CHAPTER 17: THE USD AS A KEY TO MANAGEMENT AND CONTROL
“How do we support the mission and objectives of the enterprise by using USD concepts?”
The answer to that question provides the basis for a mission statement and it requires the creation of a strategy to fulfil that mission. The service management strategy should not be limited to IT or facilities; it must identify the means to fulfil the whole enterprise’s needs. The first step is to understand and influence the enterprise’s functioning. The second step would be to take responsibility to steer overall service management, and therefore this concerns controlling service and facilities functions in their entirety. The decision to embrace both internal customer service and external customers is one of the key strategic points, as is the decision about what services should be brigaded under FM and/or service management.
After reading this chapter, the reader will better understand how the management of facilities and services takes shape within an enterprise and what position the USD must, by necessity, adopt.
17.1 Management and control
Control provides insight into the customer demand, the package of services on offer, the internal processes, the processes in the information partner and supply chains, the quality indicators and the costs and the relationship between these elements. Management implies movement and direction. The services manager operates in accordance with the set corporate governance policies on the basis of customer expectations. The customer groups determine to a large extent the nature of the services provided, and how the quality of service is valued.
Controlling the service organisation is closely related to the way in which the services and service organisation can respond to the expectations of the customer and the timely deployment of new products and services. The service organisation has administrative capacity if it is able to formulate clear objectives for itself and to realise these. The management and control concepts determine the steering power. Such concepts include the strategic services plan with its vision and mission, the front office to back office principle, procurement management, internal management functions, client mandate, account management, culture, competencies, marketing, budget, performance indicators and management information.
Understanding the service organisation’s position within an enterprise is essential for interpreting the USD role in the management and control mechanism. The service organisation can be positioned between the various stakeholders in the enterprise.
The position of the service organisation is approached from stakeholder management perspectives (Freeman31; Mastenbroek).32 The stakeholder approach emphasises the importance of investing in relationships with those who have an interest in the stability of these relationships. These stakeholders are groups within the enterprise or in its environment and that have an effect on the enterprise, or are affected by its objectives. Networked enterprises are based on the cooperation between rival units with different interests. The relationships between these parties are characterised by simultaneous cooperation and competition. In other words, in some activities the emphasis is on cooperation, in other cases mutual competition is dominant and the separate interests of units play a greater role.
Consult IT Governance Publishing Ltd’s Collaborative Business Design (Johnson and de Rouw) for a detailed study of the issue of stakeholder relationships in the design of business services.33
The mutual dependence between the parties is evident. Examining the perspectives help us understand the tension between supply and demand. The service organisation can be positioned from this perspective between the four main parties dealt with in the intermediary role on a daily basis:
1. The general management or board, also called ‘clients’
2. The clients, also called ‘customers’
3. The users, also called ‘consumers’ or ‘customers’
4. The service providers, both internally and externally (the various suppliers)
This is shown in Figure 17.1.
Figure 17.1: Four important parties for the service organisation
As shown schematically in Figure 17.1, the service organisation brings supply and demand together. On the demand side, the service organisation has three parties:
1. General management
2. Customers
3. Users
Customer versus users
For a good understanding of the management cycle, a distinction must be made between the customers of services (the users) and those from whom the service organisation receives money. In general, the customer can dictate because they pay. Thus, we speak of customers when there is some degree of control. Users in this model have no control, they do not pay.
However as already indicated at the beginning of the book, users will often be referred to as customers. The distinction between customer and user/customer is important in stakeholder analysis. Sometimes this distinction is solved by speaking of contractor and user, or of client and contractor.
The service organisation’s services are purchased for users so that they can perform their work. With the clients or customers, the service company makes agreements based on the needs and/or priorities of the users about the price that has to be paid in order to be able to deliver the services. The most important customer or client is generally also in the management board or general management with the portfolio for business operations. They pay for the generic or basic services. These needs are often laid down in service agreements or (internal) SLAs. Where external customers are concerned, the documents will be contractual, perhaps supported by the more informal SLAs.
The service organisation identifies the need and translates its functional requirements into a technical package of requirements that meets market supply. In doing so, it takes account of requirements set by the board such as architectural requirements, house style and strategic principles. In addition, the service organisation will also advise the board on matters such as new developments, standardisation, policy and costs.
Where services cannot be offered from internal sources (or where external supply is more cost-effective̶ (sometimes a standard business word for ‘cheaper’), the service organisation then purchases the services from one or more suppliers. To this end, it concludes contracts, covenants or SLAs. The service is provided to the customers in accordance with a product and service catalogue and maintained, for example by service/account management and a USD desk. In Figure 17.1 this is represented by the direct line between suppliers and users.
On the basis of measurements (e.g. audits, satisfaction surveys, panels) and performance management on the contracts, the service organisation obtains a picture of the quality. Results are reported to general management and clients. The service organisation can also take the initiative to advise on new developments (motivated by users or service providers).
Example:
Some service management systems offer automatic surveys after calls. Customers can provide feedback about their support experience by rating their solved tickets. When customer satisfaction ratings (CSATs) are enabled, end users receive an email 24 hours after the ticket has been solved that asks them to briefly evaluate their experience.
The service organisation therefore maintains various relationships with the various parties. Sometimes these are instrumental relations, such as contracts or work agreements. In addition to these, other relationships can also be distinguished such as social, power, dependency and negotiation relationships. The nature of service is generally supportive within the enterprise. A characteristic of this type of work is that they are primarily a cost centre.
The choice to translate needs into a concrete range of products and services mainly concerns the use and distribution of scarce resources. Therefore, the service organisation seeks an optimal relationship between wants and needs and the available services in the market. Of course, the wants and needs of buyers, clients and management are not necessarily the same. Users want maximum support, regardless of the costs. Clients will evaluate costs in relation to the quality of service. In addition to its organisational objectives, management (sometimes general management) has social and political interests. This means, for example, selective cost reduction or standardisation. The service providers (suppliers) want to earn as much as possible from the contracts with the customer organisation, or seek reinforcement of the contracts as the preferred supplier.
Critically, the service organisation must coordinate these sometimes conflicting interests of supply and demand so that all parties are satisfied. For example, sole focus on cost reduction will ultimately frustrate the suppliers, which means they will focus mainly on minimal costs and less on quality. Another example is that it is not possible to allow users’ free choice at the expense of the desire for cost control and standardisation. Furthermore, ultimate standardisation may interfere with the ability of the business to develop new markets and it may alienate users and customers.
This means that the service organisation sometimes has to balance similar and different interests. In practice this translates into an effective function through a mixed approach to the relationships: on the one hand demand or customer-oriented, on the other hand by acting as the manager and conscience of the enterprise, and through monitoring and prescribing.
17.2 Nature of work
There are four types of activities that typically occur between the service organisation and the four most important stakeholders:
1. Operational services (operation and delivery)
2. Demand management (orchestration/operating model)
3. Strategic services (governance)
4. Audits, training and pilots (quality)
These activities are shown in Figure 17.2.
Figure 17.2: Primary activities
1. Operational services (operation and delivery)
In this area, the relationships between users, suppliers and the service organisation are maintained, but the focus is on service delivery. This also concerns the actual execution of agreed projects and changes to which offers have been issued. This means that the products and services to be supplied are known and recorded in a products and services overview. Through service management, a USD or help desk, the supplier ensures that complaints and reports are channeled and solved smartly and efficiently.
Processes and procedures are largely known and transparent, and the service organisation is kept up-to-date with reports. Sometimes it is necessary to carry out audits. Several forms of consultation monitor the operational process; these include operational consultations between customers and suppliers, regular progress consultations between the suppliers and the service or facilities organisation, and consultations regarding programme management between project managers and service organisations.
2. Demand management (orchestration/operating model)
This area focuses on maintaining the relationships between customers (clients), service organisation and suppliers that relate to the agreements made between functional requirements and the supply of the products and services on the basis of price, time and quality. This means that the service organisation has understood the current and future needs and has translated supply agreements with the suppliers. The service organisation keeps regular contact with the decision makers in the customer organisation through its relationship managers. To streamline the different groups of needs, it often divides them into basic, basic-plus and supplementary services. The basic services are often centrally budgeted and are compulsorily purchased. Basic-plus services are services in which the price and quality have already been established and only quantity is still to be determined. Additional services can be requested within specific frameworks by specific groups of clients. To this end, offers are usually provided by the suppliers.
Adaptive or innovative changes are preferably managed on a project basis, with the projects being executed by the suppliers only after approval. In order to allow this process to proceed effectively, several consultations must be arranged. Consider for instance consultations between suppliers and the management function to discuss the (external) contracts and SLAs, quality of service (performance management), progress of the offers.
Regular account conversations should be held with the relationship managers who mediate between customers and the service or facilities organisation. There may also be a management platform for ‘heavy users’ to involve them more in the service process and to provide them with insight into developments in both technical and organisational areas. Consultations between the supplier, service or facilities organisation and the customers are also helpful; they can aid in identifying efficiencies, obtaining clarity and in maintaining the actual need for the functionality. The contractual, financial and legal relationships continue through the service or facilities organisation at all times.
3. Strategic services (governance)
The relationship formed between the service organisation, its clients and the board is called ‘governance’. The content of activities within this area is generally strategic in nature. It concerns the agreements that arise from the enterprise’s objectives, legal frameworks and financial space, and which guide the development of the service provision in the longer term. Think of architectural agreements and sourcing policy, housing policy, portfolio management and policy objectives.
The service organisation also has to account for its performance annually, and to draw up annual investment plans. The role of the manager includes monitoring the effectiveness and efficiency of the provided services. It differs in every enterprise whether this is exclusively focused on business operations, or that the support is enterprise-wide.
4. Audits, training and pilots (quality)
The fourth plane is formed by the relationships that the service organisation has with the customers and the management. The quality of the service is a result of the agreements made with the customers and suppliers and the method of delivery. The general management or the board mainly benefits if the employees can perform their work undisturbed. If their employees are satisfied, they are also satisfied. There may be tension because customers are not directly confronted with the costs, and that is why they will be more inclined to maximise their wishes and demands. Certainly in times of cost rationalisation, the discrepancy between wishes and needs and available possibilities will increase. This makes it more difficult for the services/facility organisation to directly influence the satisfaction of customers.
Effective management can be achieved by taking note of the following:
• Ensure that their suppliers’ service provision is good;
• Carry out regular satisfaction surveys or customer panels;
• Consider developments and their consequences for employees (in its strategic advisory role);
• Offer training programmes that are related to the nature of activities; and
• Actively involve customers in pilots or innovative developments.
17.3 The USD in the demand and supply process
As the service organisation improves the cohesiveness of its relationships with the various parties, its service provision will improve in consequence and customers will appraise it differently. Customers’ wants and needs will maximise and often differentiate. Customers who have to pay for services will seek to obtain maximum service at minimum cost. The service or facilities organisation can increase cohesion through standardisation and by making strict agreements with suppliers. In doing so, it must again ensure that the suppliers’ involvement is maintained. If a situation eventuates in which suppliers feel they cannot earn more, they will focus on minimal effort. In this situation, partnership is preferable.
Management and control of the supply and demand process is now conducted via the USD with the products and service catalogue and through service agreements. The package of services forms the core of the products and service catalogue, and of service provision agreements, also known as SLAs. The service package is the required instrument for top management for the effective and efficient support of the primary process. This package is in line with the vision and strategy of the enterprise. In addition to the basic package, additional products and services will be requested as necessary. Depending on the way in which the service organisation is placed within the enterprise, the additional costs will be allocated centrally or distributed to different parts of the enterprise.
These service agreements are made with the customers and as defined earlier, this refers to those who pay money to the service organisation. Furthermore, the agreements are made within the frameworks (for example the housing policy, the house style or the desired image), that have been established by the management team. Often the most important customer is also a member of the management team, with the business operations in his portfolio.
On the basis of the available budget and the agreements made, the service organisation can make agreements with suppliers (contracts or covenants). This leads to the delivery of the products and services in accordance with the agreed quality levels in the service agreements. The service organisation takes care of the composition of the service catalogue, the guideline for the users in determining the services to be purchased by them. Many of the services are delivered via the USD. The USD is thus located between the users (the customers), the suppliers and the service organisation.
The products and service catalogue
The purpose of the service catalogue is to inform the users (internal and or external) about the services provided. Simply put, the service catalogue is the ‘window’ of the enterprise for its products and services. In addition to a description of a product or service, it also describes in which way and under what conditions the users can purchase the services and at what quality level the products and services are delivered.
Today, the service catalogue is often made available via the Internet or intranet. In some cases, forms are also linked to the products and services so that users can not only consult the service catalogue, but can also place an order directly via the Internet or intranet. The service catalogue is established on the basis of the service agreements and the experience of the USD employees (and account management), in combination with the requirements for clear communication. Identify the communication mechanisms that are most used. For example, if it is well known that the intranet is not widely used, you should not make the intranet the sole source of information.
Table 17.1: Required Classification Per Product or Service in the Products and Services Catalogue
Required Classification |
• Description of product or service. • Basic package of services: description of the basic package (for a discussion and definition of these terms, see section 3.2.). • Plus package: description of the basic-plus package with accompanying price (see section 3.2.). • Additional services: description of additional services (see section 3.2.). • Authorisation/delivery conditions: explains who is entitled to purchase a product or service. • Settlement level: the level at which a service can be handled (levels comprise information request, request, settlement within the USD and settlement with waiting or lead time). • Information about obtaining/contact person: explains who or what should be approached in order to obtain the service. Additional information (e.g. legal framework). • Quality criteria: the quality of the service and the fulfilment of the service provision agreement are managed using quality criteria. |
The products and service catalogue can serve multiple purposes; it may be:
• A means of communicating to customers (i.e. the display window);
• A marketing tool;
• A means to make the added value of the services or facilities organisation transparent;
• A handle for the collection and classification of management information; and
• An instruction tool for USD employees.
SLA
Where the products and service catalogue functions as a range of offers for the users, the internal SLA is a formal contract between management and the service organisation. This contract sets out the conditions under which products and services are supplied. The SLA generally records:
• Type of service provided
• Level of performance achieved
• Conditions of service provision
• Availability and accessibility of support
• Associated costs
• Available staff
• How quality is guaranteed
Due to its contract status, the SLA has a more formal language than the products and service catalogue. The basic service package outlined in the catalogue is presented in less detailed form in the SLA and is formulated more from the objectives of the management. This means that the products and services are delivered from a vision related to business operations.
An internal SLA offers tools to provide the desired services, taking into account cost control and quality control. The SLA thus also provides the input for capacity calculation and the connection of services to the budget. A normative amount can be determined with the aid of the basic package of services and the associated work processes. Coupled with standard numbers, these form the basis for the calculation of a normative capacity.
In addition to the products and service catalogue, the SLA also contains the conditions under which the service organisation delivers. This makes it possible to discuss aspects like mandating, the work to be performed and the manner of handling complaints.
The basic service package, the corresponding capacity and the requested quality level are a tangible tool for the manager who has to defend the occupation and activities of service management to executives. It is wise to link capacity to basic service.
The SLA has several functions and can serve as:
• An informal internal contract;
• A document to record the products and services in relation to resources;
• A starting point when calibrating the objectives of the service or facilities organisation in relation to the business strategy;
• An instrument for determining formation;
• An instrument to decide the ‘criticality’ of an application or request based on its business impact; and
• An instrument for determining effectiveness and efficiency.
Registration and monitoring
The services requested by customers and offered by the service department should be documented and monitored within the management and control system, and they should form part of the management information.
Based on this information, it can be verified whether the services, products and budgets are sufficiently in line with user needs. After all, if additional services are requested more than what was expected, this may be a reason for the management to include these additional services in the basic provision. Also, this information offers management guidance to make the costs arising from the desired service provision visible. By organising the administration in accordance with standards like ISO 20000 or ISO 41001, better overviews and benchmarks can be implemented.
31 Freeman, R.E., Strategic Management: A Stakeholder Approach, Cambridge: Cambridge University Press, 2010.
32 Mastenbroek, W.F.G., Conflicthantering en organisatie-ontwikkeling. Proefschrift Leiden, vierde herziene druk, Samsom, Alphen aan den Rijn, 2005.
33 www.itgovernancepublishing.co.uk/product/collaborative-business-design.