Define and manage a service portfolio
The Service Portfolio is like any other financial portfolio: it’s a listing of services and investments in those services that enable IT and the business they support to see where IT funding is used. There are three components of this portfolio:
-
Service Pipeline: The pipeline represents initiatives and services under consideration for funding. Once funded as projects, these may stay in the pipeline until the resources to build or improve them are available. Projects in the pipeline represent an investment in growth and innovation.
-
Service Catalog: The service catalog represents operational services or services which are about to be released into operation. These services must be maintained and supported, so to a large degree, the service catalog represents the operational budget (or run costs) of an organization. Even support services like end-user computing services are part of the service catalog, as employees themselves consume a large portion of an IT budget to support their own day to day needs.
-
Retired Services: There may come a time when a service is no longer needed due to changes in the business model or because it has been replaced by another service. Often organizations fail to intentionally retire services, so even when not used they occupy computing and personnel resources. Reviewing all services and retiring those no longer needed, enable an organization to recapture these resources and apply them to pipeline projects. Essentially, the retirement portfolio represents an investment opportunity.
Often the service portfolio is related to the “run, grow, transform” activities of an organization. The operational services represent the “run” needs, while the pipeline represents both “growth” and “transformation”. Growth can come from the expansion of the use of a service or revenue growth made possible as the result of using a service, while transformation represents an investment in additional markets or completely changing the ways business is done (like Amazon’s branching out from books to sell other products). Without the capacity to grow, an organization will eventually start to fail. Thus, a critical part of service management is to optimize IT operations so that the run budget doesn’t consume the funding needed for growth and transformation. Viewing the IT investment in terms of the service portfolio enables an organization to balance its investments appropriately.
Review and formalize the pipeline
Once the activities related to identifying existing services and proposing new ones grows into a large enough bucket, IT will no longer be able to work projects in an ad hoc or disorganized fashion. At this point, it will become necessary to formalize the project lists and work with key stakeholders to ensure everything on the list is needed by the business unit. This will result in the creation of a formal pipeline, but the organization will ultimately still need a way to prioritize and fund the work.
Charter a formal governance body
A formal governance body or steering committee becomes the mechanism for ensuring IT is working on those projects that are most important to the business. The committee should be chaired by a high-ranking business leader and include senior executives from all lines of business and/or operational departments. Together, this committee bears the responsibility for reviewing, prioritizing and funding those initiatives on which IT and the business will work.
It should be noted that not all initiative will include technology. This is a sign the organization is moving jointly into a strategic operating model that supports all initiatives, whether they are technology-based or not. Even if IT drives the creation of such a body, it is still a sound means for business leaders to work together on carrying out the organization’s strategy.
Define project initiation, approval, governance
With the governance body in place, the organization can formalize the processes used to initiate, approve and govern the success of strategic initiatives. This is an important part of the strategic operating model as it ensures each business unit understands and is accountable for their participation in carrying out the plans of the organization.
-
Project initiation processes ensure everyone knows how a project can be proposed and the criteria for evaluating and prioritizing projects. Some organizations weight their evaluation based on a project’s ability to: generate revenue, address compliance needs, support business initiatives and/or grow new business. It’s important for all key stakeholders to understand the evaluation process so they can look for opportunities to align with overarching organizational need.
-
Approval rules regarding the level of approval needed in alignment with a project’s anticipated budget ensure that senior executives time is not wasted approving small improvements but also ensuring everyone is working primarily on key organizational initiatives.
-
Governance may cover a wide variety of areas, but in this context, it relates to governance for the programs being proposed and the management model to be used for key initiatives, including initiation and funding or chartering of projects.
Build communications plans
As the IT organization moves towards the support of key strategic initiatives, with more formal processes, it will need a way to ensure all personnel understand the new means of working and are aware of the initiatives being approved for work. IT (and the organization at large) need communication plans and some level of organizational change management in place to support the shift to a more service-based, strategic operation. It’s possible that without communication, developers will continue to work on pet projects of business people they support as well as new initiatives, then indicate they’re not ready to move onto the next project due to too much work, even though resource plans indicate availability.
Additionally, communication of the new way of working needs to be performed throughout the organization to ensure that the business as a whole is adopting the new approach. There can be a lot of change when moving from a tactical operating model to a strategic one and everyone needs to be aware of the change.
An organizational newsletter or frequent town hall meetings are a great way to publicize initiatives and get people aligned and excited about them. This makes it easier for everyone in the organization, including IT, to know where they should be focusing their energies.
Work together towards business goals
Through strategic planning, specific initiatives and governance, the organization begins to work more closely towards business goals and IT becomes less of a silo, off working on their own. While this approach may start with IT approaching key business personnel, no one intentionally excludes IT, more likely they just don’t know how to approach IT.
When IT and the business are able to move out of their respective silos and work together, virtually any strategy can be achieved. In fact, one could argue that to get people out of their silos an organizational strategy is needed.
Thus, at this point, when there is a true service lifecycle from inception to retirement that is worked on at the strategic level, IT and other departments know what to work on and can work together to achieve the organization’s vision.