As enterprises consider their IT strategies for the next 12 months, they need to reassess one particular area – how to tackle the excessive IT service management (ITSM) tool implementation costs that undermine wider digital transformation objectives. Confidence in digital transformation has shifted since the first wave of the pandemic in April 2020, when a survey of CFOs in the US by the professional services consultancy PwC found 53% were deferring or canceling IT investment. Research company IDC is now forecasting 2021 as a year when enterprises invest in cloud infrastructure and artificial intelligence (AI). Organizations will seek to optimize the efficiency of their hybrid workforces and to deploy automation to increase productivity and overall competitiveness. There seems little doubt that digital workflows will increase, as organizations demand greater efficiency and cost-effectiveness through streamlining.Many enterprises are still likely taking hits from the cost of unnecessary licenses & inflated fees for implementation services which fail to deliver the gains promised from #ITSM software. But how do you avoid it? Click To Tweet
The role of ITSM in digital transformation
ITSM will be pivotal to the success of these projects. Despite the pandemic, research and advisory company Technavio estimated growth in the ITSM market would be nearly eight per cent in 2020, increasing to nine per cent overall up to 2024. The correct deployment of ITSM software should turbo-charge the roll-out, support, and optimization of advanced front and back-office solutions and applications. By providing faster, more resilient, and productive networks, businesses should reduce the hours spent on routine IT processes, eliminating a layer of costs.
This should be a recipe for success in any digital transformation project. However, even in 2021, many enterprises are still likely to take a hit from the cost of unnecessary licenses and inflated fees for implementation services which fail to deliver the gains promised from ITSM software. This is a continuing story within ITSM, which operates in a market that I believe often lets customers down.
The state of ITSM software implementation
Research this year among 250 CTOs, CIOs, and senior IT decision-makers from public and private sectors in the UK and Ireland proves the point. This found more than nine-in-ten of these senior IT personnel (92%) believe ITSM implementers are failing to meet the needs of customers. Four-in-ten (40%) say ITSM implementers have left them with under-utilized software and 39% with excessive licenses they still have to pay for. Almost half (49%) suspected an implementer has sold them more software licenses than they really need. The generally poor levels of consultancy and implementation have led more than half of those surveyed (55%) to change or cease working with their chosen implementer because of failure to deliver what was needed.
The cost trap of ITSM tool implementation
Unfortunately, many enterprises find themselves trapped in a vice once they’ve selected their ITSM software and signed off the business case. On the one hand they pay for unnecessary licenses and on the other, they have to foot the bill for implementation services which are not only far too costly, but also fail to address their precise requirements or deliver the gains promised.
Examination of where things go wrong often reveals that the problem is the choice of implementer, which could be the software vendor itself, or far more likely, one of its implementation partners. It’s a set-up that tends to undermine the interests of the customer. Official implementation partners may have heaps of Gold and Silver accolades from specific vendors, but it usually means they excel at selling rather than implementing.Many enterprises find themselves trapped in a vice once they've selected their #ITSM software and signed off the business case. This article explains how to avoid the cost trap of ITSM implementations. Click To Tweet
Heavy pressure on margins from the vendor incentivizes the partner to sell as many licenses as possible or to maximize fees by other means, often by an extenuating implementation. Keen to recoup as much margin as possible, partners will maneuver a project to the benefit of their bottom line, rather than provide what is strictly best for the customer.
This is an important pitfall for any enterprise upgrading ITSM software so it can swiftly adapt to the digital future. Though undoubtedly highly beneficial, new ITSM software is potentially very costly, with commitments of at least four or five years and implementation periods of 12 months in some cases.
For salespeople, the rewards can be substantial, with licenses based on users, servers, or the number of automations. Getting the balance right between the various types of license can have a major impact on cost. Post-implementation “true-ups” too often reveal an organization has been using far more licenses than originally scoped.
Narrow focus on one vendor can work against the customer’s interest
Of course, an implementer deserves to be remunerated appropriately when it has true expertise in the specific software it sells and the entire project works to the advantage of the customer. Being tied to one vendor so closely, however, can be a significant drawback from the customer’s point of view. A vendor’s official partner is unlikely to present the full range of solutions on the market. For example, the vendor may have a very good ITSM platform but the partner will not propose a reporting tool from another software company that fits the specific requirements of the project.
In a complex enterprise this is less than desirable, as multi-vendor ITSM solutions are often required as part of a best-of-breed approach. Multiple orchestrations or automation tools may be needed, plugging into supplier systems. To be effective, this demands extensive market knowledge and complete objectivity. A workable set of solutions may be implemented, but not the optimum set, dragging down value-realization. By the time this has been understood, it’s already too late.Research finds that 46% of IT decision-makers believe the #ITSM market is opaque and nearly two-in-ten (19%) admit that they find it very difficult to know who to trust. Click To Tweet
Although the cloud has made ITSM tool implementation easier and, in theory, more cost-effective, when an IT department has under-performing ITSM solutions, it becomes difficult to do anything more than meet the daily challenges. Fulfilling the more strategic requirements of the business and its senior leadership team is very difficult. Cost-reduction and the completion of projects on time and to budget become far less likely, as does the ability to excel at hitting new key performance indicators (KPIs).
Lack of transparency leads to pitfalls
The research cited above also shows how this lack of transparency within the ITSM market is a major concern among IT decision-makers, with 46% believing the market is opaque and nearly two-in-ten (19%) admitting that they find it very difficult to know who to trust. Poor experiences are common, with 89% of decision-makers saying implementers usually get something wrong.37% of IT decision-makers say #ITSM managed services are too costly because of poor performance by implementation partners. Click To Tweet
Asked where implementers most often fail to meet expectations, more than four-in-ten respondents (41%) cite excessive costs, while 28% point to over-running of agreed timescales. And it’s not just ITS tool implementation projects that are a problem – more than a third of respondents (37%) say ITSM managed services are too costly because of poor performance by implementation partners.
The answer is to opt for vendor-neutral implementers
The answer to these excessive costs and poor performance issues lies to a large extent in the hands of enterprises themselves. If they’re prepared to step outside the vendor-official partner relationship and opt for an independent implementer they’re far more likely to have access to genuinely objective (and deeper) expertise. This is knowledge of software from the whole market not just a part of it, along with the experience of what works in practice and how it should be implemented to best effect. Independence of vendors is more likely to bring an implementer with a blinkered focus on the customer’s requirements rather than fees and license sales.
Breadth of ITSM software knowledge and extensive in-the-field experience of implementation together offer real cost minimization and return on investment (ROI) benefits for enterprises. If they want to avoid unnecessarily high costs of implementation and excessive licenses, along with misconceived or poorly-functioning ITSM solutions, moving beyond official vendor partners is what works in the real world. Vendor independence and objective expertise will maximize the chances of a truly cost-effective ITSM tool implementation that lays the ground for digital transformation within an enterprise.
Mark is a highly-skilled ITSM expert. He has designed and managed some of the largest ITSM systems and implementations. He is an experienced Professional Services Manager and Solution Architect with a demonstrated history of working in the service management industry.