According to Wikipedia, competitive advantage is a position a firm occupies against its competitors, allowing it to earn revenues higher than costs. So let us ask the question again: Is now the time to position your business in its industry as a leader in either superior service or lowest costs? If the answer is yes, then you need to understand how to achieve these benefits, and ITIL is the pathway to your success.
Setting the Agenda
Pursuit of a worthy goal that you realize through ITIL however, is an entirely different prospect. Competitive advantage is an advantage one business enjoys over its competitors. A business achieves competitive advantage by offering consumers greater value by lowering prices (cost advantage) or providing higher quality products and services that demand a premium (differentiation advantage.)
ITIL version 3 (v3) indicates that the creation of value arises through the most effective use of a company resources. Resources are organizational assets that include people, processes, patents, knowledge, customers, staff, brand equity, etc. Using resources effectively requires capabilities. At the company level, capabilities include, for example, being able to outperform a competitor, creating innovative new products, bringing new products to market sooner, etc. At the IT level, capabilities include being able to support customers and users reliably; delivering projects on time, on budget and with the promised features; finding and fixing outages fast and permanently; and, perhaps most importantly, being able to make changes in one area without inducing failures in other areas.
The combination of resources and capabilities presents a set of distinctive organizational competencies and can result in competitive advantage―if managed correctly. And, since ITIL is at the heart of IT service management, this is precisely the value that ITIL brings.
Today, virtually every business process relies upon IT activities. Improvements in the underlying IT activities remove constraints that impede the capabilities of resources and thus the creation of value and competitive advantage. Improving IT capabilities results in improved business performance, which can result in competitive advantage. Yes, IT still matters and IT can still deliver competitive advantage.
Examples of ITIL Value
Concepts of competitive advantage can seem a bit lofty with the sharks circling. So, here are a couple of real example organizations that improved IT efficiency and effectiveness while controlling costs and improving quality. These are not the nebulous, global-unlimited-budget-mega-case studies (usually funded by huge software companies) everyone finds doing a Google search, and which mean nothing since they dont explain exactly how the benefits were achieved. These example are all based on real organizations or companies with which I have worked. Youll notice I removed their names for privacys sake.
Major East Coast City- A major east coast city was able to:
- Identify more than $180,000.00 per month potential cost savings.
- Implement PeopleSoft with guaranteed SLAs to business units.
- Provide City Government with an IT report card.
- Take-on additional responsibility without significant additional costs and avoid a $600,000 equipment purchase.
- Manage IT as a business and improve service quality.
What ITIL Had to Do With It - The city was in the midst of a large ERP roll-out and wanted to understand potential issues before live deployment. The checklist included understanding bandwidth, projected loads and any potential business impact; verifying supplier and infrastructure availability through benchmarking; understanding and identifying assets in order to rationalize future purchases; and implementing service level management to improve IT service quality
Using metrics and concepts based on ITIL, the city developed metrics to improve business decision-making as follows:
Service Level Management: IT report card documented IT success. Documented required service levels and tracked them to document performance.
Capacity Management: Identified underutilized hardware through analysis of utilization and threshold setting. Consolidated and then re-deployed excess capacity to new locations and avoided $600,000 worth of planned equipment purchases. Also identified unused transmission facilities with a potential bandwidth savings of more than $170K per month.
Supplier and Availability Management: By monitoring service levels of infrastructure components, and tracking performance of assets the city was able to obtain rebates of more than $10K per month, as well as choose vendors for consolidation and contracts for re-negotiation.
Continuity Management: Took on new business requirements with existing assets while maintaining backup and disaster recovery capabilities.
Financial Management: 1000% ROI over three years, $180,000/month potential savings.
Sexy? Not at all. Valuable? Definitely. The city did not develop a huge ITIL program, nor did they hire and appoint staff, etc. Instead, they adopted a pragmatic application of ITIL concepts and tools to specific goals, in alignment with business objectives. This approach is both manageable and can deliver value quickly.
Major University - A major university was able to justify and control expenditures; improve IT service quality for faculty and students; negotiate free replacement equipment; and obtain thousands of dollars in rebates.
What ITIL Had to Do With It - The IT unit at the university started a quality improvement program (QIP) to manage its services as a business. The IT goals, based on business goals, included:
ITIL concepts and tools involved included capacity management and supplier and availability management. Once the metrics provided the facts, the department took proactive measures including upgrading backbone file and print servers to a gigabit Ethernet networking infrastructure based on projected saturation metrics; continuing the use of legacy infrastructure because the utilization trends did not warrant a change; requiring suppliers to replace or fix (free of charge) any faults due to unacceptable levels of availability; negotiating a free replacement of equipment; and negotiating rebates of several thousand dollars after proving to a provider that service delivered to the university was not within tolerance.
As with the previous example, there are some common elements including minimal process implementation with a laser focus on solving business problems. The goals in both cases were to align with the business, improve quality and control costs. In the end, each was able to make better use of its IT investments.
In summary, ITIL isnt your goal and never should be your goal, nor is process your goal. Your goal should be to improve the position of your business in its marketplace so that it (and you) can excel and seek competitive advantage. ITIL is a tool, the means to an end. As with all tools, the result matters.
Adopting ITIL and then pragmatically adapting it for your unique business goals and IT situation can result in real value, fast. ITIL delivers value because it help IT justify its actions and costs; helps make applications infrastructure more reliable, available and scalable; and reduces cost by attaining higher utilization of existing assets and personnel.
The benefits to the business are many but usually revolve around more satisfied customers; increased ROI; reduced infrastructure costs; higher use and reuse of assets; lower risk; more successful projects; less reliance on subjective data; and faster time to value.