2012

Prepared by:

Kathy Costello, Business Analyst Manager,

Department of Enterprise Services

Darrell Davenport, Enterprise Architect,

Department of Retirement Services Linda Garland, Information Technology

Operations Manager, Department of

Corrections

Matthew Re, Network Systems Supervisor,

Department of Health

James Sinks, Data Steward, State Investment

Board

Expressing Information

Technology as a Service

2

Table of Contents

Introduction ..................................................................................................................................................................... 3

The Evolution of Information Technology ....................................................................................................................... 3

Expressing IT as a Service ................................................................................................................................................. 5

Why Do We Want To Move To Services? ........................................................................................................................ 7

How Do We Move to Services?........................................................................................................................................ 8

Conclusion ...................................................................................................................................................................... 14

Sources ........................................................................................................................................................................... 15

3

Introduction

Our State government is about PEOPLE. People vote for

representation on what is important to them – what impacts their

lives, their liberty and prosperity. Our representation then moves our

needs and wants into organizations. These organizations, State

Agencies and Boards, are the arms of government that deliver the

outcomes of this process - products and services that assure our well-

being.

So, where does information technology (IT) fit into this? IT partners

with the business by providing economy, efficiency and availability of

products and services to people. Almost every function of

government uses IT to support their business – from renewing

driver’s licenses with the Department of Licensing online, to

automated lean production of furniture by Correctional Industries.

As IT has evolved, so has its application in the world and over time

has become a network of interplaying systems and services rather

than isolated instances of products. This paper will explore the

transition of IT from product to service and a strategy for this

progression in State government.

The Evolution of Information Technology

The evolution of information technology has shown us four basic

periods:

Premechanical

Mechanical

Electromechanical

Electronic

In each era the technologies have proven to be of great importance

although they each met with resistance when first introduced into

the general populace. Each period shows a transition in technology

from product based to service based.

Premechanical: 3000 B.C. - 1450 A.D.

We have come along way from the Premechanical Age in 3500 B.C. In

Mesopotamia (Iraq) the first recorded communication technology

was the Cuniform language used by the Sumerians (see chart).

What is a Product?

Think of a product as a noun, something that can be bought or sold and transfer ownership.

How an organization views a product depends upon its perspective. In the IT world we may think of items such as:

Software Applications

Circuits

Desktops

Print Devices

What is a service?

Think of a service as a verb, something that can be subscribed to, but not owned.

How an organization views a service depends upon its perspective. In the IT world we may think of items such as:

Data Center Services

Internet Service Provider

Leasing of equipment

“A service is a means of delivering value to customers by facilitating

outcomes customers want to achieve, but without the ownership of specific costs and risks.” – ITIL v3

Cuniform 3500 BC

Chart above shows the growth of

the Cunifrom language

4

This product developed through scribes and teachers into a service

utilized by the Sumerians for a standard way of communicating

throughout their society.

Mechanical: 1450 – 1840

The Mechanical Age started by giving us the first calculator, the

Abacus. It was considered the very first information processor. This

age finished by giving us items such as “Punch Card technology” and

“Binary Logic” which contributed to the production of the

manufacturing loom.

The product of a loom (such as a blanket) moved to a manufacturing

service that now includes supplying the resources and knowledge to

build products. The cost of products now includes the service costs as

well as material costs.

Electromechanical: 1840 - 1940

The Electromechanical Age lasted about 100 years, giving us

technologies and devices such as the battery, telegraph, Morse Code,

paper tape storage and the Mark I Computer (a 5 ton, 55 foot long

device with 760,000 parts used for gunnery and ballistic calculations).

The evolution of the telegraph as a product to a service started with

developing a standard for transmitting messages over great distances

to a wide audience and led us to the modern electronic era.

Electronic: 1940 to Present

The Electronic Age has given us remarkable achievements that are

now deeply embedded into our society. This era has been broken

down into four generations of digital computing:

First generation computers used vacuum tubes

Second generation computers used transistors

Third generation computers used microcircuits

Fourth generation personal computer (PCs)

During the fourth and current generation, PCs became readily

available and more affordable creating service capabilities such as

leasing equipment as we do today. Additionally, the introduction of

the Internet brought new service opportunities in the workplace and

the home.

It is an easy assumption that almost every person in our society today

has been impacted by IT systems and services that take care of our

Punch card technology, introduced in 1801 via the loom used parts remarkably similar to

modern day computers.

A History of IT and Systems http://www.tcf.ua.edu/AZ/ITHistor

yOutline.htm

Example of an Early Day IT Project

1943 - Project Whirlwind begins.

During World War II, U.S. Navy

approaches MIT to build a flight

simulator to train bomber crews.

5

needs and wants – from social networking to automated radiology

and others.

Explosion of New Technologies

Systems and services are integrated into the daily lives of almost every

person and business in modern society. Today, individuals have

mobile devices that can do most anything from anywhere at any time.

Technology has transformed from wired Internet to wireless,

providing greater mobility, availability and flexibility. As such, it’s

becoming more critical to use new technologies for providing and

accessing government services like social and health, licensing,

finances, commerce and countless others.

State government is at a pivotal point to go further in managing and

utilizing the advanced technologies of today. With the increasing line

of products in the technology arena, state IT leaders need to start

thinking of how to implement systems and services in order to be

more responsive to ever-changing business needs.

Expressing IT as a Service

What can be learned from the history and advancements in

technology that will help construct a strategy for the future of IT?

State leaders recognize that both new technology and the maturity of

State IT teams have reached a point where we can now move from

product to service.

Services are:

More personalized

Responsive to customer needs

Save customers time, money and effort

More reliable

Service providers build into their approach an understanding with the

customer on how services will be delivered, when they will be

delivered and an expected outcome. With a service, a customer can

expect the provider to support their products. There is a relationship

with provider and customer.

Unlike services, products have predetermined bundled features and

prices and typically are less responsive to business needs.

Skills of a Leader

Inspiring

Courageous

Proactive vs. reactive

Resourceful

6

People

To effectively implement “IT services” in State government we

must understand customer needs and expectations.

State IT leaders need to respond to customer needs and

expectations by retaining and recruiting skilled and motivated

people who provide exceptional IT services.

Process

We recognize the uniqueness of agencies and the services they

provide, however, processes must become standardized and

repeatable across agency lines of business wherever possible in

order to capitalize on common IT services. (For example, reporting

of time and leave for employees.)

In order to successfully transition to IT as a service, processes or

functions should be combined to eliminate redundancies and

inefficiencies.

Technology

Technology is the tool that makes people and process more

efficient. By investing in technology organizations can achieve

their missions more effectively and at a lower cost over time.

A combined business and IT strategy enables informed and often

faster decision making when determining which IT services to

pursue; improving response to the customer’s needs.

Principles for Expressing IT as a Service

The following guiding principles will support the transition from

products to services in Washington State government:

Define technology strategy surrounding people and process

to support goals

Establish partnerships with clients to identify root challenges

Analyze the organization’s mission so it is well understood

and articulated

Review short-term and long-term goals

Assess processes for efficiency and effectiveness toward

achieving the organization’s goals

Streamline and validate the collection and dissemination of

data

Identify stakeholders, champions and potential opposition

Ensure continued stakeholder management, flexibility and

adaptability to changing needs

Products and technology do not

fulfill the promise behind an IT

service — people do.

7

Define the objectives and benefits of the technology initiative

to the organization in quantifiable terms

Define and evaluate metrics to measure process and

technology success criteria

Assess the current technology environment to determine

viable alternatives

Why Do We Want To Move To Services?

There tends to be two parts of a transaction a customer receives - the

product and the service. In the past, the primary focus of government

has been on the product. What features does it have? How much does

it cost? This was fine when there were relatively few known

technological options, but that is not the case now. With the explosion

of the Internet, similar products are found everywhere (for example,

the multitude of social media websites). Basically, the products exist or

are “easily” created, but the service side may be lacking.

So why do we want to move to a service? Service is about the customer

who receives a benefit.

Customer Experience

Customers know service when they experience it. If it is good, the

customer feels good. If it is bad, the customer feels bad. So, when

customers talk about service, they are really talking about expecting

good service. So what is considered good service?

Good customer service incorporates the following. The customer is

treated in a professional way. They receive quick, accurate responses.

They are treated in a friendly, courteous way. The provider is

approachable, anticipates customer needs and pays attention to detail.

The provider only promises things that they can deliver and will honor.

The provider is knowledgeable and well trained.

Quality Product

Another feature of good service is a quality product (technology). The

product meets the customer’s expectations. It is fast and efficient. It is

easy to learn and use. It is flexible; it lives for a long time and becomes

cost effective. The core of the product can be expanded or contracted,

depending on the direction of customer needs. The customer should

be able to get to their service at any time, from nearly anywhere and

from any piece of technology: Smartphone, laptop, tablet computer,

“It takes 20 years to build a

reputation and five minutes to

ruin it. If you think about that, you’ll do things

differently.” Warren Buffett

Interpretation: customer satisfaction is difficult to

build, but easily destroyed

Skills of a Leader

Honest

Consistent

Respectful

A good communicator

8

desktop computer or any other future device. The product needs to be

secure enough to make them feel their data is safe.

Making it Easy for the Customer

The ease of doing business is viewed as good service. The billing

process is clear, pricing is competitive and it is easy to upgrade or add

features. It is easy to submit questions and comments and they are

promptly addressed. At the end of a business transaction, the

customer should feel they received the service they expected, the

product they needed, billed correctly with little hassle and had a voice

to help improve the process.

Well Planned

Planning a project, given the biennial State budgeting cycle, is not

always feasible. Long term strategy plans must take multiple biennium

funding periods into consideration. They should not be interrupted by

budgeting adjustments from cycle to cycle. Starting with the

supporting infrastructure, a project should be planned such that each

biennia cycle produces a functional component. The next phase will

continue from previous functional components.

Many of the above are handled behind the scenes using a strong

governance structure with well-defined policies, procedures and

standards. If the employees are confused about your business, the

customers will feel the same.

Result: Customer Satisfaction and Loyalty

All of these will lead to customer satisfaction. According to University

College of Technology and Innovation (UCTI), “A totally satisfied

customer contributes 17 times as much revenue to a company as a

somewhat dissatisfied customer”, also “The results of our study

supported the contention that there is a positive correlation between

loyal customers and profitability.” A satisfied customer becomes a

loyal customer which leads to profitability (or lower cost to support).

How Do We Move to Services?

Now that we understand the relationship between products and

services and why it is desirable to express IT as a service, we can form

a strategy to make it happen in Washington State government.

Summary of How to Move to a

Service

Establish business mission, goals, values

Establish real metrics to measure achievement of mission and goals.

Set three branches of governance: Technology, Business, and Operational.

Enforce policies and standards to align activities and behaviors within each branch of governance according to mission, goals and values.

Capture feedback from customers. Monitor efficiency and trends.

Measure results with mission and goals.

Adjust governance to improve results and ensure future success according to defined metrics to meet mission and values.

9

Establish the Business Mission, Goals and

Values

Premise: The mission is to serve the public; the goal is their

satisfaction, done according to their values.

It is essential to know the services which are entrusted to the State

and its organizations. Unless the mission, goals and values are clearly

understood, there is a strong risk of failing the fulfillment of needs and

expectations. The mission and goals seldom change; however, the

values may be fluid over time. It is the responsibility of the

organizations to monitor and adjust accordingly. To achieve success

and maintain public trust and respect, governance must be defined

and established.

Establish Strong Governance

Premise: Governance is about stewardship. It protects and preserves

the IT investment and fosters [public] trust.

It is the responsibility of government to provide services which

promote the welfare of the public. Therefore, the government is the

steward of those services defined in the State’s constitution.

Stewardship is established and maintained through governance.

Governance is required in three branches: Business/Executive,

Operations and Technology. Together, these branches of governance

provide a solid foundation from which services can be delivered.

The Business/Executive branch is responsible for the vision, mission,

authority, policies, standards, budget/finance, and direction. Executive

decisions are made from a defined level of acceptance of risk. The risk

levels are “calculated” by estimating the potential consequences and

degree of impact on their ability to deliver quality services and achieve

customer satisfaction. (Customer satisfaction also includes return-on-

investment and trust of stewardship.) Executives rely upon the

knowledge and expertise within the technology and operational

branches to help define, estimate and manage risk.

The Technology branch supports the Business/Executive branch and is

responsible for the technical knowledge, skills, security, devices,

networks, software and hardware.

The Operational branch supports the Business/Executive branch and

the Technology branch and is responsible for the facilities and

procedures necessary to carry out the construction, maintenance,

configuration and delivery of the services.

Skills of a Leader

Intelligent

Quiet Confidence

Enthusiastic

Rewarding

10

These are not physically defined organizational branches, but rather

roles and responsibilities. For example, policies and standards may

be written by the Technical or Operational branches and approved by

Business/Executive branch. Operational activities may reside within

both Business and Technology branches and must follow policies and

standards. All of these branches of governance must work together at

all levels of government, local and state. Each branch of governance

should have strong representation when defining and determining a

sustainable service model.

To succeed, certain basic principles need to be understood and established.

All services must answer a customer need and fit within the mission entrusted to the service provider.

Good stewardship includes security, efficiency and cost control.

Services must be monitored and continually improved/maintained to ensure customer satisfaction and responsible stewardship.

Architecture is central to building sustainable, portable, standardized and responsive services.

Business Analysis is central to understanding the customer’s needs and how decisions impact services.

Project Management is responsible for controlling the development and maintenance of new services and ongoing operations.

Establish a Project Management Office

Premise: Project management delivers better services more

efficiently.

Our State is not exempt from the facts reported in a change

management survey by IBM which found only 40% of projects meet

their objectives.

One can speculate from the survey that a root-cause for the failures

may include an imbalance of sponsorship and control or governance.

Problems arise because either the business side or IT owns and

controls the Project Management Office (PMO). Logically, it should be

an equal partnership between the business and IT, with all being

accountable and responsible for providing the oversight, resources

and sponsorship needed for the best possible IT services.

The PMO should be held responsible for effectively managing project

costs, scope, resources, tasks, roles and responsibilities,

accountability, risks and documentation. The PMO should record

The citizens of Washington

expect state government to

deliver essential services

with innovation, efficiency

and integrity.

GMAP, Lean Program 2012

Successful PMO’s

Only 40% of projects met schedule, budget and quality goals.

Best organizations are 10 times more successful than worst organizations.

Biggest barriers to success listed as people factors:

Changing mindsets and attitudes - 58%

Corporate culture - 49%

Lack of senior management support - 32%

From an IBM Survey of 1,500 Change Management executives (http://calleam.com/WTPF/?page_id=1445)

Executive

Technology

Operations

PoliciesPeople

Business mission, goals & values

Customer

Lead

ers

hip

Man

agem

en

t

Customer needs: monitoring and adjusting business

Disseminating mission, goals, values to all branches & levels

Providing both internal and external services

11

“lessons learned”, review, communicate and incorporate them back

into appropriate policies and procedures in a continual change-

management lifecycle. All branches of governance should have access

to documents managed by the PMO, so that each can better manage

their responsibilities and improve the design, delivery and support of

the services.

It is important to note that projects are not limited to new services,

but also include periodic maintenance, operations and enhancements

to existing services. Since risk is in inherent in change, governance

and accountability for the PMO is necessary to provide quality

controls for all changes to IT services.

The PMO is the hub where the branches of business governance work

together in equal representation to design, build and maintain

services. Project failure is probable where there is an imbalanced

representation or sponsorship; a lack of understanding of the mission

and goals; or an unwillingness to be accountable by any governing

branch of business.

When assigning projects the business should manage priorities via a

combined steering committee using a pre-defined set of values (for

example: cost-control, legal mandate, customer expectation, financial

requirements, security risk, impact to reputation or political clout).

Weighting the values toward accomplishing the mission and summing

them for each project helps maintain perspective on how to set

project priorities.

Planning and Design

Premise: “Luck favors the prepared.” Edna Mode, from the movie

The Incredibles.

How does one prepare for the unknown? By assessing the current

situation; watching trends; evaluating the possibilities, needs, and

expectations; and establishing standards based upon principles which

promote flexibility, innovation and portability. We should prepare by

over-estimating needs, using resources conservatively (optimizing for

efficiency) and reserving capacity.

Below are the activities of architecture, which sets the stage for the

building and implementation phase. Architecture, like any form of

governance, is required in equal measure from business and IT.

Business architecture improves the process flow. Technical

architecture improves the automation.

The “Cloud” represents a

foundational shift in how

information is created, shared,

stored, and protected across

the data center, business,

home, and mobile computing

environments. Some argue

that we have not experienced

such a seismic shift with such

categorical effects on

industries, economies, and

innovation since the advent of

the electric utilities of the early

20th century. “The next sea

change is upon us.” — Bill

Gates

12

The combination of the two will ease the development, maintenance

and future use of services. Some basic architectural principles are:

Use of standards provides portability, predictability,

consistency and a way to integrate business functions

Use of security to protect data, equipment, operational

functions and IT services, ensures confidentiality, integrity and

enhances public trust. By standardizing security, services which

are distributed across vendors and platforms which can be

more easily combined into a consolidated service offering.

Use services which run on multi-platform environments

Strive for efficiency; reduce cost, increase response and good

stewardship

Monitor, assess and improve security, performance, costs and

customer/employee satisfaction

Observe trends; public and private sectors

Challenges and Opportunities

Moving IT from product to service offers a number of challenges and

opportunities.

Standardization

Lack of standardization in State government is a big hurdle to achieving

the desired efficiencies and economies of scale that are necessary in

today’s world. The State needs to take a strategic view of

standardization, driving agencies to integrate processes across lines of

business. However, standardization in an organization as large as the

State of Washington can be complex and should be approached in a

thoughtful and well planned manner. We recommend IT leaders gauge

the level of standardization that is required, clearly understand the

benefits and the risks of standardization and balance the needs of the

organization with staff needs.

Standardization should provide the following opportunities:

Flexibility while maintaining consistency with governance,

processes, policies and tools

Scalability while minimizing IT costs

A common look and feel for customers

Streamlined functions across government lines of business

Common set of data

Elimination of unique solutions in response to a single set of

requirements

“Success is simple. Do what’s right, the right way, at

the right time”

Arnold H. Glasgow

13

IT Culture

The current IT culture in Washington State offers a number of

challenges to overcome. First, IT leaders and staff must move past the

history of how the current IT culture was formed and look forward to a

new future. Agency CIOs are positioned for leadership in this effort

and steps should be taken to increase collaboration and partnerships

across the numerous government and private entities. IT must

consistently demonstrate positive results and adopt modern

technology while realizing cost savings.

IT leaders should collaborate to redesign IT functional activities and

processes. The outcome should reflect the needs of the enterprise

while ensuring agencies have a suite of high-quality services from

which to choose.

It will also be essential to separate perception from reality and educate

legislation, policy holders and others on the challenges to effectively

transform IT services for Washington State. Areas such as:

Budgetary restrictions

Inconsistent cost recovery models

Outdated and ineffective IT policies

Power and ownership struggles that get in the way of progress

IT leaders should take steps to implement critical success factors to move into a new IT culture:

Improve flexibility of agency budgets in order to eliminate the

restrictions created by traditional funding structures

Create visibility for government wide services available to

agencies. This enhances the potential for service integration

across agency lines of business.

Reduce the potential for development and maintenance costs

by using repeatable services

Provide extensibility for other services that agencies need so

services can be scaled up or down based on demand

Ensure location transparency so users may access the services from anywhere

Provide robust and stable services to minimize critical system outages

Look for additional opportunities to transform agency systems

and expertise into centers of excellence

IT leadership must be committed to their strategy, otherwise needed

changes will not happen at the business unit, program and system

levels.

Skills of a Leader

Vision

Sets direction

Personal charisma

Passion

14

Agencies should collaborate toward a paradigm of consuming or

providing services with multiple organizations in mission and support

areas whenever possible.

Governance

There is a lack of consistency in governance across Washington State

IT. A key success factor for moving from product to service will be to

provide a method that can support the changing needs of the

business while serving the citizens of the State. Governance needs to

be scalable allowing the State to move quickly to newly emerging

technology. IT leaders need to identify ways to leverage existing

efforts to develop the next generation of IT services for mission

critical areas. While it is significantly more complex to offer these

types of services, they also have the potential to create far greater

organizational efficiencies.

Given the rapid pace of technological advancements, it’s not enough

to just build technology solutions that meet government’s needs

today, we must continuously architect for the future. Agency IT

investments are so specialized and difficult to integrate with one

another; it is often less expensive to acquire a new proprietary

system than to share existing systems.

Given this, it behooves the State to adopt standard solutions that are

phased in as proprietary systems approach end-of-life or otherwise

require replacement.

By agreeing to and implementing common standards across

government, we will ensure that assets are prepared to share data

and functionality with one another in coming years.

Staff Development

Due to budget constraints and lack of IT funding, training and

development paths for IT staff have been limited.

To be successful in transitioning to a service model, IT leaders need to

acquire and keep funding to provide training of existing staff and to

recruit staff experienced in new technology.

Conclusion

In this paper we explored the evolution of IT. We also explored IT’s

application in State government - currently and what we believe its

future application should be - moving from product to service.

15

Each generation of technological advancement has proven to us that

leadership, standardization, optimization, planning and design,

quality of service and ease of use are of the upmost importance for

success in moving from product to service.

IT needs to be attentive and responsive to customer needs and

expectations, where the customer can feel their needs are being met

and have faith they can on count consistent and reliable delivery. We

must always bear in mind the people, processes and the technologies

which are ever changing.

The roles and responsibilities of each component must be brought to

the table by each branch of government to ensure that the

governance and policies will provide the stability of IT services with a

good working service model.

We have shown the key advantages, challenges and opportunities,

and the necessity and methods needed to move Washington State IT

from product to service. To sustain services the plans, designs,

maintenance, monitoring and constant analysis of the user’s

experience and business needs will be imperative to success.

Sources

University of Alabama, School of Telecommunications and Film, A History of Information Technology and Systems

http://www.tcf.ua.edu/AZ/ITHistoryOutline.htm

Open Cloud Manifesto, Cloud Computing Use Cases Whitepaper 4.0 http://opencloudmanifesto.org/Cloud_Computing_Use_Cases_Whitepaper-4_0.pdf

U.S. CIO and the Federal CIO Council, Federal IT Shared Services Strategy

http://www.cio.gov/sharedservices.pdf Booz, Allen, Hamilton: People, Process, Technology, Strategy for Enterprise 2.0

http://www.boozallen.com/media/file/People-Process-Technology-Enterprise2.pdf

ISO 9000, 9001, AND 9004 Plain English Definitions

http://www.praxiom.com/iso-definition.htm#Product The IT Skeptic, What is a Service?

http://www.itskeptic.org/what-service MPlans.com, Product-bundling Arcticle http://articles.mplans.com/product-bundling/ Computer History Museum

http://www.computerhistory.org/timeline

Skills of a Leader

Transformational

Excitement

Persuasion

Seeks opportunities