If you receive errors when attempting to view this white paper, please install the latest version of
"SAP Americas is a subsidiary of SAP AG, the world's largest business software company and the third-largest software supplier overall.
SAP Americas' corporate headquarters is located in Newtown Square, PA, a suburb of Philadelphia."
Source : SAP
Running and Optimizing IT: A Best-practice Approach
Information Technology (IT) is also known as :
Decision Support Systems,
Enterprise Information System,
Information Processing System,
Information Technology Infrastructure,
Information Technology Infrastructure Library,
Information And Communication Technologies (ICT),
Information Systems Development,
Information Systems Development Methodology,
Information Systems Research,
Management Information Systems,
Transaction Processing Systems,
Business Information System,
IT as a Business Partner, Not Just a Technology Provider
It should come as no surprise that companies across all industry sectors are facing a
wide range of challenges that directly impact their abilities to meet stakeholder
demands for increased competitiveness, improved operational efficiencies, and
greater return on investment. In large part, these challenges are intricately linked to
today's globalized business environment - one that intensifies competitive
pressures, drives down margins, increases business complexity, accelerates the pace
of business itself, and requires companies to do more with less simply to maintain
IT has long been seen as one of the best ways to address these challenges. Yet
significant obstacles at the level of IT infrastructure stand in the way. Complexity, not
surprisingly, is the chief culprit. Many organizations operate within the context of
heterogeneous, distributed IT landscapes comprising loosely integrated point
solutions. This condition encourages siloed IT operations and rigid IT management
processes that impede business agility.
In the end, the complexity and the rigidity of IT infrastructure keep IT departments
focused almost exclusively on managing technology rather than serving the business.
True, IT must retain a focus on low-level operations. But today, business seeks more
and wants IT to act less as a technology provider and more as a service provider ?
one that partners with the business to help it achieve its objectives efficiently and
This fact is borne out in Figure 1, which shows the results of a recent IDC survey
asking CIOs, managers, and IT professionals to rank the importance of key IT
priorities for 2008.
The results of this survey show that the highest priorities are focused not on
technology but on the ability of IT to deliver services that provide value for customers
and end users. Ultimately, the business cares most about whether or not IT can help
serve its customers better and reduce business costs. This requires improved
alignment and communications between the business and IT. IDC believes that this
synergy is possible but that it fundamentally requires a secure, reliable, and
cost-efficient infrastructure and operations base on which business services and
applications can be deployed. The business must be able to rely on IT as a rock-solid
provider of services that enable and deliver innovative, competitive applications that
support business processes. For the vast majority of IT organizations, however,
infrastructure complexity, with its related IT process silos, still stands in the way. This
forces most IT organizations to spend the majority of their budgets on day-to-day
operations, leaving precious few resources that can be dedicated to innovation and
helping the business achieve its strategic goals.
IT Service Management: The Need for IT Process Standardization
By adopting formal practices and standards for managing infrastructure and
operations, IT organizations can better work with the business to understand
business requirements, implement solutions to help execute on business strategy,
and simplify IT operations to reduce costs and free up resources to focus on higherlevel
activities. This is the idea behind IT service management (ITSM). While many IT
organizations have yet to move forward in this regard, interest in and awareness of
the potential benefits are growing. A recent IDC survey asked CIOs, IT managers,
and IT professional staff to rank the importance of key drivers for adopting IT process
standards or best practices. As Figure 2 shows, drivers include improving security,
lowering IT operational costs, improving availability and performance, reducing errors,
solving problems faster, and satisfying regulatory compliance requirements.
The ITIL Framework: Best Practices for ITSM
For organizations seeking to progress along the IT process maturity path, the ITIL
framework offers a set of recommendations and best practices that have gained wide
acceptance across multiple industries. As demonstrated in Figure 3, ITIL is the most
widely implemented IT process standard currently in use by IT organizations,
according to attendees of a recent ITIL conference - and it is fast becoming the de
facto IT process and best practices standard for some. Now in its third version, ITIL
has been widely adopted in EMEA and the rest of the world. Overall adoption of IT
process best practices - including ITIL - is growing rapidly in North America, with
another recent survey showing that over 40% of large IT organizations were using
one or more process standards or best practices in 2007.
Throughout its various iterations over the course of more than two decades, the ITIL
framework has sought to address the prevailing challenges facing IT and business.
Early practitioners of ITIL focused primarily on infrastructure operations. While
optimizing operations remains the entry point for any IT organization seeking to
modernize IT, the latest version of the framework - ITIL v3 - emphasizes the need
for a more overarching service strategy that responds to the new challenges facing
business today. As articulated earlier, to maintain competitive advantage, business
now looks to IT as a business enabler rather than a limited provider of technology.
ITIL v3, in effect, recognizes that there is no longer any such thing as an IT project ?
only business projects with IT components. This requires strengthening the
fundamental relationship between IT and the business - a need to better integrate
the activities of IT into the requirements and objectives of the larger organization it
ITIL v3 addresses this need with a holistic approach to IT optimization - an approach
that enables IT to integrate with the business more effectively to meet the twin
objectives of increasing internal efficiencies and collaborating with external partners
to improve business agility and focus on core competencies. On the one hand,
organizations need a single, holistic standard that is consistent across the entire
enterprise and allows IT to consolidate operations and communicate with the
business to meet business needs. On the other hand, organizations need a better
way to collaborate across what ITIL calls value networks - the extended network of
partners that organizations work with to deliver their goods and services.
Both parts of the equation are critical for success in a globalized business economy.
From the internal perspective, IT needs enterprisewide visibility into the entire
portfolio of projects, applications, and infrastructure components under management
? along with a thorough understanding of resource availability and constraints. IT
also needs a way to capture business needs, translate the business needs into
technical requirements, and build and implement solutions that help the business
execute on strategy. These solutions, running on a day-to-day basis, need to be
monitored, maintained, and supported in a cost-effective manner throughout the
application life cycle. Finally, to ensure the highest levels of quality on an ongoing
basis, IT needs to monitor performance in the context of changing conditions and
shifting priorities to continuously improve IT service delivery. These areas of focus
correspond to the five stages of the service life cycle articulated in ITIL v3: service
strategy, design, transition, operations, and continual service improvement.
From the external perspective, where the business is focused on value network
collaboration, IT must focus on these same five stages - but with the added
complexity of coordinating with a constantly evolving group of partners spread out
across the globe. This is no small concern in an age of increased outsourcing where
organizations are attempting to focus more on core competencies by passing off
noncore tasks to low-cost specialists. In this context, the controls introduced by
effective ITSM become even more critical to business success because IT
optimization must extend beyond enterprise boundaries. With the pace of business
change accelerating, the room for mistakes becomes more and more constrained. In
many cases, businesses have a single opportunity to make a given IT project work.
Failed projects mean missed opportunities. This makes end-to-end management of IT
processes a critical factor for success.
Take, for example, a proposed plan to squeeze costs out of the manufacturing
process by modifying elements of the current supply chain. By its very nature, today's
supply chain is a multienterprise undertaking. Changes in one place require changes
in another. To make the right decisions, organizations will want end-to-end portfolio
planning capabilities that give them visibility into the dependencies of the current
supply chain and a way to think through how proposed changes will impact business.
Testing, deployment, operations, and support of the final solution must also be
coordinated across partners - all of which requires IT process management
capabilities that extend beyond the walls of the enterprise.
An obvious issue that arises in the context of integration - whether internal or
external - is the rising use of service-oriented architecture (SOA) and SOA-based
development. As a software and systems methodology that supports
componentization and dynamic sharing of valuable IT assets, SOA can be seen as an
enabler and consumer of the ITIL v3 service strategy. SOA enables organizations to
develop, deploy, and manage business services plus supporting technologies and IT
processes in a flexible manner that aligns closely with changing business
If not managed properly, however, SOA can be a double-edged sword. SOA presents
IT with an essential paradox: The more agile an organization wants to become, the
more governance it must introduce into its service engineering and management
processes. Without more formality, services can proliferate throughout the
organization, resulting in inconsistency and a potential glut of components to manage.
Without sound oversight, an unruly array of relationships between services and other
system artifacts can change dynamically and thus increase complexity exponentially.
Thus, process standards that formalize IT engineering - such as those
recommended by ITIL - are critical for SOA success.
A Solution-Based Approach to Realizing ITSM Objectives
The objectives of ITSM are laudable, and the best practices articulated in the ITIL
framework represent significant value for organizations that can implement them. But
in the end, ITIL remains a set of guidelines that focus more on what organizations
should do than on how they should go about doing it.
In theory, the best practices suggested by ITIL could be implemented as manual,
paper-based processes. In practice, however, most organizations will require
automated solution-based approaches to effectively implement ITIL.
Equally true is the fact that no single solution can address all ITIL requirements. Part
of the reason for this can be attributed to the comprehensiveness of the
recommendations - especially true for ITIL v3. In attempting to bring the business
and IT closer together, ITIL v3 best practices touch a wider range of enterprise roles
than ever before. These roles include business managers, project managers,
business partners, technical experts, and day-to-day IT operations staff such as help
Given the varying needs of the user base, companies attempting to implement ITIL
best practices may be tempted to implement a wide range of best-of-breed solutions
that will prove difficult to integrate. Ultimately, this approach can simply replace one
problem with another - creating ITIL-based silos of operations that impede visibility
across processes and make it difficult to execute ITIL processes in an end-to-end
manner across the extended enterprise.
An alternative approach is to think about integration as a fundamental aspect of the
overall ITIL initiative. Vendors that take a platform approach to IT process
management can provide built-in integrations that support ITIL best practices
Application Life-Cycle Management Platform
Managing the application life cycle in a rationalized manner according to standardized
processes is fundamental to smooth, orderly IT management. In the broadest of
terms, the application life cycle can be seen as a series of interrelated steps. These
steps include phases for IT project portfolio management, requirements, application
design, software change and configuration management and version control, build
and test, and deployment. Also included are application operation and optimization ?
where optimization feeds back into the requirements phase for ongoing
improvements. The goal is to manage change in the context of these steps in a
seamless fashion from start to finish.
Many IT organizations manage application change in a haphazard manner, either
manually or by using a wide range of specialized tools for the various steps of the
overall process. Integrating these tools can be critical to successful application lifecycle
management (ALM) - but few organizations expend the resources required for
the inevitable point-to-point integration effort. Where integration exists, its fragility can
lead to failures that impede development productivity and create additional costs.
IDC advocates the implementation of a unified ALM platform that can provide the
visibility required for business and application teams to orchestrate key ALM activities
in a collaborative fashion. Such a platform should allow IT to collaborate effectively
with the business to capture requirements and implement them in the form of new
applications or changes to existing applications. Changes should be traceable and
governed according to automated approval workflows that help the organization exert
control over the change process. Where possible, an ALM platform should also
support the orderly deployment of changes with functionality that allows teams to test
and release components involved in an application change in a coordinated manner
even where the changes may be based on different technologies. Reporting
functionality is also critical, especially when it comes to the continual service
improvement stage of the ITIL service life cycle. A powerful ALM platform that
monitors change and provides in-depth reports at both the management level and the
technical level can help organizations determine the effectiveness of the change
processes and make modifications for improvements over time.
Many companies have accumulated systems and applications over time, without
particular oversight. This can be referred to as an accidental architecture and is a key
reason why many companies struggle with environments characterized by selfcontained,
highly segregated silos of business and IT knowledge and functionality.
A more proactive approach to developing an enterprise architecture is critical to
advancing in IT maturity. With a clearly communicated blueprint for accepted
architectural practices, organizations can implement solutions and IT service
management processes that support them in a more holistic manner.
The Open Group Architecture Framework (TOGAF) is an example of an enterprise
architectural blueprint that is gaining in popularity. ITIL and TOGAF are
complementary standards. Where ITIL is a guideline for improved IT service delivery,
TOGAF is defined by the Open Group as "a methodology and set of tools for
developing an enterprise architecture."
The intricacies of enterprise architecture remain beyond the scope of this paper.
Nevertheless, the topic should be linked to ITSM. Where solutions are being
implemented, organizations are encouraged to incorporate issues of architecture into
the IT management processes - considering factors such as how the proposed
designs fit in with the reference architecture and defined standards and if it will be
supported by existing ITSM systems.
Project and Portfolio Management
One of the greatest and most pressing challenges is coordinating business and IT
effectively. Everybody talks about it; few know how to make it a reality. For this
reason, it is often considered one of the "soft" issues in the area of ITSM - an issue
that organizations too often believe they can ignore while they focus on more
"concrete" measures for optimizing IT. Organizations that adopt such an attitude do
so at their own peril. In a challenging financial climate, the costs of poor project
portfolio choices can be prohibitive. And the need to integrate IT with the business is
in many respects at the root of the new iteration of the ITIL framework. If business is
to wield IT as a competitive differentiator and if IT is to assist the larger organization
as a service-providing business partner, then IT needs to find a way to better
understand the objectives of the business and move forward with IT projects that
support them. This becomes all the more critical during an economic downturn, when
resources are scarce and prioritization of the IT project portfolio can mean the
difference between overall corporate success or failure.
Here again, a solutions-based approach, combined with effective organizational and
process change, can drive successful business and IT collaboration. In other words, it
can help to actualize the recommendations put forth in ITIL v3. The crux of the issue
comes down to more effective project portfolio management - an end-to-end
process that extends from the initial ideas for business and IT projects to their
ultimate implementation. To manage this otherwise unwieldy process in an orderly
fashion, organizations first must capture ideas, requirements, and requests from
appropriate entities throughout the extended enterprise. This can be accomplished
through a range of integrated tools that collect feedback and store it in a centralized
repository, accompanied by effective processes and organizational frameworks.
With such a repository in place, decision makers who straddle business and IT can
generate a list of prioritized requirements and the potential projects to fulfill them.
Critical to this prioritization process would be an ongoing cost-benefit analysis
process based on solid information regarding the resources available to support the
project, the trade-offs involved in moving forward, and the potential business
outcome. Solid integration into back-end resource planning applications can facilitate
evaluation of human capital, financing, and budgeting. As business conditions change
rapidly, moreover, organizations should conduct this analysis on an iterative basis to
make difficult but more effective project decisions that align with business strategy.
A company, for example, might consider killing a year-long project only three months
in, if the organization's business model suddenly changes. But before doing this,
estimators will want a clear understanding of how such a decision will impact the
business and the customers it serves.
Once a project gets the go-ahead, IT organizations need a clear process for moving it
into and managing the execution stage. This will include integrated project management
tools for breaking the project into discrete steps, building schedules, creating
milestones, establishing review and quality gates, defining budgets, and assigning
resources. All of these steps need to be understood in the context of the overall portfolio
of existing and planned projects so that upper-level managers can continue to make
informed strategic-level decisions throughout the course of the project. Coordinating
between project portfolio management and application life cycle management tools
(such as requirements, change management, quality) can facilitate effective software
creation and metrics for assessment. After the project is implemented, IT also needs a
smooth process for transitioning the implementation into operations where knowledge
acquired during the project thus far can be transferred and managed to facilitate
software deployment and ongoing maintenance phases.
SAP SOlutions for IT Optimization
SAP's approach to IT optimization is based on integrated technologies and
applications that help organize IT services and execution with the business by
supporting an ITSM process as detailed in the ITIL v3 framework (see Figure 4).
Key elements of this approach include the ITIL-based Run SAP methodology, the
SAP IT Service Management application, the SAP Solution Manager application
management solution, the SAP Enterprise Architecture Framework, the SAP
Resource and Portfolio Management application, and the SAP NetWeaver technology
For Further Information
You can find additional resources at the following link:
External Publication of IDC Information and Data - Any IDC information that is to be
used in advertising, press releases, or promotional materials requires prior written
approval from the appropriate IDC Vice President or Country Manager. A draft of the
proposed document should accompany any such request. IDC reserves the right to
deny approval of external usage for any reason.
Copyright 2008 IDC. Reproduction without written permission is completely forbidden.