Empowering Service Management

Executive summary
Camille Mendler Vice President, Enterprise Research cmendler@yankeegroup.com

Paris: XX XXXXXX, 2007

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

Introduction

Le langage est source de malentendus Language is the source of misunderstanding

Antoine de Saint-Exupry, Le Petit Prince

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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What we can prove

1. Speaking ITIL fluently is table stakes to deal with large enterprises 2. Depth and breadth of ITIL competence is a key selection criteria for more than 75% of large enterprises choosing managed IT and communications service providers 3. ITIL is top of mind among OBS leading competitors, and associated investments are accelerating

4. OBSs Service Select campaign is differentiating: It creates a revenue opportunity in what was an operational function
5. Once committed, there is no going back: ISO20K is necessary to demonstrate and maintain world-class service management

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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Service provider and enterprise disconnect

Communication without mutual understanding
Whats at fault Service providers and enterprises speak different languages to define their ICT environment Lost in translation Expression and interpretation of requirements Expression and interpretation of value delivered Consequences Pieter Brugel, The Tower of Babel, 1563 Extended time to revenue to detail deliverables contractually Focus on technical minutiae, rather than transformational impacts Lack of recognition of potential service enhancements on offer Risk of poor customer satisfaction, due to mis-communication of value
Service management, a body of practices governing the management of ICT environments, is at the front line of this communication disconnect
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Introducing ITIL

A lingua franca for empowered service management

Service Support
Configuration Mgmt Database (CMDB)

Incident mgmt Availability mgmt

Problem mgmt

Configuration mgmt Service Desk Change mgmt

IT service continuity Release mgmt Financial mgmt Service level mgmt

Capacity mgmt
Service Catalog

Service Delivery
Source: Orange Business Services

ITIL is a body of best practice in ICT service management organized into functional management groupings using a common definitional language

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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Enterprise expectation of ITIL fluency is growing

ITIL competence is a key supplier selection criteria
100% 90% 80% 70% 60% 50% 40% 30% 20%
20% 16% 4% 3% 23% 21% 5% 1% 1% 1% 51% 49% 49% 54% 24% 28% 22% 23%

Extremely important Very important

Somewhat important Not very important

10% 0%
3% 2%

Not at all important

All Enterprises North America

Europe

Asia

ITIL competence is now a key supplier selection criteria for managed IT and communications services among large enterprises in key markets.
Source: Yankee Group 2007 Managed IT and Communications survey large enterprises

n= 525
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Copyright 2007. Yankee Group Research, Inc. All rights reserved.

Optimizing service management

Summary: Does ITIL matter?
Company AT&T BT Agree? Agree Strongly agree Comments ITIL is a standard element among the approaches required to deploy, monitor, maintain and optimize IT infrastructures Adherence to [ITIL] standards creates opportunities that are revenue generating It gives us a natural ability to add value ITIL is great for us, it helps clients look behind big brands and see where we provide unique expertise like unbundling the networking layer to us ITIL is fundamental for control over service environments, particularly with regards to compliance We wrote [most of] the books on ITIL; we believe in the potential of continual service improvement ITILs popularity is tightly linked to growing outsourcing of support services and heightened regulatory concerns it is part of what it takes to improve an organization CIOs want to hear their language back or we have no credibility; with ITIL, we know what words to speak to the customer ITIL is without doubt the most important of all frameworks we use

Dimension Data HP

Strongly agree Strongly agree

Tata Consulting Services Vanco

Agree

Strongly agree

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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Human capital: service management expertise

Orange is in the leader pack
ITIL Trained Staff by Expertise
2%

Sprint

98%

ITIL Trained Staff

DiData

2%

98%

Vanco

2%

98%

Orange

6%

94%

BT GS/INS

10%

90%

IBM

13%

87%

HP
0%

30%

70%

Com pany AT&T BT GS/INS DiData HP IBM Orange Sprint Vanco

80% 100%

Totals refused* 620 550 5000 5000 1098 350 43

20%

40%

60%

Manager

Other

*approximately 10% of consultants

Oranges ratio of ITIL-trained staff is within comparative group, although a slightly lower ratio at Manager level. However, trained staff fall largely in internal rather than customer-facing functions. Others have focused their ITIL training investments from Sales outward.
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Evaluating Oranges Service Management Propositions Emergence of a new revenue stream: Service Select
Market use of ITIL in managed services
Actively used in managed service provision But largely as internal tool to govern management processes Not as a means to market new service management propositions Consequence: Majority of service providers recognize use of ITIL important, but have not made the strategic leap to use ITIL as a means to sell enhanced management capabilities in managed services

Productization of service management

Repositions service management as a differentiator and revenue stream Establishes clear boundaries between what is basic, extended and customized Reduces risk in scoping complex outsourcing projects
Copyright 2007. Yankee Group Research, Inc. All rights reserved.

Consequence: Accelerates repositioning of Orange from connectivity heritage and its legacy competitors into ICT infrastructure management, broadening appeal of service managements value to a wider audience
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Competitive Environment and Service Select

Summary View: Threat Ranking
Company
AT&T BT (inc. INS) Dimension Data HP IBM Sprint Tata Vanco

Threat ranking
3 4

Comments
Pushing best of breed service management which could be formally productized to respond to Orange Service Select no current plans articulated Actively developing productized service management offers as part of drive toward utility computing Some productized service management offers, ambitions more limited in scope Partnership with BT gives direct line into service management activities, but not core direction per se Disconnect between consulting and managed services operations, but brand and capabilities mean it could respond to Orange with its bulk Nascent stage, internally focused on service quality improvement, limited global market presence Seeking annuity revenue boost, but will take time to execute in similar vein, fragmented activities partly at VSNL as well as TCS level Service management core to value proposition, quickly ramping up ITIL skills, has market attention to exploit

5
4 3 3

3 1
2 2 4 4

Ranking 1 (lowest) to 5 (highest): Plans and ability to replicate Service Select offer
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Orange: ITIL maturity detail

Vision Definition: Definition of an ITIL service management vision integrated into companys ICT services roadmap Orange: ITIL identified as element of ongoing and future roadmap Internal skills Definition: Investment in ITIL competence across organization to execute on roadmap Orange: Investments not finalized on systems level, strong training program Service management capabilities Definition: Execution of ITIL processes into service management propositions Orange: ITIL overlay onto legacy processes with progressive migration plan
Orange: ITIL Maturity

Vision

Internal skills

Service management capabilities

Sales approach Definition: Ability to leverage ITIL knowledge fluently in client engagements, including response to RFPs Orange: Pockets of ITIL knowledge across go-to-market teams, reliance on small number of evangelists but level of proposed productization is differentiator
Copyright 2007. Yankee Group Research, Inc. All rights reserved.

Sales approach

On a scale of 1 (nascent) to 5 (highly mature)

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ITIL service management: A double-edged sword?

Upsides Sets a new standard in competitive capability through Service Select Creates a revenue stream in an area which was fundamentally a cost centre Reduces risk in scoping & pricing outsourcing deals and other large projects Facilitates new technology innovation in converging IT and communications services Repositions Orange as a skilled service provider across ICT infrastructures Improves time to revenue and sales efficiency Downsides Butts head with IT services juggernauts with deep consulting capabilities and ITIL competence Raises the bar in compliance/certifications and triggers new requirements Requires cross-company collaboration to achieve Service Selects potential But benefits outweigh risks if Orange follows through on what is has started: -Creation of a new annuity revenue category leveraging an IT-centric framework that IT services companies have failed to act upon - Creative management of integrated IT and communications metrics to achieve business transformation through proactive use of ICT
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Conclusions
1. Speaking ITIL fluently is table stakes to deal with large enterprises 2. Depth and breadth of ITIL competence is a key selection criteria for large enterprises choosing managed IT and communications service providers 3. ITIL is top of mind among Oranges leading competitors, and associated investments are accelerating

4. Oranges Service Select campaign is differentiating: It creates a revenue opportunity in what was an operational function
5. Once committed, there is no going back: ISO20K becomes necessary to demonstrate and maintain world-class service management

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

Page 13

Recommendations
What you need to do
Achieve fluency in ITIL across departmental boundaries
Orange will only achieve significant service management revenue growth if all staff, and particularly sales, speak ITIL Basic fluency in ITIL is required to understand customer needs, and respond to bids effectively and successfully Consider change to commission plan to incentivize service management add ons

Practice what you preach and prove it

ISO20K is the next hurdle to differentiate service management offers Use of ITIL terminology will become a marketing veneer among weaker, less competent competitors This will necessitate differentiation with ISO20K

Build integrated marketing campaign and find poster child

Gap in marketing story exists without one or more case studies (eg: as was leveraged with Le Meridien)

Copyright 2007. Yankee Group Research, Inc. All rights reserved.

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