Service Delivery Management

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
that’s “just right.”

Barrier 4 – Technical Issues

The technical challenge is often people’s 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 one’s 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

  1. Sumic, Zarko, “Drivers for Business Process Management,” META Client Advisory,
    Sept. 14, 2004.
  2. Greenberg, Paul, “Field Service: Not Just a Cost Center Anymore,” March
    2003.
  3. Ibid.