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Next Practices in Business Service Management

 

 

BSM at Toyota Financial Services: An Interview with Dave Howard, IT National Manager, Toyota Financial Services
by Bill Keyworth

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BSMreview was recently introduced to Dave Howard, IT National Manager for Toyota Financial Services, with specific responsibility for Service Management. Our initial attraction to Dave was triggered by Toyota’s ongoing implementation of a business reference model where IT assets and services were being tied to Toyota’s business initiatives. Bill Keyworth of BSMreview spoke with Dave about this BSM initiative which started about 12 months ago.

In addition to service management responsibilities, Dave has also led the creation of the Global Best Practices team for the global TFS Corporation. Dave has just published his first book, ITIL Release Management – A Hands on Guide, which provides a practical step by step process of implementing release management including templates used during the process. Dave holds his Service Managers Certification, two ITIL practitioner certifications and his COBIT certification. He has spoken frequently at itSMF, Pink Elephant , IDC and IDG conferences.

Bill
: What is the “business” of Toyota Financial Services (TFS)?
Dave: Toyota as a corporation is broken into divisions associated with manufacturing, distribution, logistics, financial services, etc. I work within Toyota’s USA Financial Services group which supports the sales and financing of Toyota, Lexus and Scion vehicles through these auto dealers and any dealers associated with the dealer principals of those franchises. We support the retail and lease financing for consumers of these dealer organizations as well as the financial needs of these dealers such as inventory financing, working capital loans, and real estate.

Bill
: What is your role within Toyota Financial Services (TFS)?
Dave: Within TFS’s IT organization, I’m personally responsible for service management; change management, incident management, problem management, release management, configuration management, service level management, disaster recovery, asset management, capacity management and availability management.

Bill
: What are your top priorities in service management for TFS?
Dave: To support the overall TFS business strategy so that they can meet their objectives and needs. In the last few years there has been a lot of flux in the types of activities that we do as a business. 18-24 months ago we were on a growth spurt for the purpose of gaining market share, but when financial market started to tumble, it affected everybody. Our business had to change focus and we needed to look at way we were lending money and how our systems could be improved for purposes of risk management. We had to reexamine our lending models for new business and how to improve collections and reduce risk. There was a new emphasis on call strategies, use of call center technologies, behavioral scoring and business intelligence …and all had to change significantly in the last 12 months.

Bill
: Who do you feel is your “business” customer?
Dave: My IT customers are Toyota’s dealers, consumers and corporate staff …all of these. To understand our customer’s needs, we have to understand what the end product is. For example, we must understand what the end consumer experience is going to be with our website …both from a development and a support perspective. If the website goes down it affects end users in that they can’t apply for loans and can’t pay their bills. It is the same thing for the dealers where Toyota has interface to them through technology. We have direct linkages to dealers in their submission of financial applications, info on their own inventory loans as well as answers re: what our offers are going to be.

Bill
: With multiple types of customers, who determines if the IT organization is successfully meeting TFS’s “business” objectives?
Dave: What is important is having critical success factors and key performance indicators (KPIs) set up. They need to tie back to the corporate score card and that correlation will determine how successful we are. Within Toyota, there is a real focus on the corporate scorecard …with a specific focus on the metrics that are tied to that scorecard.

Bill
: Who is providing the “business” accountability?
Dave: Accountability is a shared type of situation. First, within my area it resides with the service level manager and his/her group and we’re developing our availability capabilities through BSM for reporting on that. Secondly, accountability also comes from the Office of the CIO, who carries responsibility for tying all of the metrics and scorecards (…corporate and departmental) together.

Bill
: How are you proactive in identifying how IT benefits the business units?
Dave: We approach it two ways. First, IT projects are sponsored and funded by the Lines of Business. The idea comes from the business and our role is to be responsive to their needs and requests. We have an Enterprise Program Management (EPM) group that works with the business entity to create a concept proposal that contains a business case and a return on investment (ROI) analysis with net present value. That proposal moves forward after approval from the appropriate committee (…determined by level of expenditure).

Secondly, IT generates internal projects to improve the underlying IT infrastructure services that underpin the business applications and services that are delivered to the business. Examples might include upgrades to our Oracle databases for improved data access, or clustering to increase performance.

Bill: How do you sell infrastructure services to the business?
Dave: Such infrastructure services are funded through a separate internal budget created to support these kinds of global activities.  Justification is assessed on how that business will be impacted if such infrastructure upgrades are not done.  For example, through capacity management we determine that our business intelligence systems will be reaching capacity within six months.  We identify how that capacity will impact the business’s ability to use the system and take proactive steps to increase the capacity to meet the needs and demands of those business entities.

Bill
: Do you find that business units go after IT options that bypass IT?
Dave: Not as much as it used to be …it has gone the other way. In the last 18-24 months, we have made a tremendous effort to become a progressive/strategic partner with the business. We started with a conscious effort to ask where we are falling down; with one of things we identified was that we were not a partner with our business. We focused on this gap and started initiatives to address that gap …and it was a difficult thing. A primary reason for our success is getting closer to our business partners so that we are not being bypassed. We accomplished this by embeding IT resources within the business units – not all business units, but some of our significant business units …such as our treasury group. Our IT manager and his/her group that supports the treasury group actually sit within the treasury group, not with IT.

We have client service delivery managers (CSDM) or app managers that interact directly with the business liaisons (from the business), and together they build that relationship. When it first started it was almost at a manager to manager relationship …it was sometimes successful and sometimes not. We escalated that so that we now have director positions for applications, infrastructure, security, architecture, and office of the CIO … they work directly with VP or director levels on the business side. Getting it at that higher management level has made it much more integrated versus only the manager to manager level because we are now achieving a decision point that we weren’t getting previously. We’ve moved to an executive level connection and it has made a positive difference in the IT-business relationship.

Bill: What are the KPIs that end up driving you to do what you are doing?
Dave: One of the things that I continue to work at is the KPI’s from the BSM perspective …what is important to the business. System uptime and time-to-delivery of projects are at the top of the list. Other KPIs have required an education process. For example, the industry norm is that a large number of incidents are caused by changes …so we measure the number and success of changes. We’ve been able to reduce the number of changes that cause incidents to less than 5% …which in order of magnitude is less than what we were experiencing prior to our focus …because we have a very mature change management process. We publish a monthly report to all VP’s that says that within your specific tower of business, we made these changes and these are the systems that were impacted.

Another frequently referenced metric deals with Application Performance. I’d recommend that you don’t use different names for the business application and the business service. For example, we reference OSCAR (…the business application) in our communication with the business entity for metrics associated with our “contract acquisition system”. The business doesn’t refer to it as their “contract acquisition system.” So we purposely reference that the OSCAR system performed this way …as they relate to the business app rather that the business service or process.

Another KPI deals with our call centers …what are the number of incident and service requests that are coming into the IT call center by each business group. For example, from a demand management perspective, the collections area of the customer service group is looking at the number of call made to the service desk. Does one collections area have more IT support calls than others and if so, how much time is that taking away from our agents to do their jobs. The business units are interested in how many calls are coming, how we’re responding, and how the associate is responding and what action is required of the business (…such as training) to improve their own metrics, to reduce the time spent with IT calls, to increase customer interface time, etc.

Bill
: Is it unusual to have the business understand the “application” talk?
Dave: Yes …we’ve spent time integrating some business people into IT as well as educating IT (…the gear heads) to understand the business perspective and bring in that business view to increase our IT understanding of what is going on. Part of that is derived from our culture created by “genchi genbutsu” (…which means “go look, go see.”)  For example, we send people to a customer call center for a day to see what they actually do …and to see the impact of technology on the actual business operations.  They come back saying “…now I understand why they get so upset when x happens…” or “why they want us to do y…”  We have pushed very little for the business to come and see what we do operationally.  We probably should push for more of it …but we’ve had more success with the business participating in the project side of things to better define their requirements.

Bill
: What do you feel are the top IT concerns of the business community that drives them wanting to work with you?
Dave: Their biggest concern is system uptime and availability – our business people need to work and if they can’t work, they are losing money. We try to equate any type of outage that is a severity level 1 or 2 to a financial impact in the incident report. One of our challenges is to tie the perception of availability to actual availability. There is becoming less of a disconnect between perception and reality primarily because of education. From a service level perspective we say that if you want 99.9% availability, the system still might not be available to you 2 hours a month. So of course they then want five nines… and we get into a discussion of the extra cost.

Bill
: What are some of the IT issues that are not getting addressed that are causing you pain and that the business doesn’t understand?
Dave: One of my biggest challenges is business users understanding that sometimes we need to slow down and stabilize things to make it better …versus having to keep making modifications to make things better. Toyota culture is continuous improvement (kaizen culture), but sometimes you have to stop and make things stabile before you can move on. For example, one of our business units is extremely dynamic. Today they are doing “x” and then their business intelligence informs them that it will change next week …so they want to make a certain modification in their job parameters. We try to shape these as administrative tasks so we don’t affect the stability of the systems, but in some cases you can’t and they are trying to push changes thru that normally involve release windows or maintenance windows. The toughest part is having the business understand that in order to increase availability and stability of the applications that we do need to use maintenance windows or release windows to increase before going on to next project.

Another frustration is from a business or service continuity perspective - we have a full blown effort to create disaster recovery scenarios along with plans and support processes required if we ever had a disaster whether it be of major or minor magnitude. This kind of “insurance” coverage is not a new concept, but spending the time and resources to do that is very difficult. The business feels that everything looks fine today why prepare …but it’s like an insurance policy …nobody wants to pay for it …but when it happens you need it.

From the service management aspect it is almost a “roll down” effect …the business is putting so much pressure on the app teams to improve availability that the app managers are then putting pressure on service management to do things without understanding the concepts of what we are trying to do. App managers are responsible for development, performance and stability of their application areas. What is difficult from our side is having them understand the processes and roles that need to be maintained in order to get the right performance. A good example is from the problem management perspective. We have a problem management process, but getting them to understand what their resources role is within problem management versus what the problem management’s role is difficult. Our problem managers cannot be an expert on every application… so we have to go back to the app managers and say thank you for saying how important this is …but we don’t fully understand how this works and we need your help to resolve this.

Bill: What does Business Service Management mean to you?
Dave: BSM means relating the business services to the IT services. The business should be driving the IT services and not the other way around. We should not be doing anything unless it is supporting the business services and the corporate strategy and objectives. If anybody, including IT, comes up with an idea that we should do something solely because a cool new technology is involved …we ask “how does that support our business?” We have that linkage to such a degree with Toyota that we rarely get a push for pure technology options. An example would be newer social media technologies. Would twitter be of value within financial services? That might be doubtful. However, an app on an I-phone might be good for financial services …yes, a customer could go in and make payments and do the same thing they could on the web site.

Bill: What is your role in promoting BSM?
Dave: Our CIO is definitely interested and BSM is one of his key personal initiatives …he has a high interest in moving to BSM. He has connected me with BSM because of the roles that I play in service management …I didn’t have to explain the connection of service management functions to BSM to him …he intuitively caught onto to it. Because of my association I’ve been tasked with developing our BSM efforts.

Bill: What is the role of “maturity” in implementing BSM?
Dave: We’ve been in service management for 5-6 years. When we got into service management it was like the guy getting in front of that rolling ball in Indiana Jones. Once we started to do incident management and change management, we were confronted with “what about problem management?” … or “what about configuration management?” We responded that we could do that …but we needed resources. This was great, however, at first the IT organization was not ready for service management …the maturity was not there.

For example, we’d try to put in a release process and get push back asking why do we need release management or why do we need problem management? The organization was not mature enough to realize the benefits. Fast forward two years, after a lot of beating our heads against the wall, people started to affirm our need for a release calendar …primarily because of our hard won successes re: release management. There was a service management foundation that needed to be in place before we could start with BSM. We’ve been pushing BSM for only the last 10 months.

Bill: What is your biggest obstacle in moving forward with BSM?
Dave: Right now it is getting the reporting where I need to have it …mainly getting the data so that I can report on it is my biggest obstacle. We have the data, however, we need to align the many definitions within the data.

Bill
: What advice would you give to someone starting up a BSM initiative?
Dave: My advice would be to get a voice of the customer concept …listen to the customer ...what are their frustrations with IT …that would be my biggest thing. And then try to find out what are the real IT issues. There is a concept within ITIL V3 that you should talk about the services IT provides to the business without the business having to worry about the cost or the risk of providing the services. This means that the business “buys” the service with IT worrying about the cost and the associated risk of delivering the service of the end product.

Let me compare that to when you walk into a Lexus dealer and ask for a GS350. We ask “what do you want in that Lexus GS350?” The customer responds that they want it to be blue with leather interior, a certain type of stereo and a certain type of wheels. We respond that we can provide that to you …because as a customer you are paying for that service. From Lexus’ perspective we have to worry about the development of that car, the manufacturing, the transportation, the marketing of that car, and the technology of that car. We, Toyota, have to worry about that.

Let’s equate that with IT to the business. As a business user, I want an ERP system that is available 24x7. We ask why you need that availability and capacity. They respond that “everyone has it.” So we say “let me show you what the difference in cost is.” That is the discussion we need to have with the business. We’re probably going to build the system for 24x7 anyway because that is the way you build systems today …but the business doesn’t have to worry about or understand what IT has to do to meet the requirements …they are fulfilling their role in “paying” for and using the service.

How can IT help the business? How can I help you do your business better and be more profitable? That is what I would talk to the business about. Becoming a strategic partner is having them tell you what their pain points are …and then I need to go back and tell them how I can solve that for them. And I should not be saying that they need an Oracle 10i database system. Rather, we need to provide this type of “service” for them to resolve that problem.

We need to do a translation from their pain points back into what they really need in a way that they can understand and accept it. That is where I’m going with a BSM perspective. We’re moving from capturing the data (…my current frustration) to being able to query against the “right” things within the BSM system. We’re making sure that our other systems can provide the business data that we need to our main BSM system. While we have dashboards built from an IT perspective, we now need to translate them to a business dashboard. Our next phase is building dashboards for different IT roles …the dashboards will have the same KPI’s but be specific to the specific area or vertical.

Bill
: How does your “Business Reference Model” support your BSM initiative?
Dave: We have a Business Reference Model which begins by identifying the business process that Toyota Financial Services offers to our business customers (dealers and consumers). These business processes are translated into the business services that define what IT provides to the business …which then translates into the business applications that address “how” we support these TFS business processes and services that they require to get their job done. We can then drill all the way down to the IT systems and services that support those business processes, and these IT systems are then incorporated into our BSM model …where availability and service levels are subsequently tracked against these IT systems.

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