New approaches to IT service management

Two CIOs discuss how service management works in a modern digital enterprise

Digital organisations such as Tabcorp and REA Group are extending their ITSM practices and techniques beyond the traditional and entrenched ITIL framework.

It goes without saying in IT that the one certainty all organisations can rely on is change. In addition to the obvious changes that occur in technology, personnel, business objectives and competition, there is also consistent evolution in the way services are managed and delivered.

ITIL was once the bible in IT service management for its ability to help define the processes, services and roles that ensure IT is efficient and cost effective. But new theories and practices are complementing and supplementing the notion of best practice in complex environments.

As a result, terms such as DevOps, Agile and Lean are finding their way into ITSM and changing the way modern IT organisations go about managing the services they deliver to the business.

What’s new?

DevOps has been defined as “a software development method that stresses communication, collaboration and integration between software developers and IT professionals.”

Both are dependent on each other, so in a world where digital services are at the core of competitive edge in many industries, the introduction of DevOps is used to help an organisation rapidly produce new software.

Meanwhile, there has been a rise of Agile software development movements which Wikipedia defines as “a group of software development methods based on iterative and incremental development where requirements and solutions evolve through collaboration between self-organising, cross-functional teams.”

It aims to promote adaptive planning, evolutionary development and delivery while encouraging rapid and flexible response to change.

Then there is the management philosophy derived mostly from car manufacturer Toyota’s production systems that is known as “Lean”.

Lean is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Essentially, the concept of Lean production is centred on preserving value with less work.

Doing it differently

At a recent members’ seminar convened by itSMF Australia’s Victorian branch, two high profile CIOs discussed how service management works in a modern digital enterprise where the quality of services delivered can be the difference between roaring success and dismal failure.

Kim Wenn, CIO at betting giant Tabcorp and Nigel Dalton, CIO at online property market Real Estate Australia (REA Group), both deploy large and complex IT services operations which are constantly developing new services to diverse market-places.

One is a long time player in its market that has undergone frenetic change in recent years while the other is a relative start-up that has rapidly grown to dominate the online real estate environment as it caters to Australia’s rabid desire to do everything online through PCs and personal devices.

Both need to keep improving the value they deliver to a broad range of customers. In addition, both organisations are totally dependent on the availability and resilience of the technology that underpins their operations.

For example, Tabcorp’s Wenn highlighted in the highly competitive world of online betting, if the TAB website is not available when punters want to place a bet, they have many other betting options and may never return. It is a harsh reality that serves to motivate Tabcorp’s IT service delivery operations.

REA is a $5 billion property website operator in seven countries. Its websites are used by more than 19,000 agents, attract around 8.8 million unique visitors and serve up more than one billion page views every month. It is arguably Australia’s most successful online business.

REA’s Dalton said that his organisation has embraced DevOps methodologies, uses Agile scorecards and operates on Lean principles.

“We’ve changed the culture at REA so that IT people are no longer serving the customer as merely the next person down the line,” Dalton said. “Instead, it is all about serving the real customers – the buyers and sellers of real estate.

“We are no longer developing features and functionalities that we think will work or improve the customer experience. We actually go out and ask the customer what they want and work out a way to achieve that. It’s a new way of thinking and it requires a new way of managing the services we deliver.”

Project? What project?

Change at REA is not just restricted to customer centricity, according to Dalton. The organisation has also moved away from traditional service management controls over projects and operations with a view to improving time to market on new web features, customer service functionalities as well as enabling better internal collaboration.

“We no longer have IT operations, a project management office or a change advisory board as such but that doesn’t mean we are cowboys,” Dalton said. “Our guys apply a lot of the foundation ITIL principles to what they do but what I love about them is that they are starting to think about how they can adapt that to a more Agile world.

“So they are desperately trying to work how they can adopt these new DevOps techniques and blend them with an ITIL world because they do want to maintain their service standards.”

Straddling the fence

As an older organisation Tabcorp has invested heavily in staying relevant in the digital age, according to Wenn. Tabcorp is a business whose revenue is almost 100 per cent reliant on its systems being available to multiple customers on multiple platforms.

Systems need to be resilient in the face of unforseen incidents and over-ridden by transparency and good governance so that it is compliant with strict regulatory controls across three separate state jurisdictions.

“ITIL-based processes and methodologies still play an important role in our operations and governance,” Wenn said. “Marketing and web development including release and distribution, however, is a different story.

“We certainly look for better agility in development and distribution as we need to be very nimble in a highly competitive market place or face the very real prospect of losing customers to other electronic betting services.

“Scale and impact is important which is kind of why we have embraced both ITIL and DevOps methodologies. At the backend – our core systems – we have to be very disciplined and therefore have very strong controls around change management processes,” Wenn added.

"We just cannot risk being unavailable and face huge penalties for non-compliance so the controls around that haven’t changed.

“However, at the front end we can be Agile with our rollout of new digital features for our customers. We have found a good balance. In the digital space, we have got the marketing, technology and distribution team co-located and working in a beautiful Agile space," Wenn said.

She said these teams are doing continuous releases and deployments and have embraced the Agile way of thinking. This has allowed them to make huge inroads into the way the business thinks about technology.

“We don’t have a separate service desk and operations teams in the digital space any more. They are all together and they are collectively responsible for every aspect of production. If they muck it up, they are the ones getting woken up at three in the morning to fix it.

“That was a massive change for our business but the cost, efficiency and time-to-market benefits have been huge.”

In the digital space, we have got the marketing, technology and distribution team co-located and working in a beautiful Agile space

Kim Wenn, CIO, Tabcorp

The great spike

Wenn also highlighted another phenomenon that makes Tabcorp’s resilience and availability a unique, critical consideration. Every Saturday is a busy racing day but Melbourne’s annual Spring Racing Carnival in general and the first Tuesday every November (Melbourne Cup Day) in particular are betting days that pale the rest of the year.

“We do over 23 per cent of our business on 65 days across the year,” Wenn said. “Then you have something like the spring racing carnival which is a massive spike again over a normal Saturday. Our transaction volumes on Melbourne Cup Day are incredible and our technology needs to be bullet proof at this time of year.

“On a normal Saturday we will use somewhere between 3 per cent and 7 per cent of our capacity. That’s it. On Melbourne Cup Day we run frontline at 100 per cent. Every year we add more capacity and every year we push it to the limit.”

Some of the stats about Tabcorp’s Melbourne Cup Day operations are mind-boggling. It processes more than 60 million transactions during operating times or up to 2000 bets per second. It can interact with up to 75,000 customers concurrently and will transact with 207,000 account customers over the day.

Betting turnover on Melbourne Cup day in 2012 was $183.4 million including $97.3 million on the main race alone. There are over 1800 terminal operators on duty at various race meetings on the day including more than 700 at Flemington racecourse.

“It is unimaginable for systems to fail on Cup Day as it would have a massive revenue and reputational impact,” Wenn said. “Spring racing is so important to us, that we have a lock-down and change embargo that comes into effect on 1 October every year.”

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Tags REA GroupTabCorpLeanKim WennDevopsagileNigel Dalton

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