About The Human Factor In IT Services

Services is a very broad sector, it can be basically defined as everything produced except manufacturing and farming. IT services is one of the most complex and biggest subsets of the industry. Defining meaningful categories , standards and controls is pretty difficult given the diversity of the services being offered and the factors influencing them.

So what is the most challenging parameter in the services equations? It is the human factor. In no other industry in the world, the human is so important and critical for the effectiveness and efficiency of the business. No other industry depends so much on the people’s education, experience and behaviour (and ethics). This fact can be a blessing or a curse for a services organization; performance evaluation and management is much more difficult than any manufacturing sector. You can never standardize and have a control on the output as you do with processes and machines, the same “input” will not always produce the same results with services delivered by humans, your business will always have higher variability of  risks.

If the conditions or the environment of the human changes, the criteria for evaluation and success will change too.Hence the service organization goals defined are also subject to change at all times, leading to more uncertainty. I personally think that the longest time horizon that can realistically be set and controlled in IT services is  around 1 year, for greater enterprises maybe some more. Any objective defined for 3 or more years in advance makes as much sense as predicting the weather for that point in the future.

For the purchaser, the huge scope of services and the dependencies on the human skills and capabilities increase the risk of the services spending in many ways. How can they assess the value and quality of the services being delivered? Standardization and quality control may be difficult or not feasible at all. The diversity and dynamic nature of the sector usually require the customization of the service to fit to the exact needs of the purchasing company;  a standardized approach is not always the right call for the receivers of the service. Besides, it is usually not the purchasing department that can determine if the service was carried out properly. And one needs to purchase a certain type of service at least once to make a solid evaluation of the buying decision.

The services company has the responsibility to consider all the intangible and human related factors as well as the challenges of its customers (i.e purcahser) to  reach and maintain a sustainable success it its industry. Given the high level of risk and uncertainty for both sides, the most important task is ensuring that the all the relevant information is communicated efficiently, especially when it comes to the requirements, the service cost and bidirectional feedback. Another vital task is the management of the skills and capabilities of the organisation and each individual involved. Investment in the processes, assets,staff and synergies is the “only” way to differentiate a service organisation from the others.

Even the investments are made and an optimal portfolio of skills  is built, services organisations are exposed to risks of uncertainties and intangibility. The management of these risks should be done via demand management. One cannot create an inventory of services to serve the customers in times of higher demand. There is always an uncertainity that the demand may be below or above the existing capacity. (and it is usually so). Demand can experience a huge change overnight whereas building services capacity with skilled human labor is a time-consuming and expensive investment. Meeting and creating the demand is the key to survival in services. But how? Well, if I knew the exact answer, I would probably be an entrepreneur now. 🙂 On the other hand, it is for sure very important to build a good CRM system to understand the chaninging needs and behaviours of customers, build a relationship based on trust and opennes. Use of IT frameworks and service delivery methods also helps both the purchaser and the service provider to agree on expectations and be able to fix short to mid term plans. For instance; SLAs, integration of frameworks like ITIL or MOF, ability to comply to SOX or TQM requirements make life easier to manage scope and quality in this huge heterogenous landscape.

Services is one of the strongest rising trends of our century and it is definetely not a bubble. There is no single industry where the services spending is not continously growing. Especially in IT, the purchasing and delivery of services is quite complex, diverse and difficult to manage. Human factor is the driving force but yet it introduces intangibility, uncertainity and variability to the business. To thrive in the hugely comptetive market, services organisations have to invest a significant amount in the processes and their people, be flexible and strong enough to survive the changing environements of the service domain and fluctiating demand. They build excellent relationships to customers and know their needs and develop the capacity to forecast the demand. In times of fluctiating demand there has to be a plan B to overcome the challanges financially and morally in the organisation. This might include many organisational skills like hiring talent fast, getting the workforce provide overtime without loss of quality, building financial buffers to bridge low demand periods while keeping the capacity. And finally, a services organisation must have the ability to acquire new skills and offer new services continously, the comfort zone of services for cash cows should not be the only domain they show their presence. There is no sustainable growth possible  in IT services without  intelligent risk taking.

(Special thanks to my former MBA classmates Sara Al Murad, Annette Barth, Gianmarco Dionisio and Peter Ippy who worked with me on service chains & purchasing and inspired me with our findings and discussions)

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