Thursday, February 21, 2008

Saving ITSM

Since 1900, most business gurus were able to find a direct correlation between the failures of programs and businesses with the competence of management. To understand the connection, it helps to understand that as an entity, management is comprised of a collection of managers. Management (the entity) has an “agency” relationship to the legal entity known as the corporation; it also has a “stewardship” relationship to the stakeholders, such as investors and employees.

As an entity, management receives its power and authority from two places, the shareholders who own the equity, and the state, which recognizes the corporation and management as legal entities. The delegation of authority and liability forms agency relationships. The Board of Directors is the highest level of management and executive managers are their agents. Mid-level managers are agents to executive managers. Front line managers are agents of middle managers.

One common thread found between all failed program attempts is what can be called the agency disconnect – an intentional severance from the chain of command in the mistaken belief that higher levels of management can remove themselves from the liability created by the actions of lower level sub-agents. Even though the Board level and Executive level management are legally liable outside of the business for the actions of all managers, the behavior is still supported internally, by the ignorance of and arrogance in the corporate self-governance mechanisms.

In terms of arrogance, thousands of fiduciary violations such as manipulations, omissions and misstatements occur every day under the flag of “real life”. Since they are not exposed to public scrutiny, what happens in management stays in management. However, by the time these behaviors see the light of day outside the corporation, the issues have reached Enron-like proportions.

In terms of ignorance, the average manager has no idea that management is a professional practice based on a science. The illustrate, lets look at Alfred Chandler, who is famous for researching the connections of successful strategies. Essentially the Chandler principle states –structure always follows strategy, and systems always follow structure. Disconnects comes, when executive develop a strategy and hand it off to middle management to implement. If we follow Chandler, we will change the organization structure accordingly and pass it down to the front-line management. They will change the systems to align to the structure that aligns to the strategy.

If the middle managers are not formally educated, trained and familiar with Chandler, or they have no specific instructions, they will tend to protect and defend the organization against change. Since the new strategy will not work with the existing structure, the middle managers will re-interpret the strategy to fit the current structure. In other words, instead of adopting the strategy and adapting the structure, they adopt the structure and adapt the strategy.

An examination of most, if not all “silver bullet” fads that have swept the nation in the last forty years we find an unimpressive record of success. Most importantly, of these fad-like programs intended to change the business organization, there are few successes, which indicates the theory behind the idea is actually valid.

Service Management (SM) theory has been active in Europe for more than thirty years. The theory of IT Service Management (ITSM) has been active for more than twenty years. The success record in the US and Canada has not been great. In fact, the success of SM and ITSM has been far greater in Europe than in North America.

For those who succeed in changing the organization from a System Management culture to a Service Management culture, the Chandler principle was applied. The CIO was not only active in the development of the Service Management strategy; they were active in the implementation, evaluation and control. Therefore, the IT Directors changed the structure to align to a Service Management strategy, and IT Managers changed the management systems to align to a Service Management structure.

The bottom line is that Service Management is a practice of management, just like risk management, quality management and financial management. The successful organizations approached IT Service Management like a member of the management profession, not a management program. They identified all the traditional principles, practices, processes and professional responsibilities of management and applied them to a service environment. What could be easier?

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