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Will the enterprise market spend significant IT budget on Windows Vista in 2007?



Internal Service Delivery Should Run More Like a Business

By Scott Hammond, CEO, newScale Inc.

Recent surveys show that IT budgets are on track to increase anywhere from 2% to 8% this year.1 Good news: the IT spending freeze is over. But rather than investing in “novel” solutions that require massive infrastructure shifts, many organizations are instead leveraging technology to cut costs and improve efficiencies surrounding existing core processes.

Internal service delivery -- the deceptively costly business of supplying employees with the tools they need to do their jobs -- is one “core process” now in greater focus for today’s forward-thinking companies.

The cost of poor service delivery represents a tax on the finances and productivity of corporations -- a tax large enough to make the difference between profitability and red ink. Studies from Forrester Research support this assertion, showing that the direct costs of internal service delivery can be anywhere from 3 percent to as much as fifteen percent of an organization’s revenues. The indirect cost of poor service delivery -- reduced employee productivity due to "wait-time" for software upgrades, office relocation and other services -- is equally significant. One leading retail company calculated that employees at its corporate offices waited nearly 3 million hours each year for IT services. Assuming a productivity hit of 10 percent, this cost the retailer more than $1.8 million per year in lost productivity.

Organizations that transform service delivery from a series of poorly-defined and inconsistent processes to a standardized and automated operation can reduce costs by 30 to 40 percent. For a business with $1 billion in revenue, the potential savings can range from $6 million at the low end to nearly $60 million at the high end.

Why Today’s “Employee Provisioning” Falls Short

Every company provides services to employees. The issue at hand is whether or not the agenda of the service providers aligns with that of the business users.

For example, externally-facing employees are measured on marketplace and revenue generation metrics such as “purchase orders processed per hour,” “leads per marketing program,” or “sales per quarter.” Meanwhile, service delivery groups must balance the conflicting demands of cost control vs. delivery speed, and are typically evaluated against metrics that include “99.99 percent uptime for network access” or “four hour response time for facilities requests.”

As a result, it is virtually impossible for service teams to prioritize service requests in a way that aligns with business needs. Consider two requests: a field sales representative needs access to the customer relationship management system to process an order for a million dollar deal, and a Sales VP needs a new printer. With no visibility into the business value of the requests, the VP’s request will likely be fulfilled first, delaying the field representative’s requirement and impacting quarter revenue goals.

Besides lack of alignment, another major impediment to efficient service delivery is the service organization structure itself, which is usually comprised of separate “silos” – i.e., desktop IT services come from one group, network services and facilities services others. Each group has little knowledge of the requests or operations of other service units, and the burden of coordinating multi-department service efforts often falls on the employee requiring the services.


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