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Product Champion
Evaluating the Government Seat Management Option |
Whether in the private sector or public sector, it is critical for an enterprise to assess life-cycle and acquisition options. The Government "Seat Management" alternative encompasses the management, operation, support and maintenance of a distributed computing environment by an industry partner (that is, service provider) whose performance is based on predetermined and agreed-on service levels. Because this is a performance-based agreement, remuneration to the partner is based on meeting clearly defined specific service levels. Service levels are monitored by the use of designated performance metrics and measurements. Examples of metric goals include:
Service offerings vary depending on the requirements, and a subscriber may elect to receive tiered services. Thus, pricing is affected by many variables, (e.g., service levels required, type of support, infrastructure, asset distribution and refresh rate). Driven primarily by the Clinger-Cohen Act, the Information Technology Management Reform Act (ITMRA) of 1996 mandates measurable improvements in efficiency and effectiveness of government IT operations. Government agencies are evaluating the seat management solution offered primarily by the U.S. government General Services Administration and the Outsourcing Desktop Initiative for NASA. Despite different drivers (e.g., funding for public enterprises and mission-readiness for government agencies), the ITMRA has compelled the sector to assess a seat management option as well as analyze and improve their costs, environment, support, performance and end-user satisfaction. Although managed services (that is, seat management) frequently offers a viable alternative for IS organizations, it is imperative to explore its benefits and drawbacks (see Figure 1). As part of this assessment process, it is crucial to analyze an enterprise's current situation and predict its future. Not understanding the current environment can be extremely dangerous. Thus, any evaluation must determine the level of services being provided, the cost, the performance of the IT environment and the impact of IT on the end users. Essentially, this is the cost of doing business.  To this end, measurement is key. As Len Bergstrom, a wise Gartner associate, once said, "You cannot manage what you cannot measure." With a clear understanding of the current environment, an IS organization can determine whether or not to pursue a managed services solution. Furthermore, it is then possible to identify the components (if any) that should be placed under a managed services agreement. Gartner predicts that through 2005, 70 percent of global IS organizations that do not adopt a standard approach to measurement will struggle to justify investments in enabling technologies. Since its inception in 1988, total cost of ownership (TCO) has been evolving rapidly. Bill Kirwin of Gartner, who coined the term and methodology, has been instrumental in its development. TCO has been viewed as a cost-only vehicle and also as a panacea to address all IT issues. Clearly, the TCO tool and methodology, when used as a part of a comprehensive IT strategy, provide enormous insight and value to any IT operation. TCO offers a holistic view over time of IT costs and issues, including performance, and spans internal enterprise boundaries. Essentially, TCO is a fundamental element of the value chain that links IT investments with business value. It is not a panacea nor is it merely a cost-reporting tool. Furthermore, TCO encompasses more than the obvious direct costs of hardware/software, operations and administration. It extends beyond those costs to opportunity, business, as well as other indirect and intangible costs. Indirect costs are captured as downtime and end-user operations (the effect of an IT environment on the enterprise from an end-user perspective, represented qualitatively and quantitatively). Many of the components included in the Gartner TCO consensus cost model relate directly to managed services. To understand the environment further, two additional elements are considered - best practices (a measurement of an enterprise's management practices) and complexity. Ultimately, the TCO process enables an enterprise to understand its current situation and position itself appropriately for the future. The "IT pendulum" depicts the constant struggle to balance the IT budget with performance as well as customer needs and desires (see Figure 2). Frequently, enterprises experience such strife; it usually starts with an executive initiative to reduce IT spending. An IS organization's staff is then faced with the challenge of determining the services, technology or systems that must be cut. Given that all end users are important, this is a daunting task. Eventually, a saving is accomplished by sacrificing some type of service. This begins a downward trend in customer service and, eventually, diminished end-user satisfaction. Consequently, another executive-driven initiative mandates an improvement in customer satisfaction. Hence, the prior cost-reducing mission is reversed and, frequently, additional funding is provided to fix the problem. However, as customer satisfaction improves, the cycle begins again with a cost-reduction initiative. An IS organization in such a situation becomes reactive rather than proactive.  Consequently, breaking this cycle is critical for IS organizations that wish to create supreme value linked to the goals of the enterprise. The objective is to establish optimum service levels at a reasonable cost. To achieve this, IS organizations must implement a measurement system that enables enterprises to manage their environments and provide acceptable performance with controlled costs. Ultimately, all parties benefit, and customer satisfaction increases. Source: David Bank, Gartner Measurement, david.bank@gartner.com Writer: Carolyn LeVasseur, Gartner Measurement |
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