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March 23, 2009

The Business of Service Management

Systems management is now being tied to customer service experience metrics and service level agreements to create a new software category: business service management. CBR reports.

By Jason Stamper

Time was when systems management was just that: the management of systems. Your systems management suite, otherwise known as a systems management framework, was really rather good at telling you whether a server, database or the network was up or down. Some could even give you some idea of the cause of a problem and in doing so improve on the time it took to resolve the issue. But what they could rarely do was monitor and manage the link between the IT infrastructure and what it was actually delivering to the business and its customers.

Because the link between IT infrastructures and service level agreements was non-existent, CIOs actually had a rather inadequate picture of how well their IT systems were supporting the business and its customers. The systems management framework might indicate that nothing has actually fallen over, but vital website customers could be seeing appalling response times that result in them looking elsewhere for their next purchase. Certain employees could be seeing such slow response times from their salesforce management application that it is almost useless, and staff right up to CEO level could be finding it almost impossible to process the reports they need to make effective decisions.

Clearly what was needed is a closer linkage between the systems management technologies and the service level agreements and customer experience metrics that are so common in the enterprise.  A new category of software to address this new challenge was born: business service management, or BSM. BSM aimed not only to give IT and the business metrics that better reflected ‘real world’ staff and customer experience from the IT estate, but also to begin to highlight problem areas that were looking like breaching those SLAs and customer service metrics some time in the future.

Wikipedia offers a perfectly good definition of business service management: “Business Service Management (BSM) is a methodology for monitoring and measuring IT services from a business perspective. It is made up of both structured process and enabling software.”

“BSM allows IT departments to operate by service rather than by individual configuration items or technology silo, enabling prioritization of efforts, ultimately improving the service that is delivered to the business or organization,” the online encyclopaedia says. “Touching on all the Lifecycle Processes within the Information Technology Infrastructure Library [ITIL], BSM is a way to bring together many disparate processes and tools, and creating quantifiable improvement in efficiency and the ability to view technology as it is germane to business process.”


Technology adaptation

It’s no surprise that the former systems management technology firms have adapted their technologies, often with the help of an acquisition or two, to cater to this new requirement. In January 2007 Compuware bought privately held Proxima to give it a BSM story: Proxima’s flagship product, Centauri, was said to help manage service level agreements, by automating reporting and providing a dashboard to monitor the key performance indicators upon which the SLA is based.

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Nimsoft bought Indicative Software, while ASG bought Mobius Management Systems. The systems management big four – IBM Tivoli, CA, BMC and HP – have all updated their systems management capabilities to be more suited to this brave new paradigm. Meanwhile Novell bought one of the BSM dashboarding companies, Managed Objects, in October last year.

So what does business service management really do that was not possible with more traditional systems management? Steve Tack, director of product management at Compuware, told us that unlike Compuware’s Vantage systems and application performance management and monitoring product suite, it s acquired Proxima Centauri product is designed to not only present a business view of service delivery but also a customer-facing service level management view.

Proxima’s CEO at the time of its acquisition by Compuware, Steve Jones, added, “Centauri is already the service management solution of choice for the world’s leading service providers. These organizations rely on Centauri to contain costs, reduce risk and increase revenue throughout the contract life cycle.”

IBM touched on many of the same themes when it announced a broad portfolio of technologies aimed at the BSM challenge in February this year. Calling them IBM Service Management Industry Solutions, the company said these new technologies are designed to help companies, “manage their dynamic infrastructures using a common platform to get the most out of their smart assets, expand their businesses, and improve customer service.”

“Increasing reliance on computing power to manage physical assets like manufacturing facilities, parts in a supply chain, power plants, billions of mobile phones and other tangible entities, along with the need to deliver better, more intelligent services to customers, is prompting organizations to adopt more dynamic infrastructures,” said Al Zollar, general manager, IBM Tivoli software. “IBM Service Management Industry solutions help organizations use technology to intelligently respond to the global trends and disruptions affecting businesses, while also achieving a sustainable competitive advantage.”


Energetic response

IBM customer CenterPoint Energy is composed of an electric transmission and distribution utility serving the Houston metropolitan area, local natural gas distribution businesses in six states, and a large pipeline business. “CenterPoint is working with IBM on our Intelligent Utility Network, providing new technology to monitor our network and track assets,” said Pat Graham, CIO, CenterPoint Energy.  “Reliable energy is not a luxury and it is up to us to keep the lights on and to provide clean natural gas for homes, factories and businesses. With the help of IBM technology, we expect fewer, shorter outages and lower operational costs.”

Describing the use of such technologies by a ‘top-ten global investment bank’ (that it can’t yet reference directly), IBM said the bank needed to assure high availability for internal and customer-facing trading services, as well as compliance with rigorous financial regulations.

“During the normal business day, their massive infrastructure generates tens of millions of events,” IBM explained. “What’s more, any service downtime can cost them up to $300,000 per minute. As a result of all these factors, they need to isolate service problems within one minute. With an IBM business service management solution, the bank is now able to isolate problems within 10 seconds and notify support staff on the trading floor through their Blackberrys.”

“The IBM solution has resulted in a massive 10,000-to-1 event reduction,” IBM claimed, “from tens of millions of events to mere thousands, most of which can be handled automatically. This reduction, in turn, has driven a 20 percent efficiency savings across the support teams. The teams can also prioritize response according to SLAs with the lines of business and better maintain compliance efforts.”

Mergers and acquisitions, expanded regulations, and combining disparate business systems and IT infrastructures that put security and operations at risk are causing banks, financial services firms and all kinds of other enterprises to adopt business service management. The goal is the consolidation of operations, improvement of  payment systems monitoring, and better management of security and compliance while improving efficiency in the data centre.

It seems the technology has found itself in the right place at the right time. Arthur Allen, founder and CEO of privately held Allen Systems Group, explained the phenomenon to CBR in a recent interview: “Our customers demanded that we federate our [numerous management] technologies into a business service platform for business service management,” he said. “Before we did that our sales pipeline was in the region of $200m, now it’s $1.25bn. We’ve added a billion dollars to our pipeline by having the best BSM platform out there. I’ve never seen anything like this.”

“People are calling us an overnight success but I say we are a 22-year overnight success,” Allen added. “It’s taken us 22 years to get the strategy in place and put together the right technology portfolio.”

ASG is not the only one seeing the benefits of the BSM market. BMC had a record fiscal 2008 thanks in part to the progress it has made in the BSM space. Revenue came in at $1.73bn for the year, while BSM license bookings came in at $88m, up 16% over the year-ago quarter.

“BMC Software continues to make powerful strides in every area of our business, said Bob Beauchamp, BMC’s president and CEO. “We’re building strategic relationships with more and more customers as our sales teams convert mindshare to market share. BMC is out-innovating our competitors, and our company is executing more effectively and efficiently than ever before.”

“Business Service Management has gone mainstream,” said Beauchamp, “even as BMC has extended our leadership in this rapidly growing space.”


Economic isolation?

It seems that despite the current economic turmoil and the pressure that it places on IT spending plans, many customers are still investing in business service management because they believe it has the potential to streamline their IT operations, and give better visibility into how IT is service the business and its customers. Ultimately, that could mean that BSM could save a company money.

As CA’s CEO John Swainson said as the company announced its financial results in January this year, “While customers are closely scrutinizing all IT investments, we are seeing considerable interest in our enterprise software as it enables them to increase the effectiveness and cost efficiency of their IT infrastructures.”

Sean Larner, Managed Objects’ international president at the time of its acquisition by Novell (and now CEO at file-sharing start-up Broolz) explained why he believed business service management is so different from the systems management that came before it, telling CBR: “Managed Objects is not a management company. What we do is take information from any source, whether or not it is a CMDB [configuration management database] and visualise it.”

“To offer complete BSM you have to have complete visibility of all sources,” Larner said. “You need to connect, correlate and then visualise. But visualise in a way that it means something to the business.”

Analyst firm Forrester recently said the big four — BMC, CA, HP, and IBM Tivoli — have around 40% of the BSM market wrapped up. But they do not have the market to themselves, either: Forrester noted that Managed Objects built an impressive customer list prior to its acquisition by Novell by sitting on top of the big four’s monitoring systems, and it also name-checked service catalogue vendors like Compuware, Digital Fuel Technologies, Oblicore, and newScale.

Forrester also called out mid-tier competitors including eG Innovations, Interlink Software Services, FrontRange Solutions, Avocent (Touchpaper), Nimsoft, InfoVista, Quest Software, Numara Software, Symantec (Altiris), iET Solutions, and the software as a service vendor, The list goes on.


CBR opinion

Business service management is not mere marketing hype. There are enough examples of customers willing to go on the record to say how it helped tie their IT monitoring and management more closely to what the business really needs to track: SLAs and customer experience metrics. Which is perhaps why, despite the current economic climate, both public and privately held companies are trying to ensure that they are positioned as service management experts rather than systems management vendors.

One word of caution though. The analysts will point out that business service management should really be thought of as an approach, and not just a technology. For that reason, simply buying some BSM technology is unlikely to reap the desired benefits without some concomitant improvements to the actual process of service monitoring, management and delivery.

Also in this report: a more detailed look at the role of IT Infrastructure Library (ITIL) in business service management, and CBR asks whether the configuration management database (CMDB) really can become the ‘single source of the truth’ in the IT infrastructure.

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