Chapter 12 Developing Managing Customer Expectations by HC12080722152


									Chapter 12

       Developing & Managing
       Customer Expectations

 By Ricky Champaneria, David Figueiredo, Brody Moore
•We will describe components of a comprehensive service-level agreement and outline
methods for acquiring customer satisfaction. The central theme of the material is
developing, managing, and satisfying the operational expectations of IT customers.
•We will cover important service-level concepts and describe how IT, its suppliers, and
its customers can reach agreement on service levels.
•Operation and use of applications and their databases define a firm’s modus operandi
(- a method of operating or functioning) in many instances, which means they demand
serious management attention in the near term. The chapter we are discussing focuses
on tactical and operational concerns arising in IT organization’s production operation.
•Production operation is the routine implementation and execution of application
programs at centralized mainframe sites, locations widely dispersed throughout the
organization, or at outsourcing firms.
•A firm’s essential business activities depend very heavily on IT production activities so
these applications must operate reliably and deliver high-quality results.
•The first and most important step in building a disciplined approach for managing
production activities successfully is to establish realistic expectations about information
service performance levels.
   Tactical & Operational Concerns

• Many employees are highly dependent on effective computer center
  operations. While operating behind-the-scenes, the center’s performance,
  especially its defects, is highly visible to many employees.
• Not only are a firm’s computer production operations vital to its business,
  but they can help establish a firm’s image and identity internally and in
  many cases externally with suppliers and customers.
• Routine computer operations are impacted by what happens today and
  what will happen in the coming weeks or next month. Production
  operations managers rely on procedures and disciplines that will help
  them cope with the fast pace and wide variety of challenges that come
  with their job.
• The management of computer and network operations is strengthened
  greatly by the use of disciplined techniques.
              Customer Expectations
• Expectations have many origins and are established via many different
  means. Some expectations originate from external sources such as:
  meetings with vendors, articles in the trade press, business association
  meetings, etc.
• These expectations are reinforced by internal factors such as IT budgets or
  IT’s prominence within the firm.
• Expectations play a major role in how performance is measured, therefore
  IT managers must use rational management techniques to help a firm set
  and meet realistic expectations.
• Achieving service-level agreements between the IT organization and its
  clients is essential because they establish acceptable service levels for IT’s
  clients and include mechanisms for demonstrating the degree to which
  service levels are attained.
• One key result of the service-level agreement process is that the entire
  firm gains a clear understanding of what is expected from the computer
          The Disciplined Approach

• Service-level agreements (SLAs) are the foundation of a series of
  management processes that can collectively be called disciplines.
• Disciplines are management processes consisting of procedures, tools, and
  people organized to govern important facets of a computer systems’
  operations, whether those operations are located in the IT organization or
  in client organizations within the firm.
• The goal of the disciplined approach portrayed is to establish and meet
  customer expectations. This is accomplished when computer center
  performance is judged against specific and quantifiable service criteria.
           The Disciplined Approach (cont)
1) Problem Management – problems, defects, or
faults in operations that are causing missed service
levels and additional resource expenditures must be

2) Change Management – system-wide changes
must be controlled because mismanaged changes
create problems and impair service.

3) Recovery Management – plans for recovering from
the service disruptions that inevitably occur due to
system performance or defects or uncontrollable
outside events must be made.

4) Batch and Network Systems – batch and network
workload must be scheduled and processed, and the
results delivered to client organizations. Batch
processing refers to grouping together or
accumulating transactions for processing.

5) Performance Management – system performance
or throughput must be maintained at planned levels
to meet service agreements.

6) Capacity Management – capacity needed to meet
workload demands must be planned, but this requires
that disciplines 1 through 6 all function properly.
          Service-Level Agreements
• SLAs fill the need for reducing conflicts between suppliers and users of
  service and to help establish users’ expectations. Internal IT service
  providers are also increasingly turning to SLAs to smooth relations over
  service levels and service costs.
• Establishing SLAs requires intense discussion and negotiation. Negotiation
  objectives are to obtain agreement of service levels and their associated
  affordable costs, as well as the means for tracking and reporting results
  and progress.
• After negotiations are over, a document describing the mutual acceptable
  service levels that each IT client will receive is produced. Document shows
  all the services the client expects along with the mutually acceptable and
  affordable costs of those services.
• A proper service-level agreement establishes an affordable, cost-effective
  means for client organizations to use IT services.
• In general, client organizations must justify information system service
  costs in terms of the mission they discharge to the firm.
   Service-Level Agreements (cont)

• SLAs must use terms that are clearly understandable to both IT and
  clients. The services IT agrees to provide must be expressed in terms that
  are meaningful to the clients.
• All client organizations must be included in the SLA process, and nearly all
  computer services should be considered.
• Applications that are not executed frequently or run on an as-required
  basis and place low resource demands on the organization need not be
  specifically included in the agreements.
• Each application used in the firm has an owner-manager who manages the
  application and discharges other ownership responsibilities. One such
  owner responsibility is to negotiate service levels with service providers
  on behalf of all the application’s users throughout the organization.
                What the SLA Includes
•   Service-level agreements typically begin with administrative information such as
    the date the agreement was established, its duration, and its expected
    renegotiation date.
•   It describes the key service measures needed by the client’s organization and the
    service levels to be delivered and measured by the service provider.
•   Also included are the resources the provider needs to deliver the service, along
    with their associated costs.
What the SLA Includes (cont)
                •   Negotiations of service-level
                    agreements usually occur while a firm is
                    preparing its operational plan or shortly
                •   Renegotiations generally take place a
                    year later in the next year’s planning
                    cycle. Applications with volatile
                    demands however, may require more
                    frequent renegotiations.
                •   In general, SLAs must specify the type
                    of service required by the client
                    organization. The type specified may
                    depend on whether the service is for
                    regularly scheduled batch operations,
                    continuously operating network-based
                    systems, or complex online transaction
                    processing applications.
                •   Service providers should negotiate
                    agreements by service class since
                    capacity, performance and reliability
                    may depend on total demand levels in
                    all organizations served by IT.
            Schedule and Availability

• An SLA schedule describes the period when the system and its application
  programs are required to operate.
• The schedule should describe the availability throughout the day. It must
  also outline the conditions for weekend and holiday availability.
• During especially critical periods for the client, it may be attractive for user
  departments to negotiate exceptionally high service levels.
• On the other hand, both parties should also consider reduced availability
  or reduced performance during off hours, if these considerations yield
  cost savings.
• Negotiators who clearly understand system capabilities, limitations, and
  special user needs produce the most effective agreements.
• One of the key measures of service performance is timing, but different
  types of service have different timing factors.
• Turnaround time is the time that elapses between the initiation of a job
  and the delivery of customer output.
• The input of data for one job may have been created by results from
  several other jobs making the timing and sequencing of jobs crucial.
• For online activities, response time is the most critical timing parameter.
• Response time is the time that elapses from the moment a “program
  function” or “enter” key is depressed to when an indication that the
  function has been performed first appears on the display screen.
  Response times should be specified by service type.
• Trivial transactions require so little processing they appear to occur
  instantaneously. When trivial transactions incur delays, productivity drops
  substantially, and the system becomes a source of annoyance to the user.
                     Timing (cont)
•   Many transactions are distinctly nontrivial. They can often require
    the execution of many millions of computer instructions.
•   The client usually understands these situations and appreciates the
    response time needed to solve the problem.
•   Many other applications, such as ones that query several databases
    in search for specific data are also nontrivial. Both customers and IT
    personnel must clearly understand cases like these.
•   During SLA negotiations, the IT management team must provide
    service availability and reliability information.
•   Availability and reliability measures must be clear and
    unambiguous so users and IT personnel can measure them easily.
 E-Business Customer Expectations

• E-business operations significantly change a firm’s information system
  infrastructure and add new dimensions to system management.
• Raise the importance of service levels much higher.

• Managers’ expectations for e-business system operations are high because
  system operations are critical.
       For example, Enterprise Resource Planning (ERP) systems are used to
  purchase parts and supplies, accept customer orders, maintain work-in-
  process inventories, service customers, support salespeople, and help
  manage many other important activities. Basically, they integrate
  important digital data from the beginning to the end of a firm’s value
  chain. ERP systems are key to Web-based business enterprises.
 E-Business Customer Expectations
• In addition to ERP systems, e-business requires many supporting systems
  and functions.
        For example, collaboration tools, data management systems, and
  customized tools for sales analysis, service support. Other important
  supporting systems include security software, payment systems, and tools
  supporting Web page development. These tools and functions are the
  enablers of e-business. They are part of the infrastructure required to
  establish, operate, and manage essential e-business processes.
• These e-business connections accelerate business activities, improve
  information flow, and enable integrated business controls, while creating
  opportunities for innovation and growth.
• The infrastructure described must always be “on.” Basically system users,
  whether internal or external, have high expectations when it comes to e-
  business system operations and expect an e-business to always be open
  and ready to take their orders.
Contracts With Outside IT Service Suppliers
• SLAs used within a firm are called agreements. When a firm obtains IT
  services from an outside organization, the documents specifying the
  service are called contracts.

      What to Include in Service Contracts
The service contract should include most of the administrative items

Such as contract date and duration, parties to the contract, and the statement
of purpose.
            What to Include in Service Contracts
•   In addition, the contract must include an unambiguous description of the services provided and the
    duration of each service. For each service, the contract must provide key metrics such as system
    reliability, availability, and performance. If software installation is part of the contract, it must outline
    the schedule and the responsibilities of both parties. The contract must include payment terms and
    termination conditions.
•   Typical service contracts extend from 1 to 3 years. The contract should include requirements for
    adding or changing services, increasing volumes or adding users, or other changes that might need
    to be renegotiated within the contract period.
•   Measurement on reliability, availability, and performance depend on three factors:
    1. Requirements of the customer
    2. Availability of the provider
    3. Charges or payments for services.
            For example, if a firm’s e-business requires high availability. The provider must have
    redundant, automatically switchable systems is a highly secure facility that guarantees high
•   When developing a contract, managers must deal with two conditions of reliability:
    Mean Time Between Failure (MTBF) and Mean Time To Repair (MTTR). In additions, the amount of
    system throughput or its performance based on transactions rates and volumes must also be
    specified in the contract.
          Types of Service Contracts
• The terms and conditions of service contracts depend specifically on the
  type of service. According to the ASP Industry Consortium, four distinct
  types of contracts cover most situations.
   – Application Service Contracts
   – Hosting Contracts
   – Network Contracts
   – Customer Help Desk Contracts

• Application Service Contracts: measure application performance. The ASP
  agrees to deliver one more classes of service, orders performance
  parameters, measures application performance levels and reports them,
  and provides measurement transparency to the customer. This contract
  defines penalties to the ASP for non-performance. It’s important in this
  contract to identify who specifically owns the application because if your
  firm decides to disengage from the supplier, the software, software
  upgrades, or license arrangements may complicate matters.
Types of Service Contracts (Cont’d)
• Hosting Contracts: cover third-party services provided by an ASP. You
  should review these contracts if you engage an ASP who is subcontracting
  computer operations to a third party. The firm will negotiate this form a
  contract if it relies on a hosting firm to operate the firm’s hardware. In this
  case, terms and conditions related to operation, maintenance, and
  eventual upgrade or replacement of hardware must be outlined.
• Network contracts: cover the telecommunication link between the firm
  and its service providers. The important performance data associated with
  these contracts include reliability, availability, and capacity.
• Customer Help Desk Contract: It engages an outside supplier to handle a
  firm’s problem, change and recover management. These contracts may
  also provide for specific training for certain members of your firm’s
  personnel. Problem resolution and trouble ticket turnaround times are
  detailed in this contract.
                Workload Forecasts
• Workload forecasts contain online transaction loads, printed output
  quantities, data storage space, and other resource demands that clients
  require form service providers.
• Reflecting patterns for human behavior, for example network systems
  display a morning peak, a pause in activity around noon, and another peak
  later during the afternoon.
• East Coast opens for business three hours before departments on the
  West Coast for example Air traffic control systems. Managers of systems
  with large geographic reach must account for these daily variations with
  time zones ect.
• Workload forecasting is often tedious and time consuming, preparing
  reasonably accurate forecasting is essential to providing satisfactory
    Business Writing Tips : How to
      Write a Service Contract
Difference between a Service Level
     Agreement and a Contract
    Measurements of Satisfaction
• Finding out what users want

• Customers look for measures like average
  response and peak transaction volumes

• Using software from other companies who
  specialize in these things will save resources
       User Satisfaction Surveys
• Surveys gain knowledge of users expectations
  and experience
• Polls allow for users to view others opinions
  about your product
• Surveys are highly recommended
• Increase or improve communication, improve
  efficiency, optimize resource use, and increase
  customer satisfaction
      Additional Considerations
• Client may ask for something to be added
  during a critical period
• Requests should always be taken into account
• Some departments think they are more
• Everyone must work together
      Congruence of Expectations &
• The goal of an SLA is to develop mutually
  acceptable expectation level, cultivate an
  atmosphere of joint commitment, and to
  create a spirit of trust between organizations

• Departments may need to perform tasks they
  aren’t used to, so that both sides can be
  comfortable with the SLA
• SLAs allow jobs to be done with precise
  instruction and give a clearer idea as to what
  that job is

• Surveys and polls are a great way to gain
  knowledge of user activities and experience.
   Management of Information Technology – Fourth Edition
    Carroll W. Frenzel & John C. Frenzel

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