Service Delivery Management by mThink, May 23, 2005 Organizations today are challenged with simultaneously improving performance and lowering costs. Many are discovering that the key lies in reinventing service by adopting a service delivery management (SDM) strategy, which enables optimization and effective management of customers, assets and workforce. By focusing on operational business flows across organizations, and breaking down the information silos that prevent true business transformation, this holistic and process-centric approach to service distinguishes SDM from previous approaches that were solely customer-centric or asset-centric. The evolution of paradigms within the utility industry illustrate the growing realization that processes are interrelated and must be considered in concert for true effectiveness. This is shown in Figure 1. Because of this approach, one can naturally assume that service delivery management involves systems integration. Indeed, systems integration is a core element. However, the real essence of SDM goes beyond integrating systems to: Resolve the cultural and organizational barriers that impede transformational change; Normalize the service components used by the organization; and Optimize the key service delivery processes. Thus, service delivery management is a systems integration strategy and a business integration strategy, which can only be executed with the resolve and leadership of the business owners of the service processes. While service delivery management does involve systems integration, it is much more comprehensive than solely the interconnection of multiple applications. Systems integration, in this larger context, is not a trivial problem. As Dr. Zarko Sumic, vice president for META Group, observed, Although optimization of the complex business processes spanning a number of lines of business offers the largest improvement opportunities, it poses the greatest technical challenge.[1] The ability of organizations to technically and cost-effectively integrate applications and business processes stands as one of the impediments to true business transformation. Yet, it is key to enabling service delivery management. Paul Greenberg, author of CRM at the Speed of Light, writes, In order for this model to work effectively, technology has to be fully integrated with both existing systems and third-party systems and with the processes and data that exist for making the service delivery management solution an appropriate and successful one.[2] Defining Barriers Integration costs alone have historically represented 30 to 50 percent of the cost of a project. Therefore, it is imperative that the associated cost be reduced and the process made more agile for significant value to be attained. Understanding historic integration barriers and how these barriers can be addressed is essential to solving the integration conundrum and achieving the interoperability required for an effective strategy. Barrier 1 Need for Process Aware Applications Applications have typically lacked the breadth and depth of support for interactions necessary across multiple systems and business entities. Interfaces are often naive in the approach, supporting only a simple interface. The required available methods are often too incomplete to build robust collaborative processes. Moreover, organizations are typically limited to a least common denominator and are forced to model the flow of information supported by the least robust application in the collaborative process. Given this lack of process awareness, many organizations resort to more costly custom interfaces, which in turn make systems brittle and impede agility. Barrier 2 Lack of Common Semantics Every time a boundary is crossed between applications, a price is paid. Because each application incorporates various entities, objects or services within its unique model, an account, a contract or a work order may be conceptually distinct within each application model. Information assumed to be known to an entity, object or service may actually only be known to another portion of the application or not known at all. Bridging these semantic gaps can present some interesting challenges. An urban legend holds that if you translate the spirit is willing, but the flesh is weak to Russian and back to English, you get something like the vodka is good, but the meat has disease. Whether true or not, the point is that crossing semantic boundaries has a price and can prove challenging. Barrier 3 Number of Applications to Be Integrated The cost and amount of integration work required goes up dramatically as the number of applications increases. While strategies can be employed to eliminate each connection requiring a point-to-point integration, complexity still increases as more systems are used. Fewer may be better, but the Goldilocks principle seems to apply. One giant, monolithic system comprising your entire business may initially seem appealing, until you need to change. Then, changing just one module requires a complete upgrade for the entire enterprise an extremely costly and inefficient approach. It is far more efficient to determine the point thats just right. Barrier 4 Technical Issues The technical challenge is often peoples first concern, but in many ways it is the least important. The barriers outlined above actually have much greater impact. The barriers of the past that led to point-to-point integrations based on the data model itself have given way to a steady stream of technical advancements. These advancements were accomplished by applying distributed object-oriented computing principles to the technical integration problem. The result has been solutions providing higher levels of abstraction through application programming interfaces. Middleware solutions have provided the ability to bridge the gap between legacy solutions and the lack of uniformity in technical approaches. Hurdling the Barriers Addressing these barriers is a significant concern for organizations executing a service delivery management strategy. The overall focus on systems integration has marked a new dynamic that Sumic has referred to as the era of interoperability. According to Sumic, In the era of interoperability, the principal technology goal is a frictionless integration environment focused on business processes rather than systems. Because system boundaries often do not reflect process boundaries, the combination of the process-oriented view and the emerging serviceoriented architecture provides the ability to drive value through crossfunctional business process optimization. In order for organizations to realize the benefit from this new era, thoughtful consideration must still be given to removing the interrelated barriers of the past. Process awareness Solutions must be aware of the nature of interactions required in the context of broader business process within and beyond the enterprise. This awareness implies that methods must be available that are robust and complete. Common semantics The common semantic challenge persists as a significant issue. Uniform semantic standards do not exist for most processes. Selecting solutions that embrace semantic standards where available, combined with selecting integration touch points that are known, is currently the best approach available. Number of applications Leveraging the full capabilities of suites that enable a service delivery strategy minimizes the number of applications that must be involved in supporting the business process. This approach allows organizations to deploy components that reduce integration complexity and cross boundaries at points where the level of semantic integration touch points are well-understood. Technical The advent of service-oriented architectures and the use of Web services mark significant advancement and uniformity in our overall technical approach to integration. Collectively, the primary initiative should be acquiring service-oriented business applications that provide coherent pre-packaged components providing support for the imperatives represented in the service delivery domain customer management, asset management and field service management. From the Business Side More significant than system integration to service delivery management is the execution of a sound business integration strategy. If achieving transformational change and business value requires more than systems integration, what are the missing elements? An integrated approach for service performance and service execution combining your customer relationship management, field service and asset management strategies. True transformation will require the following: Resolve the Cultural and Organizational Barriers That impede Transformational Change Business processes do not stop at the boundaries of an application, or at the boundaries of an organization; they actually extend to your customers, suppliers, contractors and partners. So, achieving transformational change requires breaking down not only the application barriers, but also the people and information barriers as well. When optimizing business processes, think in terms of the processes that span multiple organizations and where information created in one area is used by another. Cultural and organizational issues are often what prevent true change and impede progress. Examples: Technicians with similar skills are unable to share workloads because of organizational/territorial and system boundaries. Customer service representatives are unable to make specific commitments to the customer as to when work will be performed or provide updates about the status of work in progress. Groups responsible for the execution of work and the reliability of the infrastructure have supply chain clashes with the financial groups responsible for the stewardship of financial processes. Eliminating the suboptimization that results when independent groups make myopic decisions in their portion of a process remains the most formidable barrier to change. Often, this is a structural problem. No one has responsibility for the complete service delivery process. Rather, fiefdoms exist for call center, billing, field service, construction, maintenance, inventory and payables activities. Transforming an organization to enable it to reinvent service requires breaking down these cultural and organizational barriers and forcing organizations to share information and enable processes that support the operational efficiency of business. Normalize the Service Components Used by the Organization Once an organization is willing to address the organizational and cultural challenges, it can begin to reconcile redundant or overlapping applications applications that fill the same role, but for different groups. For instance, organizations often have multiple work management systems. While the IT inefficiency is obvious, normalizing the application portfolio needs to be carefully thought through. Too often, this exercise is driven from the IT perspective of simply reducing the number of applications and integration points it needs to support. Instead, it should be driven from a business process perspective. The guiding principles for normalization are: Business value that can be driven by re-engineering existing work practices through the use of a single application. Ability of the application to manage all aspects of the role required to be filled by the application. Capacity of the application to provide the depth of capability needed not just to support existing practices, but next practices once the organization is prepared to move to higher levels of operating efficiencies. Ability to tailor the application to promote efficiency based on the capabilities needed today and how those capabilities are used. Optimize the Key Service Delivery Processes Once complete end-to-end processes are enabled though systems integration, value can be driven though the optimization of resources that drive those processes. To optimize resources, first consider the interrelationship of customer-facing and asset-facing activities and their relationships to work processes and supply chain management processes. As Greenberg observed, Field service is not simply a customer-facing set of processes, applications and actions. It cuts a massive swath across all elements of business including supply chain, customer relationship management, and enterprise resource planning [asset management]. It intersects the demand and supply chains and the subsequent molding of the value chain.[3] The downstream processes that define work and support the execution of work are critical to ones ability to deliver service. But, to stop there tells only part of the story. While customers are a primary source of demand for the execution of work in the field, there are additional sources, which tend to be oriented around the maintenance of the infrastructure for the delivery of the utility service itself. These activities tend to be less reactive, but are equally important to the value chain as they support the continued reliable delivery of service. Conceptually, all of these demand sources, together with the associated service-level commitments, must be balanced with the supply sources that are necessary to complete the work tasks. Supply sources include the availability of skilled labor, both inside and outside of the four walls of the utility, as well as all of the associated parts, tools, equipment, permits and instructions needed to complete the job (see Figure 2). Service optimization technology employing a combination of advanced heuristics and genetic algorithms can consider the overwhelming complexity of variables and constraints, combined with the nearly infinite potential order sequencing combinations, to provide an optimal schedule and to react to changes in real time. The power of these technologies is enormous. In fact, it is precisely the lack of such tools in the past that perpetuated inefficiencies and served as a primary barrier to transformation. The power of the tool goes beyond just doing a better job of scheduling. It enables organizations to completely reconsider how work is organized and how the skill sets within the business can be most effectively leveraged. Conclusion Service delivery management is a philosophy for reinventing service by achieving constructive operational transformation based on a processcentric paradigm. It is a business integration strategy combining both your customer relationship management (service performance) and asset management (service execution) strategies and encompassing key operational strategies for: Systems integration; Cultural and organizational change; Normalizing service components; and Optimizing key service processes. So, service delivery management is indeed an integration strategy. However, it is not an integration strategy that can be solely executed by the technicians in the IT department. It is a business integration strategy that must be addressed and embraced in the boardroom. Endnotes Sumic, Zarko, Drivers for Business Process Management, META Client Advisory, Sept. 14, 2004. Greenberg, Paul, Field Service: Not Just a Cost Center Anymore, March 2003. Ibid. Filed under: White Papers Tagged under: Utilities