BSM: What It Is and Why You Should Care
Author: Hank Marquis
Abstract
Business Service Management (BSM) is a relatively new term in
the IT management community but it has already become a buzzword.
This white paper explains what BSM is and how it can benefit your
organization. Learn how you can obtain significant real value in a
relatively short period of time if you follow the four-step BSM
model. Understand why it's important to think and talk about the
long term. This white paper also explains the goals of BSM.
What BSM Is and Isn't
First of all, BSM is not a product or a technology. You cannot
buy BSM, and it does not come out of any box. Still, one vendor
might proudly proclaim, "BSM is software that essentially forms a
dynamic link between business- oriented IT services and the IT
infrastructure components that support those services." This
contradicts one of the original developers of the term, who likes
to say that BSM is a "mindset, not a product set." However, that
hasn't stopped many vendors from jumping on the BSM product
bandwagon. It also hasn't stopped numerous analyst firms from
weighing in either. In fact, one notable firm states that BSM is IT
managers "understanding the metrics their business users employ to
decide if IT is providing value, and linking these metrics and
associated business services to IT infrastructure components." From
this point of view BSM isn't software after all-it's metrics and
component monitoring.
If you are confused, you are not alone. Since arising a number
of years ago at BMC Software, a large IT management software
vendor, the term has taken on life of its own. So much so, in fact,
that BSM is quickly becoming like the term CMDB (Configuration
Management Database), which is ambiguous and confusing. It's
unfortunate too, since BSM is something that is absolutely critical
to the success of IT. BSM has even found its way into the new ITIL®
(IT Infrastructure Library, version 3), which defines BSM as "an
approach to the management of IT Services that considers the
business processes supported and the business value provided." Note
the focus on understanding the reason for business needs.
Basically, it means BSM is how to properly and effectively
implement ITIL.
BSM has today reached a point where vendors can no longer make
claims about what it "really means" or why their software
implementation is "better BSM" than a competitor's. As described in
ITIL v3, BSM refers to managing IT based on end-to-end services. It
means understanding the marketing place for enterprise products,
considering the work employees carry out in support of those
enterprise products and managing IT resources in ways that best
support that work. Note the absence of mumbo-jumbo about products,
software, automated dashboards, configuration management databases,
and all the rest.
BSM is not a software product; it is, indeed, a mindset-it is a
way of thinking about IT resource allocations. BSM is a strategy
described by the ITIL as an exercise in strategic thinking. So, how
does one then attain the enlightenment that is BSM if it cannot be
purchased or tangibly made? As with many skills, BSM must be
learned before it may be practiced.
Why BSM Matters to You
The reasons for BSM are many; however, the primary driver is IT
commoditization. IT commoditization refers to the fact that
businesses today are more and more dependent upon IT services. As
the cost for hardware and software falls, the ease with which it
may be interconnected is increasing dramatically. This presents
business with many alternatives to the traditional IT organization,
because many businesses can simply acquire and install systems on
their own that were traditionally the purview of an IT
organization. In many organizations, such ad hoc business IT
systems are then connected to traditional business IT systems. The
result is an incredibly complicated environment that shows no signs
of decreasing in complexity.
While the business not only assumes the mantle of IT provider in
many cases, the requirements that businesses place upon their IT
organization and technology, in general, are also increasing.
Referred to as variability, the issue is that as a business becomes
more entwined with information technology services, it can sustain
less and less variation in the quality and delivery of those
services.
For the IT organization, this combination of factors represents
an "IT perfect storm." Simply put, today's IT organization faces
ever-growing complexity with diminishing tolerance for poor
quality. This, combined with economic realities such as decreasing
IT budgets and headcounts, represent a no-win situation-not just
for the business but also for the IT organization.
From this vantage point, BSM is used to steer ITSM, Application
and Technology management, and operations within IT. BSM describes
how the well-functioning IT service provider aligns with its
business, understands its marketplace, and balances its resources
in ways to best benefit the business.
BSM provides the guidance an IT executive requires to align with
business, control the costs of IT, improve IT service quality, and
balance resource allocations. Since the business does not operate
independently of the IT systems or organization, it is equally
important for technical and non-technical executives to understand
how they must work together. BSM provides such a roadmap.
Moving from Good to Great
BSM is the highest point on the continuum ranging from managing
IT resources, through managing applications, to managing workflow
to managing towards business outcomes. IT organizations pass
through each of the following points as they mature.
Technology Management
Technology management is usually the first phase of a maturing
IT organization. Managing technology typically involves technology
silos and organizational autonomy and bias based around the
resources required to manage a particular type of technology (for
example, networking or software development.) Technology management
is focused on technology and is generally represented with
fragmented management views due to its disconnected and
technologist nature. This produces an emphasis on resolving IT
technical issues. It can also result in redundant investments. The
value of investments made in information technology at this
technology management stage is generally minimally visible to the
business and mostly visible to the IT organization.
Application Management
Application Management is generally the natural evolution of the
IT organization from a technology point of view to an application
point of view. Application Management subsumes Technology
Management and gives it direction and focus.
From this perspective, the maturing IT provider begins to
consider the fact that it provides applications to its business
customers and users. These applications, in turn, provide value to
the enterprise. Application management is an evolution of
technology management— slightly more encompassing application silos
replace individual technology silos. Generally these application
silos span several technology silos and even some IT organizational
boundaries. Management design focuses on the requirements of the
application. This produces a limited integration of management
views, and the IT emphasis is on resolving application issues. The
primary value of information technology investments at this phase
is visible to the business customers and users of the
applications.
IT Service Management
IT Service Management (ITSM) is the term used to describe
managing the workflow and activities within an IT organization.
ITSM considers not only the application, but also the entire
organization and workflow required to deliver applications and
other services to the business. ITSM expands beyond applications to
encompass all manner of support required of the IT organization by
a business.
The ITIL is the de facto best practice describing ITSM. ITSM
presents an evolving and integrated approach to managing IT
services. The concept of managing by service is relatively
simple—in order for the IT service provider to add value to its
enterprise and consumers, the IT provider must focus on end-to-end
service delivery.
This requires the provider to understand the marketplace within
which the consumers of its services operate.
From a normal corporate or enterprise perspective, this means
the IT department must understand not
only its business customers and users, but also the marketplace
where the enterprise offers its products. IT value arises at the
boundaries between the enterprise and its marketplace. IT services
provide an indirect value—the IT service facilitates the
interaction of business customers and users with enterprise
end-customers and end-users.
Business Service Management
BSM is the term used to describe the strategic direction
required for ITSM to be successful. BSM, simply stated, aims to
manage IT investments in ways that matter most to the success of
the enterprise and its marketplace. BSM also means making decisions
in IT based on what is best for the enterprise. It spans all
technologies and all organizational boundaries. BSM, focusing on
process integration and automation, leads IT Service Management and
design.
Most IT organization’s emphasize addressing the business’s
service issues. IT investments’ value at this point becomes clear
to the marketplace and is seen by the enterprise as competitive
advantage.
How To Achieve BSM
The mind-set of BSM requires just four steps.
- Define IT services and validate business case
- Analyze service value and prioritize to balance demand
- Measure quality to choose improvement opportunities
- Authorize and allocate resources
These four steps create a framework with which to achieve
success from investments in ITSM initiatives such as ITIL.
Step 1: Define IT Services and Validate
Business Case
The basic concept is straightforward—to manage by service
requires the service be defined. This does not require complete
service articulation from enterprise product through to the last
bit of IT hardware or software, but rather an understanding of key
business processes, business customer and user constituencies, and
primary IT services supporting the same. These are referred to as
Customer Facing Services and represent those business applications
and services critical to the enterprise. They need not be
completely defined; however, they must be initially defined for the
IT organization to be able to value them.
With a service defined, its business case is next. The purpose
of the business case is to justify significant expenditure—and IT
services represent significant benefits and liabilities. The
business case will include information about costs, benefits,
options, issues, risks, and possible problems. It will also include
a description of the service, including its operational
characteristics, methods of use and acquisition, and support.
Step 2: Analyze Service Value and
Prioritize To Balance Demand
IT service valuation is an important next step. With IT services
defined at a high level, it becomes critical to prioritize them
relative to each other. Given that IT services represent not only
benefit to the organization, but also liabilities and risks,
effective IT service valuation is essentially a risk management
exercise. Valuing IT services based on the risk they provide to the
enterprise provides an objective value achieved by working with the
business. This value is used to rank services in terms of IT focus.
Generally speaking, at this point, the most important services will
now be known and agreed to by all.
Value is more than cost—as well as replacement costs, it
includes possible fines, levies, loss of profit and revenue, legal
and social obligations, etc. Quantifying the benefit—and the
liability—of a service establishes its value to the enterprise.
Step 3: Measure Quality To Choose
Improvement Opportunities
Following definition and valuation, it becomes critical to
measure the quality of IT services. IT service quality cannot be
measured from within the IT organization. At best, internal
measurements of capacity, availability, and so forth can predict
what a user or customer may experience; however, true IT service
quality may only be measured subjectively based on customer
satisfaction. Measuring quality externally from the organization
indicates those services that are not performing as required—from
the point of view of the service consumer. The IT manager then
turns his or her attention to understanding the capability of the
organization for that service. The product of this measurement
phase is a gap analysis indicating what is required and what is
being delivered.
This gap, of course, represents an improvement opportunity—an
opportunity defined in business terms, in agreement with the
business, and of the utmost importance to the success of the
enterprise.
Step 4: Authorize and Allocate Resources
The final phase is the justification of the improvement project
in business terms. Every IT improvement program should be
instantiated as a formal project. This does not require significant
investment in overhead or infrastructure with regard to project
management, but rather a focus on a strong business case. The
business case, defined in business terms and with supporting
documentation from business stakeholders identified during the
definition, valuation, and measurement phases, is critical.
How to Get Started with BSM
It is critical to remember that the purpose of BSM is to lead
ITSM, often in the form of an ITIL implementation. For most
organizations this makes education and training the first step.
ITIL brings with it a common dictionary of IT terminology, as well
as many tools and techniques that must be learned, because most IT
organizations operate without them today (and generate the problems
most IT organizations today face.)
To get going with BSM requires the appointment of a manager to
steer the BSM initiative, and provide guidance to the ITIL
implementation. Specific management training in BSM techniques
(Defining, Valuing, Measuring and Justifying IT services) is
critical for the manger of the BSM initiative. BSM and the adoption
of ITIL are such important projects that they require formal
oversight. The project manager should be an ITIL Certified Service
Manager or have at least one advisor who is so certified. This is a
long-term project, and every effort should be made to have the same
Certified Service Manager to provide continuity to the ITIL
implementation.
This person, perhaps called an IT Services Manager is the person
who should carry out the four steps of service strategy. Executing
the four service strategy steps will produce an inherently
justified plan articulated in business terms. Engaging with the
business helps steer IT and insures that we focus on those systems
and applications that can have the most positive contribution to
the business.
Many companies then begin by requiring most or all IT staff to
take an ITIL Foundations Certification class. This class can be 2 –
3 days in length. Many companies require that the class include a
certification test. This training provides a common understanding
of the ITIL framework, the value of the service lifecycle approach,
how and where IT can add value to the business, and a common
language for a more accurate discussion during the
implementation.
An ongoing step is to consider is the need for new technology.
However, new technology should not be considered until your
processes are better defined. It is important to remember that
technology is only an enabler and does not improve weak processes.
The selection of a tool for software systems should be the last
step in a well-executed plan based on ITIL.
Related Courses
ITIL® v3 Foundation
How to Define and Value IT Services
How to Measure and Justify IT Services