I was sitting in a meeting the other day and the dreaded question came up. “How do I justify the investment in Service Management to the customer?” the IT executive asked.

It is a fair question. It is a question that makes sense. There is only one problem – it is the wrong question.

THE CUSTOMER PERSPECTIVE OF SERVICE MANAGEMENT

We in the Service Management industry have made a big deal about putting our services in the context of business value. That is the right thing to do, but it is misaligned when we discuss the value of Service Management. Here is the cold, hard truth about Service Management: it has no value in-and-of itself. The value is only realized through the delivery of better services to our customers.

So the answer to the question of how you justify an investment in Service Management to a business executive is not one we like to hear – you don’t. It has no value to them.

It is as if you walked into your favorite restaurant and the maitre’d greeted you with a warm smile saying, “Welcome, welcome our favorite guest. Thank you for coming. Today, I am so excited to tell you that we have revamped everything about the restaurant! We have a new menu, we can take and deliver your order 30% faster and the quality of your meal and the entire dining experience will be better than ever before!”

He excitedly continues, “This has taken a great effort and has come at a great expense. As one of our best customers, your share of this improvement is only $1,000. Will that be cash or charge?”

You would clearly turn around and walk out the door. This does not mean that you would not value a better, faster experience. It is just that we see that value from two perspectives. First, we all have a basic expectation that things should work as we expect them. If we walk in to a restaurant, we expect that the wait staff will be attentive and that they can get our food out to us in a reasonable amount of time. To the extent that the improvement in speed or quality simply brings the service up to what we perceive as our “expected” level of service, we will not want to pay anything for this “improvement.” That is because it is not an improvement at all. It is merely delivering what should have been reasonably expected in the first place.

On the other hand, if it represents a fundamental improvement of the service level to a point beyond our normal expectations, it will be a different story. We still will not want to pay for the improvement process directly, but we will likely be willing to pay more for our meal than we were before the improvement. If as a result of the improvement effort, the food and service is consistently better, you will probably be happy to pay an extra $2 per meal for the better dining experience.

THE VALUE OF SERVICE MANAGEMENT

What then is the value of Service Management? The value can only be found from either the present or future needs of your customer. Essentially, you should only be utilizing Service Management as a tool to either:

  • Improve the service you are currently delivering to your customers
  • Proactively reinvent yourself to meet your customer’s future needs

While this should be common sense, the truth is that many IT organizations drink the proverbial “ITIL Kool Aid” and fail to root their efforts in the value to their customer. This fact is betrayed by the countless “Service Management” or “ITIL Implementation” projects that exist within countless enterprises around the world. The goal should never be to adopt Service Management or implement ITIL. It should always be to solve a specific set of problems and to improve a specific set of services in ways that are quantifiably valuable to your customers. As you recognize this, you will understand why the question of how to justify a Service Management effort was the wrong question in the first place. That question is evidence that what you are communicating to your customer is that you are implementing Service Management rather than simply utilizing Service Management to solve a problem that is of meaningful value to them.

If a Service Management effort is executed solely in the context of improving services that the customer values, the question of justifying the “Service Management effort” will never come into question. While you should have an earnest conversation with the customer about whether the improvement that you are proposing is worth the cost of implementing that improvement, the conversation will be about the value of the improvement, not how it is done.

There is one other aspect of this that you must be mindful of, however. This approach assumes that your customer is at least marginally happy with the services that you are currently providing. It is only in this context that the “value of the improvement vs. cost of the improvement” conversation can be had. If your customer feels that the current level of service is sub-par, then they will be very reluctant to have any conversation that involves “further investment.” You must therefore be prepared to not justify your improvement efforts at all, but instead to fund improvements through your run-rate budget. You will need to demonstrate to your customer that you can deliver at a basic level before you can have the next conversation.

BLOW IT UP

In his book, Winning, Jack Welch tells the story of the moment when he handed the reins of GE to Jeff Immelt. It was a monumental moment in the storied history of one of America’s most admired companies. He looked at him and simply said, “Blow it up.” It was the same advice that he had received from his predecessor and the message was clear. GE had not become the company that it was because its leaders had rested on the successes of their past. They were successful because they were willing to constantly change to prepare for the future. Nothing was sacred if it would inhibit the future success of the company.

This sage advice is the other major value that can be found in Service Management principles. Service Management efforts can be utilized as a tool to “blow it up” and proactively prepare the organization to meet the future needs of its customers. One of the most common reasons for not moving forward with a Service Management effort is that “if it isn’t broken, don’t fix it.” The idea is that if services are being deemed “acceptable” by the customer, then a Service Management effort will simply make the customer start to question the value of services with which they are presently happy.

The problem is that if you wait until the customer feels the pain, it will be too late. In this era of increasing competition from outside providers and off-shore outsourcers, you must be proactive and be willing to introduce significant changes to the service delivery model in anticipation of your customer’s future needs. This, of course, requires a deep and strategic relationship with your customer to be able to understand what those future needs will be. With that understanding, and from the perspective of meeting your customer’s future needs, Service Management principles can be a powerful tool to reshape and reorient your organization toward a vision for the future that you create with your customer.

THE RIGHT QUESTION

The question is not the value of Service Management. The right questions must be about the customer. What do they value? Where are their opportunities to add value to the services they provide? What must you be doing now to help prepare them to compete in the future? These are the questions that will enable you to plot a strategy with your customer that directs both the most valuable operational improvements and the most strategic investments to enable future gains. The fact that the adoption of Service Management practices will be the catalyst that helps you realize these goals will not matter to your customer. It will only matter that you have understood their needs and what they value, and that you are executing a plan to realize them.

That is the real value of Service Management.

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