Business Case Study

Published: August 2008

Service management is critical for effectively running IT services to be strategically valuable to the company and its core business. At Microsoft, the IT Service Management Office (ITSMO) was formed to define and drive a consistent strategy through governance and standardization, innovation, performance measurement, client insight, and continuous improvement. The ITSMO and the service management culture evolved over time, providing key insights into the fundamentals that enable an IT organization to support the business and satisfy customers.

Situation

In the past, Microsoft Information Technology (Microsoft IT) leadership focused on continuing to drive technology advances. To do so, IT services such as networks, e-mail, security, and desktop management were run by multiple teams across the organization. An overall service management strategy had not yet been articulated, so service managers had differing processes, goals, and communications to their customers. With the focus on technology, IT service management had not yet consistently defined how it added value to the core business of Microsoft, or how it specifically measured what it provided to the customers.

The "customers" of Microsoft IT consisted of thousands of internal consumers of IT services in offices around the world. At the time, available services that Microsoft IT provided were not clearly defined or presented to the customer in non-technical terms. There was no shared understanding between Microsoft IT and its customers as to what comprised a business service, and likewise, no shared understanding of customers' IT service requirements.

Microsoft IT had not yet identified consistent roles, accountabilities, processes, and templates for IT service management, so teams within Microsoft IT independently determined how to best proceed when planning, implementing, or improving a service. IT operations had differing goals, priorities, and methodologies in service management across teams.

Microsoft IT is also an organization committed to being the company's "first and best customer," so service management took on additional importance in the commercial success of Microsoft as a company. Microsoft IT needed to determine how to evolve its own organization from a vertical technology-centric organization to one that is customer focused and service-centric.

Establishing the Foundation

Microsoft IT determined that an IT Service Management Office would be established to bring governance, consistency, and improved quality to IT services, aligning Microsoft IT service management activities to business needs.

Microsoft IT took the following steps in the establishment of the ISTMO:

1. A project team was selected, and the charter for the ITSMO was written.
2. Members of the extended IT service management community within Microsoft met to determine and prioritize challenges in service delivery, contributing factors, and pain points associated with delivery of business and IT services. This included identification of issues in processes and communications across teams responsible for service delivery, as well as the impact to customers in regions around the globe.
3. The ITSMO started defining what comprised a business service, and identifying service managers, service owners, and the list of services that should be incorporated in a service catalog.
4. The service catalog was created, in which all business and IT services were consistently defined. The catalog was written in customer terms, avoiding technical language that customers would find confusing.
5. An advisory board was developed, which put forth recommendations for the ITSMO and related IT service manager roles within Microsoft. This definition effort and the foundation under which the ITSMO developed guidelines, principles, and processes were founded primarily on industry best practice frameworks Microsoft Operations Framework (MOF), IT Infrastructure Library (ITIL), and proprietary knowledge.
6. A director for the ITSMO was appointed, signifying the official launch of the ITSMO in overseeing the standardization, governance, measurement, and improvement of IT service delivery within Microsoft.
7. The mission of the ITSMO, as written into the ITSMO charter to provide direction for all programs managed by the office, was to provide "the critical foundation across Microsoft IT to run IT as a business through service-orientated governance, performance, and cost measurement and continuous quality improvement for products and services through a customer-centric perspective."

Identification of ITSMO Strategy Pillars

The focus of the ITSMO was to improve the quality and reduce the cost of services delivered by Microsoft IT and to improve overall Microsoft employee satisfaction with Microsoft IT services. The ITSMO aimed to improve service quality through implementation the following key objectives:

• Governance and standardization. Provide guidance through standardization of common processes that ensure effective and efficient use of IT services. Drive IT governance based on industry-standard frameworks such as ITIL, MOF, COBIT, CMMi, and ISO20000.
• Innovation. Deliver on the role of Microsoft IT as the "first and best customer" of Microsoft, driving innovation in product development and product use at Microsoft, and standardized common practices.
• Performance measurement and client insight. Measure, track, and report client perception of service performance, and work with service management to address key drivers of customer satisfaction. Enable the business to make informed decisions about service utilization and aspects of business services in need of improvement.

Maturity of the ITSMO

Part of the maturity of the ITSMO organization was the development of specialized teams. There were four distinct functions, two focused on traditional service management roles and two developed to address specialized needs at Microsoft:

• Service Level Management
• Service Performance Management
• Client Insight & Satisfaction
• First & Best Customer Program

Service Level Management

The Service Level Management (SLM) function provides a consistent and critical service-oriented foundation across Microsoft IT. This service-oriented governance model emphasizes performance measurement, cost measurement, and continuous quality improvement that will help align IT service delivery with business needs. The mission of the SLM function is to enable the business to make valuable, informed decisions about IT services.

SLM provides a structured way for consumers and providers of IT services to meaningfully discuss and assess how well a service is being delivered. This group is responsible for maintaining the Microsoft IT service catalog, as well as developing and maintaining standard templates for common processes across Microsoft IT. These include service level agreements (SLA) and operating level agreements (OLA), which are used by service managers for defining service offerings presented in the service catalog. These templates have been adopted consistently by service managers and service owners for creating standard SLAs and OLAs to ensure that the agreed level of services are delivered to meet the needs of their customers and users.

Service Performance Management

The Service Performance Management (SPM) function provides the framework to enable the business to make informed decisions based on the performance of IT services. Performance management also ensures that Microsoft IT has the correct information to make informed decisions about the services that it provides to the business.

Specifically, SPM includes the development of simplified and standardized reporting methods, such as dashboards and scorecards. The SPM developed a program to track and bring visibility to service improvement plans, or SIPs, including how they are implemented across Microsoft IT. The program fosters a culture of continual service improvement as it promotes consistency and recommended best practices for SIP implementations.

Client Insight & Satisfaction

The Client Insight & Satisfaction (CInS) function was developed to focus on measuring and reporting user perception and satisfaction of IT services across Microsoft. Although customer satisfaction data may be considered qualitative in nature, the program incorporates a very consistent and carefully maintained quantitative process for gathering customer feedback on a regular basis. The data collected are analyzed to identify IT infrastructure and application services areas where client feedback indicates expectations were not met, identifying services that are candidates for SIPs.

Advanced statistical analysis tools and techniques are implemented to identify which components of business services are most important to overall customer satisfaction, and results are shared with IT service managers and executive management.

First & Best Customer Program

It is the goal if Microsoft IT to be the first and best customer of Microsoft products. The First and Best Customer (F&B) program supports this goal by working with the product groups to drive collaboration and innovation in product development and product use at Microsoft. The F&B program emphasizes a strong partnership between IT and the product groups, a clear roadmap for accountability, and progress toward expanding and improving Microsoft enterprise products and supportability. Four areas of focus are market expansion, co-defined functionality, testing and deployment, and showcasing Microsoft IT's product implementation successes.

Service Management Best Practices Integrated Across IT

Service management at Microsoft continues to mature as a discipline. The ITSMO, created to address specific needs, helped integrate service management best practices across the IT organization, even to the degree that a major division within Microsoft IT changed its name to the IT Service Management Division. Ideas and best practices that were incubated in the ITSMO became part of the core methodology in the larger organization.

Continual Service Improvement

The IT Service Management Office continued to evolve in order to better serve needs across Microsoft IT services, as well as advocate for the overall client experience. Part of this evolution involves an adoption of ITIL V3 best practices and a focus on continual service improvement—aimed at integrating ongoing improvements into the fabric of Microsoft IT, as opposed to reacting to a specific situation or a temporary crisis. As a foundational step, the IT Service Management Office changed its name to IT Continual Service Improvement, or IT CSI.

Continual Service Improvement Fundamentals

The primary purpose of CSI is to continually align IT services to the changing business needs by identifying and implementing improvements to IT services that support business processes. These improvement activities support the life-cycle approach through Service Strategy, Service Design, Service Transition, and Service Operation. In effect, CSI is about looking for ways to improve process effectiveness and efficiency, as well as cost effectiveness.

The next steps were to establish goals for improvement, including gap analysis, identification of solutions, and establishment of measures to assure that the gaps have been closed and benefits achieved. The IT Continual Service Improvement group organized the gap analysis around key CSI pillars aligned to ITIL:

1. Review, analyze, and make recommendations on improvement opportunities in each life-cycle phase: Service Strategy, Service Design, Service Transition, and Service Operation.
2. Review and analyze SLA results.
3. Identify and implement individual activities to improve IT service quality, improve cost effectiveness, and improve the efficiency and effectiveness of IT service management processes without sacrificing customer satisfaction.
4. Ensure applicable quality management methods are used to support continual improvement activities.

CSI does not directly own all activities. It partners with other IT teams to move to continuous quality control and consolidation for higher-quality services.

Realization of Benefits

It was through a combination of internal best practices and adoption of industry standard frameworks, such as ITIL and MOF, that Microsoft was able to achieve its service management goals. The collective efforts of the ITSMO drove continual service improvement by:

• Enabling consistency across Microsoft IT teams responsible for IT service management.
• Delivering a consistent reporting method for communicating deficiencies to business service owners.
• Proving a standard framework for implementing and tracking services under service improvement plans.
• Providing a feedback mechanism for the customer to report where services are or are not meeting expectations.

The benefits of improved service management are not limited to internal and external customers. Microsoft IT has worked to provide feedback on the lessons learned and methodologies developed over two years of implementation, which has since been incorporated into MOF version 4.

Improved Responsiveness

Microsoft IT cannot evolve an IT service without an understanding of the changing needs of service consumers. Through the customer feedback data provided by the ITSMO, Microsoft IT is better able to more quickly identify needed changes in IT services to meet user expectations for business services. Using standardized processes for implementing and tracking, service management teams can effectively prioritize and implement service improvements.

Improved Business Relationships

Because IT service management efforts are aligned with the business, the perception of the contribution of Microsoft IT to the business is improved. Through the structured communication facilitated by Service Level Management, IT and business groups can effectively communicate about IT performance in service delivery. By reducing defects in the products, customer satisfaction is also improved.

Improved Service Quality and Consistency

The ITSMO provided a consistent, structured, and predictable foundation for Microsoft IT service management. With standardization in place for common processes, teams in Microsoft IT have clearly defined guidance for maintaining IT services with a minimum of impact to service consumers. Reporting of defects through periodic customer feedback combined with performance measurement provides data and processes needed to drive continual improvement in service quality and maturity. The IT services grew from a baseline of 0 percent maturity to roughly 96 percent maturity over the course of the last nine months of fiscal year 2008.

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