor perception of IT services

• Service providers use technical jargon to describe services
and explain what is happening.

This indicates poor customer relationship practices.

Good communication between the business and IT:

• A catalogue of available IT services is written in terms the
users understand, with prices (if users pay for IT services) or
cost information (if not)

• Judgements on value can be made about IT services and
service levels

• Service providers are concerned with customer perceptions
and expectations

• Service providers use language reflecting business processes
and the value IT provides to the customer.

7 Some common mistakes

Designing and developing IT services that are fit for
purpose but not fit for use:

• Focusing on system functionality but not the usability of the
whole IT service will delay (or even prevent) delivery of
business benefits

• Retro-fitting IT service design later is a high-risk strategy
which will prove more costly and be fraught with problems.

A well-designed IT service provides both functionality that is fit
for purpose to support business processes, and infrastructure,
operations, processes, people and competencies to make it fit
for use. The IT service needs to be easily accessible, available
when required, performing as expected, with sufficient data
and processing capacity, protected and secure from threat,
robust and recoverable from failure, maintainable, capable of
being enhanced when required, recoverable from disaster, and
at an acceptable cost which is under the control of those who
pay. The IT service must be capable of being de-commissioned
when no longer required without punitive cost. The end
product of a development project is an IT service, not merely a
functional application system.

Focusing on the one-off project cost but not the ongoing
operational service cost:

• Failure to take account of ongoing costs of ownership when
developing a business case will lead to a poor financial
decision and a failed return on investment

• Operational costs will continue beyond the project payback
period, so cannot be offset against one-off savings.

For a well-designed IT service, the annual cost of ownership is
fully understood and there is a clear distinction between the
one-off project cost and the ongoing cost of ownership. Service
design aims to minimize overall cost, not merely the one-off
cost. Skimping on one-off development expenditure has a high
risk of increasing annual operational costs.

Taking short-cuts to ‘adopt ITIL’:

• Adopting ITIL practices cannot be achieved merely by
sending a few staff on Foundation-level training or
purchasing some software tools which claim ‘ITIL
compliance’.

ITIL means changing the way the business does IT, so that IT
services are developed and delivered in a way that is business
focused and value driven. ITIL may require investment in people
and tools, but more importantly it requires a service culture that
should be introduced carefully and thoughtfully with support
from senior management.

8 Achieving quick wins

It is not always necessary to embark on a major project in order
to improve your IT service management. Sometimes a change of
mindset is the most important thing that is needed, and some
‘quick wins’ can help achieve this:

• Send key IT development staff on ITIL training, focusing on
service design and service transition practices. They will
better understand how to design IT services which are both
fit for purpose and fit for use – meaning fewer failures when
the services go live, and a better understanding and control
of operational costs. This may not resolve current operational
IT issues, but it will prevent future operational problems from
being created.

• Rotate IT development staff into front-line operational roles,
so that they get first-hand experience of the consequences of
poor service design and can bring back ideas for
improvement of service design practices. Send front-line
operational staff into business areas so that they better
understand the business impact of poor service operation.

• Send key IT service management staff to work in another
organization or department, which practises IT service
management well, for a short period of time. They may learn
more about service culture by being immersed in it for a few
weeks than they would on a training course. The experience
can be followed up and consolidated with theoretical
training later.

• Carry out a high-level assessment of your IT service
management practices in order to identify those areas
which cause most pain, and which will give the greatest
benefit if they are improved. The 80:20 rule will often
apply – improving 20% of processes most in need of
attention will bring 80% of the required improvement in
terms of business benefit.

• Undertake an analysis of operational IT costs by IT service –
in other words, find out the cost of ownership of each IT
service. Allocate overhead costs between IT services in a
logical way. Then track costs of ownership through time,
to see how projects and other changes affect these costs.
This will highlight whether the savings promised by
business cases are actually delivered, and will provide
insight into what causes costs of ownership to rise or fall.
It will inform decisions on service strategies and business
cases for new IT services. Understanding cost of ownership
of each IT service is essential for making business decisions
about IT investment.

9 How to access ITIL and
where to start

You can find out more about ITIL through the following
publications (TSO, 2007):

• Introduction to the ITIL Service Lifecycle

• Service Strategy

• Service Design

• Service Transition

• Service Operation

• Continual Service Improvement.

Introduction to the ITIL Service Lifecycle gives an introduction
to IT service management practices and an overview of the
following five publications, which cover the stages of the service
lifecycle in depth. Complementary publications add breadth and
depth focusing on specific topics and audiences.

You can build skills and knowledge in IT service management
and invest in people through ITIL training and the ITIL
qualification scheme. Hundreds of thousands of IT practitioners
across the world have already gained ITIL professional
qualifications. The scheme is supported by accredited training
from a global network of training providers, and examinations
run by accredited institutes. There are qualifications at
Foundation, Intermediate and Expert levels with an advanced
diploma for the most experienced IT service management
professionals. An excellent way to start adopting good practices
is by training key staff or hiring staff who are already qualified.
Training development staff in IT service management will ensure
they focus on developing IT services.

The Institute of Service Management (ISM) in the UK and linked
institutes in other countries provide professional recognition for
IT service management practitioners, and BCS, the Chartered
Institute for IT, recognizes IT service management as a key skill
for IT professionals. Universities and business schools offer
IT service management topics in their IT-related first degree
courses and masters degrees in IT service management.

ISO/IEC 20000 is the international standard for IT service
management, which was developed based upon ITIL processes.
Adopting ITIL practices can help organizations achieve the
ISO/IEC 20000 standard and provide evidence that they are
practising good IT service management. ITIL also aligns with
other management frameworks and standards, including COBIT,
ISACA’s framework for IT governance and ISO/IEC 27001, the
international standard for information security.

The IT Service Management Forum (itSMF) is a not-for-profit
membership body which supports a vibrant international
community of practitioners and professionals, operating in
over 50 countries. Its members include many small, large and
multinational companies across all industry sectors. It offers
opportunities to network, share experiences and best practices
with IT service management practitioners and experts across
the globe.

IT service management as a professional practice is here to
stay, because it makes sense for businesses. ITIL has already
proved its place in the world and, as more organizations better
understand its value, ITIL adoption will continue to increase. If
you want to help your organization to get more value from its IT
investments, then ITIL is a good place to start.

Reviewers

TSO would like to thank Eddie Potts (Pink Elephant) and Stuart
Rance (HP) who carried out a review of the paper on behalf of
OGC, TSO and itSMF UK.

The author would like to thank the following people, who
provided very helpful review comments:

Ms Denise Plumpton, independent consultant

Mr Dave Colquitt, interim Business Change Manager at E.on

Mr Mark Jones, independent consultant

Acknowledgements

Sourced by TSO and published on
http://www.best-management-practice.com

Our White Paper series should not be taken as constituting
advice of any sort and no liability is accepted for any loss
resulting from use of or reliance on its content. While every
effort is made to ensure the accuracy and reliability of the
information, TSO cannot accept responsibility for errors,
omissions or inaccuracies. Content, diagrams, logos and jackets
are correct at time of going to press but may be subject to
change without notice.

© Copyright TSO and Maggie Kneller. Reproduction in full or
part is prohibited without prior consent from the Author.

Trademarks and
statements

ITIL® is a Registered Trade Mark of the Office of Government
Commerce in the United Kingdom and other countries

The Swirl logo™ is a Trade Mark of the Office of
Government Commerce

The OGC logo® is a Registered Trade Mark of the Office of
Government Commerce in the United Kingdom

About the author

Maggie Kneller is an IT and business consultant, with 30
years’ experience as an IT practitioner and manager in
major organizations in both the public and private sectors.
She has extensive management experience of all areas of
the service lifecycle and has also managed a successful
medium-sized IT business. Recent roles include UK Head of
IT Services at AXA and interim Chief Executive of itSMF UK
and International.

An ITIL expert, Maggie has been an ITIL examiner since
1996, and chaired the ISEB Service Management Board
until 2003. Maggie won the class prize for her IT Hybrid
MBA at Henley Management College. She is a fellow of the
Institute of Service Management, a fellow of the Chartered
Institute for IT, a chartered engineer and an assessor for
Chartered IT Professional.

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