Keep up-to-date with ITIL news. Low volume to-the-point bulletins...
ITIL in Practice from
At the time of the case study below I was a permanent employee of the Financial Services Company, hence the references to we (meaning IS Operations).
Financial Services Company - Potential Outsource of IT Operations
A) Scene
It was the early nineties and outsourcing in the world of IT was being perceived as a silver bullet that had the potential to save money and improve services.  The words around economies of scale abounded and the horror stories of escalating costs and the true reasons behind them had yet to come fully to light.  Information for those less ancient, computing was becoming more exciting in terms of PC's and networks and the mainframe based work although still critical was largely legacy and in gradual decline.
B) Scenario
Based in a rural environment around 150 miles from London in a financial institution that had a newly appointed CEO, who was also an actuary, it came as no great surprise when the IS department was advised that a number of industry outsourcers had been invited to tender for the IS Operations area.  At this time the services were a mix of mainframe applications that supported the pure insurance/assurance and pensions business and client servers that supported the office administration applications including finance and purchasing applications   
C) Story
The IS department was not in too bad a shape.  We re-charged for services and had thresholds set to differentiate what work would be undertaken as part of 'the day job' and what was an 'extra' and would require a project code and be re-charged and therefore also required the requester to ensure that they had the budget to cover it.
Also, mainly owing to the location and consequential lack of business competition, staff turnover was generally low and in the IS operations and technical support areas almost non-existent.  This had a number of benefits, the primary from a service management point of view being that the majority of the technical and operations staff had been part of the organisation for sufficiently long that they had an inherent feel for what services were important.  To the business, both in terms of impacts, as well as who would shout loudest if not looked after properly!  Most of the changes to services and their implementation had been designed and implemented by the staff that were still on site.
As soon as we were informed that invitations to tender for Operations had been issued a number of activities came under focus, budgets were scrutinised, the day job work and thresholds were strictly adhered to and a number of potential good ideas put on hold until the way ahead appeared clearer.
We remained, somewhat like rabbits in the headlights, for nearly 18 months during which time a number of the potential bidders dropped out of the bidding because as an organisation we simply weren't big enough to be of interest.  I confess that I found it galling on a daily basis to have to give information to someone who was working on taking my job away.  Whilst at the same time we worked on a three year budget and made everything we did as tight as possible. Then we were informed that following a board meeting it had been decided that the IS Operations work would stay in-house.
It came as a enormous relief, because, as I recall, TUPE was not on the UK statute books, and at that stage and only a chosen few had been told that they would be kept on to manage the 'contract' 
D) Lessons Learnt
At the time - The knowledge of the budgets and re-charging system and the experience of being a zero rated cost centre meant that we could produce a 3 year budget that was arguably correct.  Staff turnover being so low everybody knew business priorities and the IS response to Incidents was effective and focussed on the most sensitive and critical areas of the business.
The most powerful area within the business, as with any financial institutions, are the 'Investments Department' and their requirements for information systems and access to the stock markets are of course critical to the organisation.  Having the staff who built their systems and then who responded to them from anywhere on campus and attended within 5 minutes put the in-house team in a great position.  It transpired that it was this department that attended the board meeting and simply stated that they wanted the status quo and they were listened to.
The 18 months of not knowing where we were going, what the strategy was, was a very corrosive time within the Operations area, good ideas were not completely stifled, but keeping ones head down was the order of the day, it was a stress filled time and if you had an idea that required additional budget it was effectively put on hold.  The key points were:
  • Know the business and your customers and their services (B)
  • Financial Management  (Budgets and re-charges) are actually part of core IS (M)
With hindsight - It was a stressful time!!  Knowing the costs of services and of their component parts and who the most important customers were in terms of business impact proved absolutely critical.  As much as it hurts the ITIL purist part of me, it was also a fact that we did not have fully documented systems and SLAs at the time, but by simply knowing the information that those documents should have contained enabled us to deliver an excellent service.
In answer to the question 'Would I recommend low staff turnover in favour of fully documented services?' - NO of course not and in these fluid times the two primary risks run are clear.
Firstly, a disaster, the No 9 bus that takes out the queue at the bus stop as well as 50% of your service knowledge and the department is unlikely to recover easily or quickly. The amount of time spent by government organisations in 'Succession Planning' being testament to the perceived affects that individuals moving on could have.
Also personal knowledge is not truly scalable, should the business volumes suddenly double, whether it be owing to corporate acquisition or for some other business reason how well would you be able to cope with the increased demand? Or would service quality dip at just the wrong time?  Without properly documented services how will you achieve the nirvana of consistency?
The episode did however pass on something that I consider of great benefit to me, in that in subsequent years when on other sites where I represented the potential outsourcer I remembered what it felt like to be on the painful end of the process, and I sincerely hope that my attitude and manner in dealing with the incumbents has been tempered with understanding.
The key points were:
  • The documents such as SLAs are less important than the understanding that is behind them (in much the same way that if you have to go and review the letter of a contract to answer a simple point then it probably indicates that the relationship has gone off kilter anyway.
  • The thoughts at the time - bulleted above were pretty accurate.
About the Author - Colin Mayers is the Managing Director of Mayers Consulting. Colin operates across all market sectors and provides a breath of experience with regards Service Management. As for formal qualifications he holds the ITIL Managers Certificate, ISO20000 Internal Auditor and Consultant Certificate and also the Prince 2 Practitioner.
Be the first to leave a comment about the above article...

Please submit any comments you have about this article.

Your feedback will help add value to the content for other visitors and help us develop the content for the benefit of all.

You will need to provide and verify your e-mail address but your personal information will not be published or passed on to others. To identify each post we take the part of your email address before the @ sign and use that as the identifier, so if you are your post will be marked "by john.smith".

NB: We respond personally to every post, if it calls for it.

If you prefer to respond without posting your comment please use our contact form.

Click the REVIEW button below to preview your comments.

Tags; ITIL,Outsourcing Experience,SLA,ITIL purist
This article has been viewed 11876 times.
NB: This page is © Copyright and / or the relevant publishing author. You may copy this article only in it's entirety, including any author bio and / or credits, and you must link back to

Keeping up-to-date with ITIL...

Keep up-to-date with ITIL news. Low volume to-the-point bulletins...