Better Demand Management: An Integrated Approach - … · Better Demand Management – An Integrated Approach 2 ... Specialised in integrated services management and technology enabled

© 2011 IBM Corporation

Better Demand Management: An Integrated Approach

Charlotte Newton, Chief Innovation Officer for a Global Client Account7th March 2011


Better Demand Management – An Integrated Approach

2

About Charlotte Newton

20 years in Glaxo/GlaxoWellcome, final role as Head of Corporate IT10 years in IBM Certified IT Strategy & Change consultant. Specialised in integrated services management and technology enabled innovation, across industry sectorsCurrently Chief Innovation Officer in a large IBM outsource client team, leading a joint innovation partnership to bring IBM capability to drive mutual value



3

Objective for this session

Source: If applicable, describe source origin

Consider why IT Demand Management is a challenge for many organizationsOutline an approach to improve discipline and efficiency in the definition of demand and the planning of supply, with particular emphasis on forecasting.

Topics covered include: the context for Demand Management upstream enterprise activities and their impact on downstream service response managing forecast uncertainties enabling effective Demand Management across multiple suppliers and the value of an integrated approach.



4

Agenda

Why is IT Demand Management a challenge?

Role of forecasting

Enabling effective Demand Management

Value of an integrated Demand Management approach



5

The value potential of better managed demand has long been known

SUPPLY DRIVEN DEMAND DRIVENSUPPLY DRIVEN DEMAND DRIVEN

Renegotiate outsourced contracts

Leverage technology, factor costs, & scale

Reduce complexity thru standardization

Best practices transfer

Manage demand thru pricing, fit-for-demand drives affordability trade-offs

Source: Booz Allen Hamilton

Renegotiate outsourced contracts

Leverage technology, factor costs, & scale

Reduce complexity thru standardization

Best practices transfer

Manage demand thru pricing, fit-for-demand drives affordability trade-offs

Source: Booz Allen Hamilton, 2004

8-10%

20-22%

14-17%

8-10%

35-41%



6

Demand Management is being given greater priority across industry

2525

2019

1818

171616

1514141414

1313131313

1212

1010

98

0 10 20 30

Knowledge ManagementService Portfolio Management

Financial ManagementInformation Security ManagementIT Service Continuity Management

Service Catalogue ManagementStrategy Generation

Service Level ManagementService Reporting

Service Asset and Configuration MgmtChange ManagementService Measurement

Release and Deployment ManagementSupplier ManagementIncident ManagementProblem Management

Availability ManagementEvent ManagementRequest Fulfilment

Access ManagementDemand ManagementCapacity Management

Service Validation and TestingEvaluation

Transition Planning and Support

3735

3030

2929

282727

262525

2423

222222

2120

1919

1818

1613

0 10 20 30 40

Demand ManagementService Portfolio Management

Capacity ManagementAvailability Management

Transition Planning and SupportStrategy Generation

Knowledge ManagementRelease and Deployment Management

EvaluationSupplier Management

Service Asset and Configuration MgmtService Catalogue Management

Service Validation and TestingEvent ManagementRequest Fulfilment

Access ManagementIT Service Continuity Management

Problem ManagementFinancial ManagementService Measurement

Service Level ManagementService Reporting

Change ManagementInformation Security Management

Incident Management

Priority given to Demand Management process to date:21st of 25

Priority given to Demand Management going forward:1st of 25

Source: itSMF Asian Survey 2008

155Total0.6%1Wholesale0.6%1Utilities0.6%1Health0.6%1Chemical1.3%2Retail

1.9%3Media & entertainment

1.9%3Local government

2.6%4Petroleum2.6%4Automotive3.2%5Transportation3.2%5Telecom3.2%5Insurance

3.2%5Central government

4.5%7Industrial products

4.5%7Financial markets

4.5%7Education7.1%11Banking

26.5%41Services, Professional Service

27.1%42Electronics & IT

Response

Percent

Response

CountBusiness sector



7

What do we mean by Demand Management?

The process of capturing and prioritizing the demand for IT services to deliver business value and maximize strategic

alignment and resource utilizationAMR 2004

“A planning methodology used to manage forecasted demand”

Wikipedia 2011

“…encouraging and ultimately institutionalizing a better alignment between the supply and demand for internal

services”Booz Allen Hamilton 2003

“…understand and influence customer demand for services and the provision of capacity to meet these demands

ITIL V3, 2007

ActivityFocus

Understanding and Influencing

Demand & Supply

AlignmentDemand & Supply

Planning MethodSupply

Information Capture Process

Demand



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E2E DEMAND MANAGEMENTApplications

Portfolio Management

Project Portfolio

Management

Project Execution

Change Management

Infra. Life Cycle Management

Legacy Management Operations

Business Change & Priorities

Technical Architecture, Standards & Strategy

SUPPLIER DOMAIN: SUPPLY

CUSTOMER DOMAIN: DEMAND

Demand Management requires an end to end approach that influences and aligns customer and supplier domains

With apologies to ITIL



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There are differences of opinion about the what, who and how of Demand Management

Two languages:

Two perspectives:

Misaligned expectations:

I call the tune:

It’s not my problem:

business & project

the value the customer wants

the terms of the SLA

the business drives the solution

it’s something the supplier addresses

supplier & service

the profit the supplier makes

the SLA baselines

TCO drives the solution

it’s something the customer addresses

SUPPLY

DEMAND

These differences are accentuated when customer and supplier are in

separate companies



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Also, budgets are not aligned around what the customer wants andwhat they supplier can do

£$€ Discretionary Budget ~25% Value Add

Fixed Budget £$€ ~75% Run

Business Change & Priorities

Technical Architecture, Standards & Strategy

SUPPLY

DEMAND What the customer wants to do is not always easy for the supplier to accommodate



11

Agenda


Role of forecasting





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Tensions at the interface between demand and supply can be alleviated by forecasting

SUPPLY DOMAIN

DEMAND DOMAIN

FORECASTING

It’s all about



13

Forecasting gives suppliers valuable information about service requirements, needed for effective service preparation

Operations

SUPPLY

DEMAND

Change Management

Project Execution

Non-functional requirement forecasts enable planning of the right level of operational service •Number and location of end users•Business criticality•Data retention•Security•Etc.

Physical requirement forecasts enable resource and other capacity planning for changes to be deployed•Server OS•Physical or virtual•SAN•DB etc.

This type of information is gathered early but often communicated to suppliers late in the project life cycle



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Service Delivery can’t assimilate requirements in timeLack knowledge of what is importantCapacity is not available when needed

Unforeseen incidentsStandard remedies can’t be appliedInappropriate response by service providersNo root cause analysis

Customer dissatisfactionIncreased cost of operationNeed for remediation projects

No configuration dataCriticality not knownPoor solution architectureAcceptance criteria not clear

…Impact of poorly executed projects

…More urgent projects

IN

OUT

E2E IT Supply Chain, Client Project Execution Study 2010

Here is a customer example of the effect of poor project execution, which included lack of any form of forecasting

Bold text shows items that could have been avoided by forecasting



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Forecasting enables resources to be prioritised in line with business needs

•CONTRACTS

•PROCESSES

•DEPLOYMENT RESOURCES

Cap

acity

Man

agem

ent

Dem

and

Fore

cast

ing

•PROJECTS

•PLANNED OPERATIONAL CHANGE

•AD HOC OPERATIONAL CHANGE

PRIORITISATIONOF RESOURCES

PRIORITISATIONOF REQUIREMENTS

SUPPLY

DEMAND

Request for Service

Catalogue Orders

Change Management

However, forecasting is often weak or missing, which keeps suppliers constantly on the back foot

SOU

RC

ES O

F D

EMAN

DD

ETERM

INAN

TS OF SU

PPLY



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Applications Portfolio

ManagementProject Portfolio

Management

Project Execution

Infra. Life Cycle

Management

Legacy Management

provides specific forecasts enabling alignment between lead times and project dates

PRIORITISATION

Forecasting starts with upstream processes which are a source oflong, mid, and short term information about demand

SUPPLY

DEMANDLong Term Forecasting

Planning & Budgeting

Mid Term Forecasting

Short Term Forecasting

Stra

tegy

& D

irect

ion

Infra. Architecture &

Policy Management

Apps. Architecture &

Policy Management

provides ‘macro’ estimates used for e.g. quarterly projections

provides information to help shape the technologies and services required

Order History



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Demand Management is more than just forecasting

SUPPLY

DEMAND

FORECASTING

It’s all about

and it’s a two way conversation which reinforces adherence to cost effective architectures and corporate standards

Demand Management is the processes, roles and tools that enable efficient dialogue between disparate organizations

E.G.Short term forecast discussions cover• technical standards adherence •TCO considerations •and general technical guidance



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Agenda


Role of forecasting





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Understand Cost to Serve

(Supply

In a perfect world we would do all of these things…

Understand business priorities and requirementsDefine business model changes

Understand cost driversDefine performance improvement levers

Understand Value

(Demand)

Optimize Supply and

Demand

Engineer the Delivery Model

Manage the Change

Confirm leadershipCommit resourcesExecute

Understand business affordabilityDesign fit-for-demand solutions

Align strategy, process, organisationEmbed enabling systems and technologyDefine metrics



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Here are some real world recommendations to start effective Demand Management

1. Define a clear process - break down the end to end process into clear short, mid and long term steps, and define a clear process for each

2. Recognise it’s not a one to one situation – multiple suppliers requires an integrated approach

3. Leverage current standards - link short term (project) forecast points to the toll gates in your project methodology lifecycle

4. Take a phased approach – initial deployment to test the fit and understand the value, then global adoption



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Define a clear process

Here’s the outline of a SIMPLE process covering short term forecasting developed with a client

Areas to look out for– Mismatch between demand volume and the available channels for demand forecasting

within the suppliers – Frequency of forecast reviews, manage by exception– Perceived effort - re-distribution of, rather than addition of, resources – Dealing with fuzzy projections of demand – keep a history to when a forecast is likely to

become order – Supplier can fix it – keep the focus on upstream activities and not just downstream

(supplier) processes

Trigger –Business Request

Register Demand

Develop Business & Technical Content

Consolidate Demand

Review & Confirm Supply

Monitor Forecast Trends



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Trigger –Business Request

Register Demand

Develop Business & Technical Content

Consolidate Demand

Review & Confirm Supply

Monitor Forecast Trends

Sep-08 Oct 08 Nov-08 Dec 08 Jan-09 Feb-09 Mar 09 Apr-09 May 09 Jun-092008 2009

M onthly R eport ing & S teering C om mittees

Detail Design & Developm ent

Kickoff

Migration Preparation

SLA & GPS 2 Documentation (ITIC item resolution)

Test Script Developm ent and Test Planning

Test Exe-cut io n

P ilo t M igra-t io n

Communicate Final migration schedule

Test & Vali-dat io n R epo rt

GPS 2 Validated Computerized System

Training Material Developm ent

System Retirem ent

QM Readiness for Deployment Start

P ro ject C lo sedown, Lesso ns Learned, P o st P ro ject R eview, C A R F orm 6, C P S

Project Closed

Old GPS EnvironmentRetired

Dashboard Im plem ented

All projects migrated

P repare decision & C R fo r

CR Approval

P erform ance and Lo ad T est preparat io n

Disaster Recovery (DR) Test

DR Implemented

Migration 1/ 4 N o nC rit ia l P ro jects

3/ 4 N o nC rit ia l P ro jects

C rit ia l P ro jects

Execute performance and load

Confirm Performance Measures

Project approach meeting date: 20-Aug-2008

Tollgate review color:

Financial Assumptions: Total project costs are shown here. Note: the CAR only reflects planning and execution costs.

Project carries infrastructure installation and operation costs for 4 months in 2008 and 5 months in 2009

SAS license costs are considered to cover only additional costs caused by the project

Business Benefits:

10% annual growth in user population supported. System performance improves by 10-20%. Stability improvements lead to 99.3% system availability. Full system recovery in 1day in case of disaster.

No delays to critical or heavy weight projects during migration.

Dependencies / Linkages• MODESIM: environment to run modelling & simulation jobs

requires access to data within GPS II system. • C-DARS: Requires SAS 9, new GPS II test and productive

environment and selected clinical projects migrated to new environment to accomplish project goals.

Key risks / Critical success factors• CSF: Minimize disruption to the business during migration process• CSF: Performance improvement• Have current access limitation and problems with CITRIX

metaframe licenses resolved• CSF: Resolve as prerequisite for GPS 2 upgrade go-live the 16

group limit to enable business work efficiently (M&S and CIS)

Roles and Responsibilities:Business Area: CDMA, CISBusiness Sponsor: Kathleen MellarsSystem Owner: Kathleen MellarsAccount Manager: Wanda BidlackBusiness Lead: Roy Ward

Problem Statement:

GPS is essential to maintain base business, it is used for every drug project

GPS II system is reaching its current limits and the old infrastructure hardware components cannot be scaled up anymore to meet the expected business growth

GPS II suffers poor performance, as the current architecture leads to a resource cannibalization of the basis system ClearCase and the application SAS

Project Scope:Replace current GPS II server environment and extend software licensing with newest versions

Implement Disaster Recovery/back up services standard for a system classified as vital

Migrate all data from existing to new environment with minimal impact on active drug projects.

Proposed Solution:

Install new, parallel GPS II environment (development, test and production) in CH (Basle) having Disaster Recovery/back up services implemented. Users will access a single site solution via CITRIX, ClearCase local client package will be removed.

Install SAS version 9.2 and ClearCase version 7

Migrate all data from old to new environment according to migration plan

After all data have been migrated, retirement of old environment

Project approach meeting date: 20-Aug-2008

Tollgate review color:

Financial Assumptions: Total project costs are shown here. Note: the CAR only reflects planning and execution costs.

Project carries infrastructure installation and operation costs for 4 months in 2008 and 5 months in 2009

SAS license costs are considered to cover only additional costs caused by the project

Business Benefits:

10% annual growth in user population supported. System performance improves by 10-20%. Stability improvements lead to 99.3% system availability. Full system recovery in 1day in case of disaster.

No delays to critical or heavy weight projects during migration.

Dependencies / Linkages• MODESIM: environment to run modelling & simulation jobs

requires access to data within GPS II system. • C-DARS: Requires SAS 9, new GPS II test and productive

environment and selected clinical projects migrated to new environment to accomplish project goals.

Key risks / Critical success factors• CSF: Minimize disruption to the business during migration process• CSF: Performance improvement• Have current access limitation and problems with CITRIX

metaframe licenses resolved• CSF: Resolve as prerequisite for GPS 2 upgrade go-live the 16

group limit to enable business work efficiently (M&S and CIS)

Roles and Responsibilities:Business Area: CDMA, CISBusiness Sponsor: Kathleen MellarsSystem Owner: Kathleen MellarsAccount Manager: Wanda BidlackBusiness Lead: Roy Ward

Problem Statement:

GPS is essential to maintain base business, it is used for every drug project

GPS II system is reaching its current limits and the old infrastructure hardware components cannot be scaled up anymore to meet the expected business growth

GPS II suffers poor performance, as the current architecture leads to a resource cannibalization of the basis system ClearCase and the application SAS

Project Scope:Replace current GPS II server environment and extend software licensing with newest versions

Implement Disaster Recovery/back up services standard for a system classified as vital

Migrate all data from existing to new environment with minimal impact on active drug projects.

Proposed Solution:

Install new, parallel GPS II environment (development, test and production) in CH (Basle) having Disaster Recovery/back up services implemented. Users will access a single site solution via CITRIX, ClearCase local client package will be removed.

Install SAS version 9.2 and ClearCase version 7

Migrate all data from old to new environment according to migration plan

After all data have been migrated, retirement of old environment

PLAN

FIN

ANC

IALS Expense Capital

Value Generated

2008 $3'1392009 $592201020112012

Total $3'731 $0 $026-Jun-09Project Completion

08-Dec-08New GPS II Environment available

02-Sep-08Execution Charter Approved

23-Apr-08Planning Charter Approved

19-Dec-07Draft Charter Approved

26-Jun-09Project Completion

08-Dec-08New GPS II Environment available

02-Sep-08Execution Charter Approved

23-Apr-08Planning Charter Approved

19-Dec-07Draft Charter Approved

CHARTER

PLAN

ARCHITECTURE

JointIntegrated

DEMAND/SUPPLYFocus

INTEG

RATED

CAPAC

ITY MAN

AGE

MEN

TRecognise it’s not a one to one situation – multiple suppliers require an integrated approach

Service ProvidersService Focus

Provide Data Centre Requirements

DedicatedServersManageSystems

Storage Devices

WAN / LAN

Rack Spaces

Power consumption + Cooling + Network Ports

Service ProvidersService Focus

Provide Data Centre Facility Services

DC 1 DC 2 ….

Rack Spaces

Power consumption + Cooling + Network Ports

Task IDDC Task Description Power/Coo

[kVA]New tape libraries in existing DCs

1 WSJ-210 Installation of 1 new tape library 1 x 3.42 WSJ-210 Copy data from 1 old tape library to 1 new tape li3 WSJ-210 Installation of 1 new tape library 1 x 3.44 WSJ-210 Remove 1 old tape library - 1 x 3.45 WSJ-210 Installation of 1 new tape library 1 x 3.4

ID Hostname Assigned Datacenter Rack Space

FOR-CV-PHCHBS-S4485 503 extension 44/104

SSC-987

PHCHBS-S4484 503 extension 44/104986


PHCHBS-T3655 503 extension 44/123899


PHCHBS-T3656 503 extension 44/123

Customer and all

Suppliers

CU

STO

MER

SO

UR

CES

SUPPLY FOCUS

DEMAND FOCUS



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Link short term (project) forecast points to tollgates in the project lifecycle

Leverage established methods and practices to gain maximum traction quicklyEducate, educate, educate about the importance of early forecasts, even though the numbers may be vague it really helps suppliers

– The forecast schedule is as important as a project definition report or architecture document

Build forecasting into personal objectives (human performance management)

1 2 3FORECASTING

POINTS 0

PRE-PROJECT

PHASE 1

PHASE2

PHASE3

PHASE4

YOUR PROJECT METHODOLOGY

General OOM* Specific Quantity Demand Demand

* Order of Magnitude



2424 11/03/2011

Take a phased approach – client example, under discussion

”Lean“ the processs; configure the

workflow & plan early adoption; design integration with service provider

processes

Timing is indicative, to be confirmed

2. Early Adoption

Phased early adoption within the pioneer Business Unit

W1 W8 W17

Background activities in parallel to embed the process and incorporate improvements based on

initial learning

Roll out to other Business Units

starting at week 18, “carrot shaped stick“

3. Process Integration

W39

Global Adoption 1. Configuration

Learning Capture

The initial deployment consists of three phases, providing phased deliverables over a nine month period



25

Agenda


Role of forecasting





26

Integrated Demand Management addresses many demand / supply issues...

Insufficient technical knowledge in the enterprise, resulting in inefficient architecture, low conformance with standards and/or low understanding of TCO

Lack of forecasting of physical requirements from enterprise to service providers, resulting in problems with capacity and resource planning

Inconsistent or missing business prioritisation, resulting in disconnect between business priority and how capacity and resources are allocated

Inadequately specified RFS / Catalog ordersincluding technical errors, resulting in delays in the execution of the Service Request and Order Fulfilment processes, and low customer sat ratings

.Gap between the enterprise business view of requirements and supplier service view of requirements, resulting in mis-communication and inefficiencies in governance

Failure to capture and communicate non-functional aspects of demand (how many users, business criticality, data retention, security requirements, archive, etc.) which are crucial to enable effective operational support once a service is live, and which may have an impact on service arrangements that need to be put in place.

Lack of integrated coordination of supply across multiple service providers, resulting in serial lead times and discussion about dependencies too late in the demand life cycle



27

Demand Management Benefits Case Study

Situation 25 week project, required 20 servers to be configured by external resourcesNo demand management

Requirement for non-standard items communicated to retained IT External partner resources engaged in line with approved planTechnical guidance requested to support solution design

No technical resource available for guidanceRequirements not communicated to supplier until orders were placedLead time delays advised to retained IT but not passed quickly to project teamData centre space not allocated even though project is priority

Significant slippage - 20% increase in project timeAdditional $140k cost incurredGreatly increased risk to project delivery

Availability dates for required technology known early: External resources engaged later to fit with lead times:

Technical support available to assist solution design: Requirement for non-standard items flagged early:

Pre-allocated data centre capacity:

Action

Outcome

Impact

With Demand

Management

plan realistic dates avoid overspendidentify non std reqs. supplier is ready prioritise capacity

Mis-communications & inefficiencies in governance



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...and reduces the differences of opinion which inhibit smooth cooperation around demand and supply

Two languages:

Two perspectives:

Misaligned expectations:

I call the tune:

It’s not my problem:

business & project

the value the customer wants

the terms of the SLA

the business drives the solution

it’s something the supplier addresses

supplier & service

the profit the supplier makes

the SLA baselines

TCO drives the solution

it’s something the customer addresses

SUPPLY

DEMANDTalk the same

language

Understand each other’s perspective

Set expectations clearly

Balanced needs and objectives

Joint responsibility



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We model the value for clients based on their specific situation

We use a simple value framework to define the desired outcomes and measurable value which are used to track the benefits delivered by the process once it has been deployed

These are the summary of key areas of value* from integrated, end to end Demand Management

Customer Satisfaction

Fit for Purpose Design

Planning Effectiveness

Financial Control

Business Relevance

Architectural Fit

End to End Transparency

BUSINESS FOCUS IT FOCUS

VALUEVALUE

BENEFITSBENEFITS

CAPABILITIESCAPABILITIES

ENABLERSENABLERS

FEATURESFEATURES

KVIsKVIs*



30

Thank you

Charlotte NewtonChief Innovation Officer Client Integrated [email protected]+44 7753 832967

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Better Demand Management: An Integrated Approach - … · Better Demand Management – An Integrated Approach 2 ... Specialised in integrated services management and technology enabled