5.1 Marketing 101
5.1 Marketing 101
5.1.1 Identify and Define the Product/Service
Chapter 6, "Taking a Customer Approach," speaks to the process of determining what services should be offered to support a targeted business environment. Defining the IT services in business terms and their impact on the business's operational ability to deliver the expected service to their customer is another view of the same entity.
While the descriptions of the deliverables in Table 5-1 may be understandable to some faction of the business constituency, they do not generally reflect an understanding of the business initiatives they are supporting or enabling.
Table 5-1. Delivery of IT Services from an IT Perspective
| IT Services | IT Deliverables |
|---|---|
| Server monitoring and corrective action
| The deliverables that will be generated out of these services are continuous monitoring, tracking of the primary systems processes, and supporting computing infrastructure to meet the requirements of the business unit as well as on-demand user service requests . Fault detection will result in proactive reporting to the proper support organizations. Operations will provide Tier II corrective action to maintain the service level requirements. |
| Print Services
| The deliverables that will be generated out of these services include: requirements specifications, physical, logical and network configurations, equipment orders, installation work orders, and documentation updates. |
| Network Management
| The deliverables that will be generated out of these services include capacity and performance requirements, network configurations, telco coordination, intranet coordination, installation work orders, and documentation updates. |
The deliverables described in Table 5-2 are in more generic business terms. To the extent that an IT organization can identify specific business unit objectives and goals that can be supported by these services and plugged into the deliverables section, the likelihood is that the deliverables will not only be better understood , but internalized and supported as well.
Table 5-2. The Same Service Deliverables Viewed from a Business Perspective
| IT Services | Business Deliverables |
|---|---|
| Server monitoring and corrective action
| The deliverables that will be generated out of these services are at a consistent high level of operational service, per the agreed to service level, on an ongoing basis, and the rapid proactive addressing of any potential problem that could interrupt that service. |
| Print Services
| The deliverables that will be generated out of these services include the installation, deployment, daily support, and maintenance of printers to meet the business requirements. |
| Network Management
| The deliverables that will be generated out of these services include reliable, available, and serviceable network access and connectivity to business-required data and processing. |
5.1.2 Determine the Value and Price of the Product/Service
In the project that stimulated the writing of this book, perceived value, as well as actual value being received, was a key element in the analysis of services and their delivery. The value of the services IT provides is derived from the user's perception and may not have a clear relationship with cost. The determination of the cost of the services is treated in a later section of this chapter. To mix metaphors, the level of value is in the eyes of the beholder or user.
The traditional calculation of value in the business world is return on investment, or ROI. Other more recent measures of value include economic value add, or EVA. The measures of value from this financial or pure business perspective when applied to technology pose significant challenges. Allocating capital investments to specific technology initiatives, as well as identifying and accurately capturing revenue-generated or cost savings directly related to these initiatives, may take significant amounts of accounting and finance resources.
This is not to say investments in technology initiatives should not be expected to create value or have fiscal accountability. Application of simple payback calculations, applying a corporate cost of capital burden on top of initiative costs and other straightforward, easy-to-calculate measures are worthwhile efforts. However, the value created from technology initiatives may not be fully or accurately reflected in these often-sterile numbers .
F. Warren McFarlan, in a recent CIO Magazine article, raises and answers a pertinent question relative to value. "How can companies know if technology will add value to their businesses? Technology allows businesses to deliver different kinds of value, but how to tease out that value is the biggest headache . Value is not measured in some abstract sense; it's measured against what other competitive offerings are out in the field. The company may be doing better, but then it's doing better in a different competitive universe. It's hard to know if your investment was really a plus, or if it was just holding things equal." [2]
[2] F. Warren McFarlan, "ShopTalk," CIO Magazine, February 1, 1999. (Reprinted courtesy of CIO Magazine. 1999 CIO Communications, Inc.)
Generally, the resources required to even attempt to accurately account for value in the traditional ROI sense is not worth the time or money spent. The bottom line on the subject of value is that building credibility by delivering quality services repeatedly will ensure the IT organization is creating enterprise level value.
A different approach is tracking value from the perspective of the receiver of the services/product delivered. A subsequent section of the book deals with success metrics that will identify ways to realistically measure the value from a customer satisfaction standpoint.
Pricing of services in an enterprise can take the form of chargebacks at a company, division, department, or workgroup level. The chargeback approach often entails receiving a monthly, quarterly, or annual hit to the budget that is not anticipated, explained, or open to negotiation. In other organizations the amount and timing of the charge is negotiated and agreed upon prior to the fiscal period the charge will be incurred. In this latter case, expectations are managed and the "price" to be paid for services are understood, if not fully controllable.
In progressive organizations that take a more competitive approach to technology services, a menu of services to choose from is offered to the enterprise with prices associated with the service. The process associated with this approach often starts with the development of an application. A determination is made at project initiation as to which services will be required to support the application and what level of support will be most appropriate given the criticality of the business effort being supported with technology. The prices offered for the services in this scenario assume that there are options available to the business unit to obtain their services internally, externally, or not "purchase" the service at all.
In this latter case, being sensitive to the market prices that external service providers can offer is very prudent. The incentive to provide a cost-effective , competitively priced, value-laden service is clearly present.
5.1.3 Establish a Distribution or Delivery Vehicle
Once the services required by the enterprise are identified, a vehicle or channel to provide the services must be determined. Of course the channel selection is interdependent upon the cost, value, and pricing of the services.
Different enterprises may have different alternatives available to them, based on internal and external politics, regulatory constraints, and market competition.
Table 5-3 provides a format to analyze the different alternatives available to provide IT services. The alternatives included continuing an existing outsourcing agreement, establishing a new outsourcing agreement, utilizing corporate IT resources to provide the services, along with creating a division level IT data center.
Assumptions:
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A common set of tools to be used will be required across all alternatives
-
New processes/procedures will be developed for all alternatives
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Training on new tools and processes/procedures will be the same for all alternatives
Table 5-3. Charting Options
| Alternatives | Services Offered | Rank | Level of Service | Rank | Investment Cost | Rank | Ongoing Cost | Rank | Overall Rank |
|---|---|---|---|---|---|---|---|---|---|
| Current Environment | Services listed in current contract | Level dictated by existing contract | |||||||
| New Outsourcer Proposal | Service listed above plus new requirements | Level to be negotiated for new proposal | |||||||
| Corporate Data Center | All services as outlined in section above | Two levels, 7X24 and 5X8, with service level guarantees with users | |||||||
| Internal Data Center | All services as outlined in section above | Two levels, 7X24 and 5X8, with service level guarantees with users | |||||||
| Composite Rank |
RANK is a 1 to 4 rating given to the specific key attribute associated with the respective alternative. An overall ranking assumes an equal weighting of each attribute.
By utilizing an objective quantifiable chart the major vehicle to dispense services can be evaluated and a supportable decision made.
EAN: 2147483647
Pages: 93