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Service Delivery Process Unit-2

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Service Delivery ProcessUnit-2

Service Delivery Process It is concerned with the management of IT services and involves several management practices to ensure that IT services are provided as agreed between the service provider and the customer.

Service Level Management It deals with various issues related to service delivery across business units and helps in the management of services that an organization provides to its customers in a cost-effective manner. It assist in delivering, maintaining and improving IT services up to the desired level through a constant cycle of agreeing, monitoring and reporting to achieve the customers requirements and objectives.

Service Level Agreement Scope of service level management includes defining the IT services for the organization establishing service level agreements (SLA) for them.

SLA is a written negotiated document. Involves documenting the required levels of services to be provided by the organization to the customer. It is a part of service contract.

SLA Each area of service scope should have the level of service defined for it. Level of Service (LOS) is a measure-ofeffectiveness by which the quality of service on elements of IT infrastructure is determined.

Operational Level Agreement Relationship between the internal parts of an organization is defined in this type of agreement. This agreement gives the description of the responsibilities of each internal support group towards the other support groups. Gives detailed description of the internal process including the time frame for the delivery of their services.

Service Level Management Use of service level management in an organization usually does not give an immediate improvement in the levels of services delivered. It is in fact a long-term commitment. Initially, the services are likely to change slightly but improvement can be observed over a period of time. This improvements happens as the targets are achieved and then exceeded.

SLM Major steps required to implement SLM are as follows: Preparing Service Catalogue It provides the details of range of services that can be delivered and the levels of services that are available to the customers.

Developing Service Level Agreement (SLA) It consists of the negotiations agreed upon by the customer and the service provider to deliver the required levels of service support.

Operational Level Agreement It is an agreement between two internal areas. It describes the delivery of one or more components of the end-to-end service.

Service Spreadsheet This is a detailed document identifying what is agreed in the SLA and the required technical specifications.

Service Quality Plan This contains the management information necessary for steering the organization to meet its goals. For each process, target values are defined and solution time with its impact level is set.

2 Approaches followed in SLM Linear Approach It follows these processes: Setup Activity These are early steps that help the business in determining if there is a requirement for service level management and whether it possesses the resources for its implementation.

Service Catalogue It is a guide to the services available to the business.

Service Level Agreement It is a mutually agreed-on an negotiated agreement documenting the required levels of service.

Service Level Monitoring Each service is monitored according to the agreed-on SLA criterion in order to ensure compliance with the SLA.

Service Level Reporting It is an interface between an IT Department of an organization and the person responsible for a business process. It contains the monitoring data used to measure performance against objectives.

Service Level Agreement Review It is conducted to formalize and renew SLAs. 2-way communication between the IT department and the organization. It is a key management inspection which is carried out at specified intervals.

SLA Review ProcessesPlan of Review Prepare for Review

Conduct Review

Follow upon Review

Cyclical Approach It is a cyclic approach, which does not stop after each of these processes are implemented. Defining Services It is a strategic step of service level management. It define and document the services offered by the organization.

Agree and Operate Mutual agreement is laid down in the form of SLA document between the IT service provider and the customer to deliver the required levels of support.

Monitor and Report Monitoring the services as per the terms and criterion mentioned in the SLA document. Prepares report based on observations.

Review and Optimize It reviews the offered services based on monitory report and ensures that the services are being delivered efficiently and are optimized to meet the requirement of the organization.

Advantages of SLM Increased Service Quality Helps in improving the services available to the customers in the long term and resolve service provision issues that currently exists.

Reduced Cost As we have increased knowledge of business expectations so it helps in cost management.

Improved communication with the Customers Dissatisfaction among the customers can be due to following reasons: Bad quality of service delivery. Poor communication between IT service providers and their customers.

So SLM can improve communication by using SLAs and service catalogue.

Improved Customer Satisfaction SLM allows IT department to meet customers expectations and take proper feedback.

Cost of SLM Personnel Cost Includes the cost of staff such as service level managers and the project team.

Training Cost Cost incurred during the training program to train the project members.

Documentation Cost Cost of documentation of related items such as SLA, catalogues.

Operational Cost Costs of operational activities related to modification of the service quality plan, SLA, and service catalogue.

Miscellaneous Cost Cost of accommodation, hardware, software etc.

Financial Management Objective is to manage the monetary resources of the organization to achieve organization goals. It provides cost-effective management of the IT assets and resources which are used for providing IT services.

Financial Management for IT includes: IT cost accounting. Budgeting for IT services and activities. Project investment appraisal. Cost recovery IT charging and billing activities.

Purpose is to make sure that IT infrastructure is obtained at the most effective price. Also includes cost estimation that company will charge to its customers for its services.

Various factors are considered in cost estimation. Equipment Software Personnel cost Cost of third party service providers.

Cost is divided into 2 types: Direct cost Indirect Cost

Components of Financial Management Primary activities where financial management is used: Cost Accounting Budgeting Project Investment Appraisal Cost recovery and billing

IT Cost accounting


Project Investment Appraisal

Cost Recovery


IT Cost Accounting It is an inward looking activity for monitoring financial management process. It involves identification of the assets and activities to which cost can be assigned. It breaks down the cost associated with a particular activity and may assign these costs to a project or customer.

Its major roles are as follows: It allows IT departments to track costs and to make informed decisions about the best way to achieve cost savings. Enables IT departments to quantify and understand their cost. Helps in reducing customer confusion. Assistance to managers in planning and controlling the operation on IT organization. Protect IT department from cost-based attacks from outside vendors. Tracks and records the cost of life cycle of all IT assets. Life Cycle consists of cost of procurement, maintenance and disposal of IT components. For this Configuration Management Database (CMDB) is usually used.

Budgeting of IT Services Includes a detailed plan which specifies the method followed to obtain specific resources and is used over a specified period of time. Includes planning of the future activities. Assessment of the performance of the current activities. Foretell the estimated expenditure to be incurred by an organization during a specified period of time. Controlling and distribution of money. Ensures that sufficient funds are available throughout the entire period. Used for planning routine operational cost.

Some of the factors that must be considered at the time of developing a budget includes: Prior period trends Financial manager should examine the trends of service levels over past budget periods and use the experience to approximate future requirements.

Service Level Agreements (SLAs) with each organizational group. SLAs includes the service levels and the costs for providing those services that must be referred before making the budget.

IT organizational requirements such as personnel training and system upgrades Changes in IT environment may require significant resources, which must be planned in advance.

Industry and economic trends Industry and general economic trends affect the need for IT services; so they must be examined beforehand.

Special requirements such as developing in-house applications For example, depending on the scope of applications to be developed significant resources may be required.

Customer satisfaction Customer survey can be used to find out the service performance from the previous budget. This will certainly help to determine if the correct levels of services are being provided to customers.

Methods used for preparing Budget1. Previous year budgeting New budget is based on the previous year budget. This budget process begins with a copy of the previous year budget and any modification done to the budgeted amount is based on the actual cost incurred to date. The budget planning process begins with a zero balance and each activity that is to be funded must provide a justifiable reason for its inclusion in the budget.

2. Zero-based budgeting.

Zero based Budget advantages It has an advantage over the previous year budget because it is not simply a reworked version of the prior periods budget. It requires that all prior period costs be evaluated before they are included in the budget.

Project Investment Appraisal It is an analyzing activity of the financial management process. It involves the evaluation of costs and benefits of proposed changes by the IT department and suggest for the investment. Methods used for analyzing the financial impact of a change include payback period, net present value, return on investment, total cost of ownership and real cost of ownership.

Investment is a very crucial process and requires intensive analysis. IT manager should evaluate each investment to see if it is useful and worthwhile to the organization. He should explore all available alternatives before finalizing one. Some metrics can be prepared to compare the alternatives.

Methods that are typically employed are: Net Present Value It is the total present value (PV) of a time series of cash flows For an investment, it is the difference between the sum of the discounted cash flows which are expected from the investment and the amount which is initially invested. It is a standard method for using the time value of money to appraise long-term projects.

NPV Following steps are there: Calculate the expected free cash flows (usually per year) that results out of investment. Subtract/discount for the cost of capital (an interest rate to adjust for time and risk). The intermediate result is called Present Value (PV). Subtract the initial investments from PV to get Net Present Value (NPV).

Computation of NPV over last n years can be given as follows: NPV= (PV1 + PV2 + . + PVn) Initial Investment Cost where PVi is the present value or the cash flow from the ith year (positive for cash inflows, negative for cash outflows).

Payback Period It is defined as the length of time required to recover the cost of an investment.Payback Period = (Cost of Project/Annual cash Inflows) For ex, If a project cost Rs 1,00,000 and is expected to return Rs 20,000 annually, the payback period will be 5 years.

Drawbacks It disregards any profit that occurs after the payback period and therefore, it does not measure profitability. It also disregards the time value of money. Time value of money is defined as the value of money figuring in a given amount of interest for a given amount of time.

Return on Investments It is a measure of performance of any investment and sometimes referred as the Rate of Return (ROR). It is the ratio between the financial benefit or loss of an investment and the amount of money investment. ROI= ((Return of Investment Cost of Investment)/Cost of Investment) * 100

Cost Recovery It is referred as charging. It is a charge-back activity of the financial management process. 2 key aspects that one should keep in mind while charging customers: First, the bill should be prepared in such a way that customer easily understands the costs included in the bill. Second, cost should be tied to specific customerperceived benefits that the customer realises through the use of IT services.

IT Charging and Billing These activities involve deciding the charges for various services that IT department of an organization provides, to prepare bill and to send them to concerned people.

Advantages Cost estimation of IT services It assist in fair allocation of cost to IT services provided by the organization to internal and external customers.

Revision of Cost Structure. It identifies and classifies the cost structure of IT services. It checks the charges at regular intervals to find out if they are realistic and need to be revised.

Budget Planning It helps in effective IT budget and planning activities. Includes bookkeeping of IT expenditures and revenues.

IT Service Continuity Management In the current scenario, companies are expected to continue to operate and provide services at all times. So objective of IT service continuity management is to help in ensuring that all IT services are capable of providing value to the customer at the time of failure of normal availability solutions. It provides support to ensure that IT infrastructure and IT services, including support and the service desk, can be restored within desired and agreed amount of time, if in case any disaster happens.

Availability of the IT services or their absence has much influence on customers satisfaction and can quickly affect the overall reputation and success of the organization. The task of IT service continuity management is achieved by a process that analyses business processes , their impact on the organization and the IT infrastructure susceptibility that these processes face from many possible risks.

There are many factors that influence the availability of an IT service. Hardware failure Environmental issues Human Error For ex, mere failure of power supply to a server might cause the whole IT services to be discontinued. Dual redundant power supplies attached to the server can be employed to minimize some of these kind of risks. Battery backup systems can be used to cover the time required to startup a standby generator.

These kind of problems are referred to as availability risks, and the action taken to minimize these problems are called countermeasures. If any of the countermeasures fails, more drastic actions must be taken. These actions are outlined in a document called the contingency plan.

Processes involved Processes involved in IT service continuity management process: Collection of Service level requirements Once risks are known, users take the help of IT to decide which risks are to be minimized and which ones are to be assumed. In order to reduce a risk, one needs to handle many resources like people, time and money. IT management takes the necessary steps to determine a risk which is so small that it does not want to incur much cost to minimize it.

To implement IT service continuity management effectively, customers need to understand the methods that they can use to define their availability requirements. Its effective implementation includes two steps:1. Identify IT service layers. To find out the probable places where risks may be introduced, IT environment needs to be broken down in logical components. Thus their services are divided into layers. Now, an IT service can be delivered only if all the services underneath are functioning.


ApplicationMiddleware Operating System Hardware Local Area Network Facilities Egress

2. Identify risk to each IT service layer. Single point of failure can be identified by inspecting possible risk vulnerabilities of each layer in the IT stack. Various types of risks that can occur are: Fire Flood Virus Power outage Lack of staff Human error

For each of the layers defined, the above stated risk are analyzed to check their impact on them. Risk levels are defined for each layer and corresponding risks, as Low, Medium and High, depending on the level of threat, with which that particular risk can occur in that layer

Proposing Contingent Solution Once the possible risk factors for the business process are recognized, and their financial implications are understood, one can start preparing the contingency plan. Service continuity under this process includes two steps: Failover It is automatic and manual movement of the operations of a component from its primary location to a secondary location. 2 types:- Automatic failover and Manual failover. Restoration It involves the act of bringing the operation of a component back from the secondary location to the primary location.

Formalizing OLA After agreement between customer and the IT dept. of an organization is done, an agreement needs to be formalized between various internal support groups of an organization. Its objective is to present a clear, concise, and measurable description of the internal support relationships of the service provider. Some of the important components that an OLA should include: Definition of the business processing Impact of downtime and non-availability of IT services on business.

The cost of downtime and non-availability and the way theses cost can change over time. Minimum performance characteristics and hours of service required. Critical periods of service, where downtime is intolerable. Less critical period of service, where downtime is more tolerable. Scheduled downtime periods for planned maintenance. Amount of downtime can be tolerated before contingency plan should be invoked. Number of users.

Formalizing the Contingency Plan The contingency plan is like a guide for the IT personnel which is used to failover and recover the service in case of a disaster. This document includes the information on : Escalation and Notification procedure. Start-up and Shut-down procedure. Communication methods and status reporting requirements.

Escalation and Notification Procedures This is the document which maintains the information about who can fix the problem at the time of contingency. It includes the relevant times when an individual can be contacted.

Startup and Shutdown procedure In case of an disaster, the sequence of the steps to be followed should be made available in advance. For ex, in case of natural calamities, availability of this information helps in rebuilding and activating a recovered data centre with less time.

Communication methods The contingency plan should describe clearly the methods of communication that are used by the repair staff to communicate with each other and with the affected process. It should includes the set of actions to be taken if communication media such as telephone, email fails.

Status reporting requirements The contingency plan need to be described clearly so that in case of any emergency, the list of people that need to be notified for each contingency level can be identified.

Advantages of IT Service Continuity Management Organizations implementing service continuity management can manage the recovery of their systems. Organization lose less time for service availability and offer better continuity to the users if they use IT service continuity management. It minimize the interruption to their business activities. It defines proactive measures to reduce the risk of a disaster in the first instance. It is regarded as the recovery of the IT infrastructure used to deliver IT services.

Cost of IT Service Continuity Management Major cost components are: Initial time and cost required to initiate, develop and implement ITSCM. Cost of hardware and software associated with the results of the introduction of risk management. Cost required for continuing the recovery arrangements. Ongoing operational costs of ITSCM. Ex, cost of testing, auditing and updating plan.

Capacity Management The primary goal of capacity management is to ensure that IT capacity meets current and future business requirements of the organization in a cost-effective way. It is the process of planning, analyzing, sizing, and optimizing capacity to satisfy demand in a timely manner and at a reasonable cost. It ensures efficient use of IT infrastructure. It proactively adds components, space or people in a cost-effective manner while assuring that the performance is at acceptable level for new additions and older components.

There are three main elements of capacity management: Inputs:- Usual inputs include business plans, processes, technology and related information used by each of the sub-processes. Sub-processes:- These are the levels of analysis where capacity is considered. Outputs:- Capacity plans, databases, reports, changes and recommendations are the main outputs of the sub-processes.

Capacity management is an iterative process.

Various management tasks involved in capacity management process are: Monitoring It monitors utilization of each resource and service on an ongoing basis to make sure that each hardware and software resource is being used optimally. It helps ensure that everything is happening as agreed in service level agreement document.

Analysis Data collected in monitoring phase need to be analyzed and used to carry out tuning exercises and to establish profiles.

Analysis activity helps in identifying the following issues: Contention in memory, data, file and processor. Inappropriate distribution of workload across available resources. Inappropriate locking strategy. Inefficiencies in the application design.

Modeling It is a central element of the capacity management process. It relies on the data obtained from other capacity management sub-processes and activities. Modeling techniques with the effective use of simulation software helps in investigating capacity planning in order to build a model that simulates the desired outcome.

Optimizing Analysis of the monitored data may identify few important areas of the configuration that could be tuned and optimized to make better use of the system resources or to improve the performance of a particular service. Optimizing techniques that are helpful include balancing workloads, balancing disk traffic, defining an accepted locking strategy and efficient use of memory.

Change Initiation It implements changes to the services that have been identified by the analysis and tuning activities. This activity also includes the identification of the necessary changes and subsequent generation and approval of change requests.

Processes involved It aims to prevent surprises and rushed purchases by making better use of the available resources, and to increase capacity at the right time. Three main sub-processes: Business Capacity Management It is responsible for ensuring that the future business requirements for IT services are well considered, planned and implemented in a cost effective and timely manner.

Service Capacity Management It addresses the issues of IT services. It is responsible for ensuring that the performance of all services is monitored and measured properly.

Resource Capacity Management It concentrates on the technology components and supports the service provisions. It ensures that all components with declared finite resources are monitored and measured accurately.

Advantages of CM Reduced Risk As it effectively manages resources, it reduces the risk associated with existing service and monitors the performance of the resources continuously.

Reduced Cost It helps in making of any investment at the appropriate time, neither too early nor too late, which results in reduced service cost.

Greater efficiency Since demand and supply are balanced at an early stage, this results in a greater degree of efficiency.

Reduced Business Disruption It has close connection with change management. So it reduces business disruptions by preventing urgent changes resulting from inadequate or incorrect estimates.

Improved Customer Satisfaction It consults the customer at an early stage and anticipates the requirements efficiently.

Better validation of IT Spending It ensures avoidance of incorrect capacity sizing which results in appropriate use of resources and sufficient capacity availability in time to meet production workload needs.

Improvement of Relationship with Suppliers Further purchasing, delivery, installation and maintenance agreements can also be planned more productively and effectively.

Cost of CM Cost of Hardware and Software Includes the cost of purchase of hardware and software tools. Common tools needed are monitoring tools, trending and modeling tools for simulations and statistical analysis, reporting tools, capacity management database.

Project Management Cost It is a cost associated with the implementation of the project management process.

Cost of Training This includes the cost incurred in providing personnel training and to develop support base.

Facilities and Services This includes cost of facilities used and cost of services provided.

Availability Management Availability refers to the ability of a service or component to perform the function as desired at a stated instant over a stated period over time. It make sure that any given IT service delivers its functions consistently and cost-effectively at the level of service availability that the customer requires. It also ensures that if there is a difference between supply and demand, then availability management has a solution. It ensures that the achieved availability levels are measured, and wherever necessary, are improved continuously.

AM focus on two distinct areas: New IT service Main goal is to achieve the desired availability targets from the very beginning and to successfully manage the levels of availability in entire life cycle of the solution. It provides best opportunity to organization for achieving desired availability targets in a cost-effective manner.

Existing IT service It requires considerable amount of short term-effort to improve levels of availability. Existing IT services can have their availability levels much improved and stabilized through the use of a formal availability management process.

Processes involved Various approaches are available, each having its own cost implications: Defining Service Level Requirements Understand the availability targets of the customer. Determine the cost of downtime or unavailability of the required IT service, so that a feasible IT budget can be setup.

Includes following: Determining Critical Customer Functions An IT service may contain multiple customer functions or transactions. These functions have varying availability requirements and impact on business if they fail. Then these functions or transactions are studied and ranked in order. Based on the order, functions or transactions that are very important and critical for the business can be identified. Determining the Availability Requirements If the customer sets inappropriate expectations without understanding details, it leads to many undesirable consequences such as 1. Misunderstanding between him and IT organization. 2. Inappropriate levels of Investment 3. Customer Dissatisfaction.

To avoid such kind of problems and misunderstandings, it is very important to understand exactly how an availability requirement is to be measured. Customer should be educated about the terminology and make sure that end results are realistic. This activity consists of following: Define key business requirements. Identifying and negotiating the periods of downtime for planned maintenance activity, technology upgrades and the introduction of new business functions. Identifying quantifiable availability requirements. Defining business hours of the customer. Setting up agreement about maintenance channels.

Proposing Availability Solution Identification of IT Service Components Available IT services are divided into manageable components. For ex, Service Applications Middleware Operating System Hardware Network Facilities

Design for Availability Lifecycle of each component is studied in detail. Availability risk and countermeasures Risk associated with each component and their appropriate countermeasure is identified. Lifecycle management needs The main goal of this step is to determine any operational task that can be undertaken to maximize the availability of the IT component, for ex startup and shutdown time.

Common management needs of each IT component includes efficient handling of: Monitoring of IT components End to End health checks Startup and Shutdown of components Proper password maintenance Housekeeping administration Backup and restore methodologies Upgrade and change methodology Emergency upgrade methodology Configuration documentation requirements Failover and feedback requirements

Design for Recoverability There is a need of recovery plan which can be used in case of an incident such as an unexpected event or even in the failure of a countermeasure to protect a service. For ex, in case dual redundant power supplies, any failure in primary components needs to be identified and corrected before the secondary unit also fails and result in total loss of service. Lifecycle of a incident includes: Incident occurrence Incident Detection Incident Diagnosis

Incident Repair Service Recovery Normal service restoration Various periods that can be measured: Occurrence of the incident This is the time when the fault is identified by a user through other means Detection After the occurrence of the fault, service provider is informed about the fault. The time required for this is called detection time. Diagnosis Service provider needs some time to respond. This is known as response time. This time is needed for diagnosis of fault.

Repair Service provider restores the service or the components that caused the fault. Service Recovery This is the time when the service is restored to the user. This includes activities such as configuration and initialization. Normal Service Restoration Finally, normal services are restored.

Maintenance Management It refers to all technical, administrative and managerial actions during the lifecycle of a component intended to retain it, or restore it to, a state in which it can perform the required function.

Maintenance work must be carried out when the impact on the services can be minimized. It keeps a scheduled time, when normal services are not available, during which it can perform software and hardware upgradations, changes to any component can be done.

Developing the Availability Plan It is long-term plan concerning the availability of the IT services in the next few years. It is one of the important outcome of the availability management. Initially it describes the existing state, later following can be added: Activities for improving the existing services. Plans for new services and guidelines for maintenance.

Measuring and Reporting Provide provisions for verifying service agreements, resolving problems and defining proposals for further improvements. Following metrics used in availability management: Mean Time to Repair (MTTR) Average time between occurrence of a fault and service recovery. Also called downtime. Sum of Detection time and Resolution time. Mean time between Failures (MTBF) Minimum time required between the recovery from one incident and the occurrence from the next incident. Also called as uptime. Mean time between system incidents (MTBSI) Mean time between the occurrence of two consecutive incidents. MTBSI= MTTR + MTBF

Formalizing Operational Level Agreements SLA is a two way written agreement between an IT service provider and the IT customers. OLA is an agreement between internal IT service providers.

Advantages It ensures that new products and services fulfill the availability requirements and availability standards that are agreed with the customer. The associated cost is acceptable. It makes sure that the availability standards are monitored continuously and improved. In case of the unavailability of the service, it ensures that corrective action is taken when the service is unavailable and tries to minimize unavailability duration.

The cost of availability management includes following components: Cost of implementation It includes cost of implementation of availability management in the organization.

Personnel Cost This is the cost incurred in providing training to personnel.

Facilities Cost This is the cost which is required to provide various facilities to customers.

Measuring and Reporting Tools It relates to the cost incurred in measurement and reporting tools.