By John W. Verity

Listen in on a group of savvy IT managers — in a work setting, anyway — and you’re bound to hear talk of “running IT as a business” and “aligning IT with business objectives.” That’s especially true at companies in highly competitive industries. Here, IT executives must look for an advantage that delivers greater efficiency. More insight. The ability to tame increasingly complex IT infrastructures and operations. And higher-quality business benefits for lower cost.

That’s the mandate of Matthew Calhoun, Chief Technology Officer of the IT Outsourcing Division at CIBER Inc., a nearly $1 billion global IT system integrator and outsourcer with 85 offices worldwide. “Our core business is running IT shops efficiently. We tell the customer, ‘We can run this better than you can,’ ” he says. “IT should exist to support a business.”

That sentiment is far more than a marketing slogan. If CIBER fails to deliver, the company could face serious financial penalties. That’s why CIBER’s workforce is such an important piece of the company’s offerings. In fact, four years ago, CTO Calhoun realized that CIBER and its customers were running into a problem — and quickly. Labor costs at the company’s Outsourcing Division were projected to rise faster than revenues would grow. “We were looking at labor costs that weren’t sustainable,” Calhoun recalls. “We figured we would not be able to deliver the levels of service our clients were asking for without doing more [in the data center] for less.”

What’s more, labor costs were only one of several challenges CIBER faced. Calhoun was coping with the growing complexity of technology, in part driven by CIBER’s increased use of virtualization and the need, on the part of the company’s customers, to adopt Enterprise Resource Planning (ERP) solutions. Colorado-based CIBER also found itself competing against lower-cost providers from India, China and other Asian countries.

In addition, CIBER faced a sea change in the market. For many years, Calhoun reports, only the largest corporations used overseas outsourcers. Midmarket companies — CIBER’s main customer base — preferred working with U.S. suppliers. But now the midmarket was starting to embrace foreign outsourcers, particularly those based in India. “That pressured everyone,” Calhoun says.

Also, CIBER’s much larger U.S. competitors — including IBM, EDS and CSC — were starting to move down-market, encroaching on CIBER’s territory. “Their presence was creating more pressure,” Calhoun recounts. “It meant more providers that customers could talk to.”

Finally, client expectations were on the rise. “They were telling us, ‘I want to see the value I get from my IT. It can’t be just a cost center; it has to be more profitable.’ ” Calhoun says. “CIOs had not always looked at it that way in the past.”

The bottom line: CIBER had to figure out how to deliver the same level of service —or even better—for less cost. Plus, the company needed to do so quickly, before the competition had a chance to take over. Calhoun realized that radical change was in order. In billion-dollar outsourcing deals, Calhoun says, it’s easy to absorb some extra costs. But at the upper end of the mid-tier market, where CIBER is most competitive, every penny counts. For this reason, Calhoun saw that simply cutting costs wouldn’t be enough. Also, he says, “We needed to transform the company from a project-based outsourcer to an operational one.”

That change, Calhoun and his fellow managers soon realized, would require specialized automation that surpassed the capabilities of the tools deployed in CIBER’s environment.

To be sure, these various automation tools—which included disparate consoles, control panels, process maps, Web pages, loose-leaf binders and electronic spreadsheets—were helpful. But CIBER’s people still struggled to make sense of the information, much of which was stored redundantly, Calhoun says. For example, employees had to transcribe data from one system to another to keep multiple data centers running smoothly.

Holistic View Wanted
In effect, CIBER was struggling internally with the very same problem it often helped its customers solve: how to meld disparate information silos to yield a holistic view of the business landscape. CIBER needed to get its arms around a large, ever changing collection of assets, people, projects and processes — all of them interrelated and potentially affecting other software and hardware functionality, performance and integrity.

Yet, without a single, comprehensive multidimensional view into all these IT resources and each interdependency, CIBER was at a loss. How could its managers know whether assets were being used as efficiently as possible? Would moving one application to another server open a potential security hole? How could CIBER meet service level commitments for a particular customer if there was only limited visibility into the resources the customer was consuming?

Two Steps Ahead
CIBER found the answer in a powerful new way of managing IT resources. The company has adopted the IT service model approach recommended by the ITIL® best practices framework. This approach involves a rigorous definition of those services that are repeatable and measurable. In this way, CIBER can implement formal processes, thereby reducing operating costs and complexity and, ultimately, making IT more business-like than ever before.

Further, by taking an IT service model approach, CIBER can apply automation to great advantage. This is key in the IT industry, which faces a mixed reputation when it comes to efficiency. “The only thing IT people can do to fix this perception is to work smarter,” says Hank Marquis, Director of IT Service Management Consulting at Enterprise Management Associates, an IT consulting firm. “But IT can’t automate unless it first knows the manual workflow and process. The service approach helps IT to identify those workflows, apply best practices and evolve away from trying to invent everything from scratch.”

IT organizations still need to improve their reputations with internal customers, Marquis says. That’s because IT has historically avoided process and clung to manual methods. One result: Seven of every 10 IT outages are the direct result of an IT person doing the wrong thing, Marquis adds, citing recent research. Even worse, only about one in five IT projects ultimately succeeds. The rest are either shut down early or overrun their budgets, rendering them a failure even if the technology behind them succeeds.

These conditions affect everyone in IT. Marquis points to a survey of workers in all fields, which found that IT jobs are among the most stressful of all, topping even the stress levels of paramedics and doctors. “IT has to move to standardized service offerings and a shared service organization,” he concludes. “Only such services can be effectively and easily measured, tracked, reused and added to.”

CIBER’s Calhoun agrees. “The single greatest expense in outsourcing is labor,” he says. “Our biggest objective has been to reduce the number of people required to perform the work we need to do.” But it’s not just a matter of shedding people, he explains, as much as enabling the existing staff to be more productive. The best way of accomplishing that—and of reducing stress on those employees — is by implementing rigorous processes and well-honed automation. “Doing more with less labor is almost always cheaper than doing more with cheaper labor,” Calhoun says.

In fact, Calhoun realized quickly that reorganizing around the service concept could not get done overnight. Rather, it would require a good deal of thinking through new processes and fostering cultural change within CIBER. “There wasn’t a big bang,” he says. “It has been a continual evolution: measure, tweak, measure. Are we on course? Then adjust the compass, rebalance costs.”

To fully realize its new service-centric approach to IT management, CIBER has leveraged CA’s Unified Service Model, which provides insight into the service definition—that is, the assets, people and processes that support each service—and key information about each service, such as costs, service levels, problems, incidents, events, projects, entitlements and more. CIBER’s implementation of the Unified Service Model centers around CACMDB, with integration to 65 other management tools. In effect, CIBER has been constructing an ERP system for IT: a transactional system of record that captures every change in policy and hardware configuration, tracks the performance and quality of every service the IT organization provides, and automates a broad range of processes in the optimal way.

The CMDB, which describes in great detail the current state of CIBER’s IT infrastructure, is at the heart of this system. With all 65 IT management systems leveraging The CMDB, a change made in one system — for example, moving an installation of SAP’s R/3 software to a new server cluster — is immediately reflected in all other relevant systems.

CIBER considers CA a key partner in helping realize its vision of service- centric IT management. “We have a collaborative relationship. We got early views of CA products and live betas,” Calhoun says. Most impressive, he adds, CA is listening and taking CIBER’s suggestions for extending and refining CA’s Unified Service Model concept and the solutions that leverage it. “We’re interested in anything that can help us to proactively monitor our infrastructure and figure out for us that something’s going to break before it actually does break—predictive analysis,” Calhoun says. “If something does break, we want to get to the root cause as rapidly as possible.”

One of CIBER’s biggest opportunities to cut labor costs has been the automation of routine tasks. That calls for implementing well-defined processes, especially where several departments or work teams contribute to fulfilling a particular request. That might involve, for example, provisioning a client’s new hire with appropriate access to selected IT systems. “We can develop a definite workflow to handle this,” Calhoun says. “Once the employee is approved, the system does the work, opening multiple accounts, providing a password, turning on access, pulling everything together and finally saying, ‘It’s done.’ ”

This kind of automation not only gets routine tasks completed more quickly than CIBER’s employees could when doing them by hand, but also completes tasks more accurately. “Systems are good at process,” Calhoun says. “People get bored and interrupted, and they make mistakes.” It also helps CIBER do more with less. “We have been able to decrease the number of staff we need [to do a particular task] by as much as 30 percent,” Calhoun says. “For us, reducing staff contributes directly to the bottom line.”

Critical CMDB
The CMDB is critical to large-scale IT operations, says Charles T. Betz, author of Architecture and Patterns for IT Service Management, Resource Planning , and Governance (Morgan Kaufman, 2006). “The complexity of IT environments is getting out of hand,” he says. “With hundreds or thousands of IT employees and data centers distributed geographically, you’re looking at tens of thousands of interdependencies. There’s no way that can be tracked accurately through Excel spreadsheets. The CMDB is utterly critical.” Betz, who also blogs at ERP4IT.com, says the CMDB and service model are the enablers for running IT as a business. “This helps you understand and govern the value chain of IT,” he says.

The CMDB’s lineage stretches back to the metadata repositories that mainframe shops used long ago to keep track of batch jobs and corresponding data sets. Over time, these repositories were seen as useful primarily to software developers, and their potential for operations got lost, Betz says.

At CIBER, that potential has been recognized in full, Calhoun says. CIBER uses its CA-supplied CMDB as a catalog of all components of IT and how they relate to each other: services, software, hardware, systems, operating systems, applications, databases, functional roles, process documents, security documents, network components and more, explains Calhoun. There’s even more that can, and will, be done with the technology, since CIBER’s embrace of IT service management and the CMDB is not complete. “We’re not as lean as we could be,” Calhoun says. “We haven’t achieved the total vision we have for the technology. It will take another three years before we can realize that vision.”

The next phase of CIBER’s plan calls for adding financial budgeting and planning tools that can also take advantage of CMDB. This would allow CIBER to forecast the impact on costs and profits incurred when adding, for example, another hundred servers, and help the company decide where to locate them.

But even though there’s more to be done, the benefits of the existing tools are obvious. CIBER can better understand the impact of every change it makes in its data centers. “If we make a change here, how is the rest of the infrastructure going to be affected, both from a technical and, more importantly, from a business perspective?” Calhoun asks.

This kind of insight has been particularly useful as CIBER’s customers take more of their business online. For instance, CIBER runs SAP software and a retail Web site for a sizable U.K.-based retail client. This retailer does 80 percent of its annual business during the holiday shopping season and, therefore, needs its systems available at all times during that period. To ensure a 100 percent uptime guarantee, CIBER must have complete understanding of the resources involved — in case something goes wrong—as well as the ability to call in extra resources at the drop of a pence.

Fortunately, this doesn’t need to happen often. Thanks to its new IT management tools, CIBER uncovered a good deal of idle capacity in its data centers, which is a good thing to have when capacity spikes. “We were shocked at how undersubscribed we were,” Calhoun says. “We saw that we had a lot more CPU power installed than was being used on a regular basis. As we go forward, this new understanding will serve as a cost-preventive tool. We won’t have to add as many servers in the future as we thought we would.”

This kind of insight should help make CIBER even more competitive going forward, and in pleasing customers. “Customer satisfaction drives us,” Calhoun says. “We don’t push process on them. We’re flexible and come to reasonable business terms. Our philosophy is covenant over contract: ‘Here’s how we’re going to work with you.’ We work collaboratively with them.”

Service management tools, he adds, provide CIBER with the visibility and flexibility needed to make that covenant and collaboration effective—for both sides. “For instance, we can rapidly respond to a retailer who needs 20 percent more capacity to handle an increase in Web traffic driven by a promotion,” Calhoun explains. “We can ensure that the customer is happy—without spending a massive amount of time and energy. We’ve struggled for a long time to give customers and management fingertip- access to that kind of information.”

These changes have also improved customer experience, Calhoun says, which is, in the end, the most important measure of success. “Before, there was a lot of concentration [in data collection] on speeds and feeds—how fast this server was, and so forth,” he says. “Now, we’ve really started to shift to ‘What is the overall quality that we’re able to deliver back to the customer?’ ”

John W. Verity is a freelance writer who covers technology and business from South Orange, N.J.

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