The 4 Steps of BSM Success

By Shane Deay

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The topic of BSM is a frequent subject of IT management publications and vendor marketing materials. Does BSM have real benefits, or is it just another industry buzzword? How does one go about doing BSM? How can we maximize the benefits of BSM? What exactly is BSM? As usual, the answers depend on who you talk to.

Here's what the vendors say …

While BSM pioneer, Peter Armstrong of BMC, says “You can’t buy BSM out of a box” and “BSM is a mindset, not a product set”, most IT vendors typically approach BSM from an infrastructure management perspective:

There’s a common focus on process automation and internal measurement of resource facing services (RFS). Unfortunately, in the case of IT services, internal metrics are only predictors of potential quality and value. The ultimate gauge of real business value and quality services are end-users and end-customers.

Telecomm service providers have known for decades that five-nines of availability in the data center or central office is meaningless if the customer doesn’t have dial tone when they pick up the handset. This situation indicates there is more to measuring value and quality than predictive internal measurements alone.

What your customers say …

If internal measurements alone are not enough to succeed at BSM, what should we be measuring, and where should we look? Let’s move to the other side of the table for a moment.

From a customer’s perspective, business value is created at the boundary of the IT department at a unique point in time called the “service encounter”, e.g. when they use our services. Whether we like it or not, their perception of our services at the point of consumption is reality. If they place high value on a particular service and their perception of that service is something other than the expected level of quality, they will look elsewhere for that service.

With this in mind, the only way to accurately measure real business value is through honest, open dialogue with your end-users and end-customers. This is something that can’t be measured with process automation software, or isolated planning meetings in the back office of a date center.

So, now the question becomes: Who should we listen to?

As it turns out, vendors and customers are both right. The IT product offerings that consumers interact with are customer facing services (CFS). Consumers are aware of CFS and know they are using them when they interact with them. Plain old telephone service and email are good examples of a CFS. A CFS is composed of RFS's and an RFS is the IT systems that combine to create a CFS. Service consumers are unaware of RFS, and do not interact with them.

While internal process automation of RFS is an essential component of BSM success, those RFS exist to support high-value CFS. As such, the starting point of any BSM initiative should be CFS, not the RFS or the systems or processes which support RFS. Real BSM success has everything to do with open, business oriented dialogue focused on maximizing the business value of IT services while consuming the least amount of resources. When we begin to communicate in these terms we also make great strides towards, dare I say it, achieving business/IT alignment and being welcomed at the boardroom table.

How to Succeed at BSM

There are four fundamental components of successful BSM initiatives:

  1. Defining services

  2. Assessing the business value of those services

  3. Measuring service quality and performance

  4. Selecting and justifying services or service improvement programs

Let's look at each one in turn.

Defining Services

If you identify your CFS and analyze the relationships between CFS, RFS, and the supporting processes and resources a clear hierarchy will emerge. You should be able to easily communicate the linkages between what goes on behind the scenes in support of your CFS. As echoed by ITIL, COBIT, SID, and numerous other standards and best practices, this is the foundation for all service improvements.

The deliverables from this step are the feedstock for building a service catalog, implementing a configuration management database (CMDB), negotiating service level agreements (SLA), and successful service portfolio management.

Business Value

Using a systematic and repeatable method, evaluate the business value of your CFS. Business value shouldn’t be limited to monetary measures. Factors including competitive advantage and liability reduction should also be considered. Instead of focusing exclusively on the cost of delivery, consider measuring the cost of “failing to deliver” through structured risk assessments of services. CRAMM, COBIT, M_o_R, and ITIL all indicate higher risk sensitivity equals higher business value.

In addition to understanding customer viewpoints, this is a valuable opportunity to discuss needs versus wants and requests versus requirements. These discussions will reveal which services are most important and why. This requires open dialogue with customers and a conscious effort to listen in an unbiased manner. The goal is not to validate IT’s speculations about service value, rather to understand the business value associated with our services and manage to those expectations in a financially responsible manner.


Now that Services have been defined and ranked based on business value, it’s time to measure the quality of performance. This is where we blend the two perspectives referenced earlier. It is essential that performance be measured both internally and externally looking for gaps in capability (internal) and quality (external). The importance of external gaps cannot be over-emphasized. Breakdowns in the communication of expectations, both real and perceived, are frequent sources of pain for service providers.


SERVQUAL, CMMI, Six Sigma, and ITIL suggest that larger gaps indicate less quality and utility to customers. These gaps are potential opportunities for improvement.

Selecting and Justifying

Here is where the rubber meets the road for BSM. We’ve defined our services, ranked them based on business value, conducted gap analysis to identify shortcomings, and assembled a list of activities we could be working on. This leads to the next question: Where do we begin?

Assuming we subscribe to the Theory of Constraints as suggested by PMBOK, PRINCE2, COBIT and other management best practices, we should allocate resources to deployment or improvement of high value services while drawing resources away from low value services. If we combine the gap analysis data, service ranking data (based on business value), and the service hierarchy, relationships between gaps and services will emerge. We can now focus our limited resources on deploying new services, or improving existing services, that have high business value and base these decisions on data obtained from the business and customer.

The Benefits of BSM

There are many near and long term benefits of successful BSM. The most immediate is its role as mechanism for communicating IT strategy and resource allocation in non-technical business terms. This helps IT departments and service providers move beyond the lingering image of a cost center. BSM facilitates productive, business oriented dialogue, and provides tangible evidence of business alignment. With BSM real business/IT alignment becomes achievable and measurable.

Successful BSM also facilitates objective demand management for IT program management offices and project managers by working with customers to jointly assess the business value of their requests and differentiate between needs and wants. We begin to see that just because a gap exists, or a request is made, doesn’t necessarily mean resources are justified.

Sometimes "good enough" is perfect. From a business value and financial perspective, it becomes apparent that not every gap is worth fixing, and not every quick win is worth winning. Just because we can, doesn’t mean we should. A more subtle benefit of BSM is as a mechanism for objectively re-allocating scarce resources in down economic cycles by drawing them away from low value services and doing so in a manner that doesn’t alienate customers.

BSM represents a shift away from IT’s past role as a purely technical operation, to one of partnership with the business and customers. Those who are successful at BSM may undergo a transition from IT managers who support business customers to a trusted business partner who understands how to maximize the business value of technology resources.

Shane Deay is the president, CEO, and co-founder of CourseSeeker. Prior to CourseSeeker, Shane was the founder of Avant Corporation which specializes in ITSM education and consulting services. He is also a co-founder of The National Association for Business Service Management. With over 17 years of IT experience, Shane began his career as an applications/database programmer in the financial services industry with progressive shifts towards operations management consulting roles for various industries including telecomm and hospitality.