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December 3, 2008

Mailbox #150, Mervis HallPittsburgh, PA 15213

+1 (412) 818 3879http://www.saurabhdubey.org

ITIL v2 vs. ITIL v3: A Newbies Guide

By Saurabh Dubey Joseph M. Katz Graduate School of Business

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December 3, 2008

Contents

Introduction 2 Who Cares, and WHY? 3 ITILv2 built on ITILv3 3 The Modified Problem Statement 4 Previous Options 5 Business Approach 5 Approach Plan Outline 6 Implementation Tips 7 Tool Tips 7 Summary 8

IntroductionITIL is arguably one of the fastest evolvingframeworks that the IT industry has seen. Itis not uncommon to see that before a new

technologys use becomes widespread anewer version releases, however, for that tohappen in case of a framework is rare. It isfurther interesting to see that the newer version actually came out before theunderstanding on the previous version waslow.ITIL v2 is the more widely used andunderstood version of the framework currently. It was a consolidation of the 30books of ITIL v1, created by the CCTA,

which took place in mid 1990s. However,the acceptance of framework initially took some time. In early 2000s, ITIL startedgetting the recognition that it proved itdeserved. The service industry caughtmomentum in towards the end of 2001,which gave ITIL a firm base. But before theexperts really got a hold of ITIL v2 and itcould mature as a framework, OGC (Officeof Government Commerce, UK) announcedan ITIL Refresh, which is now popularly

known as ITIL v3.ITIL Refresh was announced in December 2005, and the official v3 was released inMay 2007. A key change to ITIL under version 3 has been the repositioning of theframework from the previous emphasis onthe lifecycle of the process and alignment of IT to "the business", to the management of the lifecycle of the services provided by IT,and the importance of creating businessvalue rather than just the execution of processes. Consequently, it was rebrandedITIL Service Management Practices in order to represent service management 'bestpractice'. It is a publicly stated aim of therefresh to include more reference to ROI.

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WHO Cares, and WHY?

Service Providers: In almost allcases, it takes more than a year to getthe ball rolling for an efficient ITIL

v2 implementation (from experienceof 8 projects that I have handled).The cost implications of animplementation are huge, because itinvolves the cost of time at the veryleast, which can be very high. Inmost situations, it also needs aninvestment into theapplication/software level solutionthat is used to provide the service,and then in training the staff for the

required tool and then the relevantprocesses. This added to the cost of hardware required and managementsetup, makes an investment whichneeds careful thinking. For a serviceprovider, the decision of whether togo with the latest in the market or thetried and tested solution is verycritical in itself, but when it comes tomaking the same decision about aframework instead of a technology, itbecomes as important as the processitself.It is understood that such projectsalso come with a risk of failure. Theloss in case of failure is not just thatof the investment, but is also of thepossible opportunity cost, and canalso lead to loss of reputation in theindustry.

Customers: There are customers whohave their process standards thattranslate into performance standardsfor the service providers. Suchcustomers usually put high value inthe standards that the serviceproviders comply with. They prefer to go with providers who can presentthem with higher and newer

standards. In my experience, customers givevery high preference to service providerswho have management centers that arecertified and that follow the best framework.There is more than just a basic reason of

service availability for the customers toworry about the performance and henceframework standards. The companies whichplay the part of a customer in this industryhave their primary concerns aligned to thoseof their investors. Most of the time investorsare people who may not have a very specificknowledge of the industry or of thecompanys qualifications, however, theymove with the hype. A framework like ITIL,which is so ultra hyped in the service

industry, usually has a lot of value put on itbecause of the hype around it. Thisassociates the monetary value of the possiblelosses in absence of this framework.

Consultants: These are people who provideprofessional services in reference to theservice industry. These people are the realplayers of the frameworks game. The valueof a consultant is as high as hisunderstanding of the processes framework.To have an answer to the question is veryimportant for them as it becomes a part of their primary skill.

The world has not crumbled beneathyour feet - ITIL v3 builds on a solid ITILv2 1 ITIL v3 refines the standards and processesdeveloped in previous versions, but does notreplace them. The concepts outlined inprevious versions are not lost. Therefore,CIOs who have already adopted v2 or haveyet to adopt ITIL at all can adopt v3 at their leisure. Earlier ITIL certifications (under "v1 and v2) continue to be recognized andbridging classes are now being offered for those who want or need to learn what isnew.

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ITIL v3 is composed of five bookscompared to v2s nine books,eliminating some of the overlap inv2. Version 3 also focuses more onthe business value of IT through a

"Service Lifecycle" approach. Ithelps bring a business managementapproach and discipline to IT ServiceManagement. From that perspective,the five core volumes of ITIL v3emphasize the complementaryaspects of running IT like a business.

According to the official website, thechanges to ITIL may be summarizedthusly 2:

Where V2 talked aboutbusiness and IT alignment,V3 emphasizes business andIT integration.

Where V2 talked about valuechain management, V3emphasizes value network integration.

Where V2 talked about linear service catalogues, V3emphasizes dynamic serviceportfolios.

Where V2 talked aboutcollection of integratedprocesses, V3 emphasizesholistic service managementlifecycle.

As promised by OGC, no prior certifications are voided by theadvent of V3, but new V2certification is being phased out over the next year, and update courseswill be made available for thosecertified under V2 who wish to learnabout the differences in V3.

The Modified Problem StatementIf the parties involved in this were to play bythe ear, they would never reach a decision.There are many opinions about this andmany publicized and published by various

consultants who think they can providesound answers to the above problem.However, among the bigger companies thathave approached various consultants, nonehave been satisfied with an answer that suitsthe problem statement. While there aremany consulting practices being developedto find a migration bridge between ITIL v2and ITIL v3, there is no perfect solution yetfor the problem of whether a start fromscratch would work for the organizations

that want to utilize the framework to their competitive advantage.

If we look carefully, while most of thesuggested approaches give it depends asthe answer, they also point to the underlyingcapability of ITIL v3 to be able toencompass ITIL v2s capabilities. However,still there are many consultants who wouldrather suggest that the approach of start withbasics of v2 which overlap with v3 and then

see how it goes. That seems to be a concernin my mind, because I perceive them to beoverlooking the competitiveness of themarket. Given the situation and competitionin the market, everyone overlooks the aspectof the market where each player wants to beon the top of the ladder. The number of contracts that you can win will be directlydependent on the height/one-upmanship of the framework/technology that you have.Since the business works so much by the

hype of frameworks and processcompliances, the amount of businessvictories will be impacted if we choose v2over v3. Even in that case, will we suggestgoing with a v2 to v3 bridged model?

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Previous OptionsThe previous knowledge on theconcept has always been from aprocess evangelists point of view.The answer as discussed above as

well, has always been a Best Practiceanswer. So, then why dont manycompanies agree with it? The issue isdeeper than we presume it to be. Wewant the Business Answer to thequestion.Its interesting to see that while theindustry has heard clear and longdescriptions of differences betweenthe two versions of the framework,not many have toyed with the crucial

question of how the industry willview this development as daysprogress. It has been stated that theold certifications will still have their value, but will the height of competition permit an organizationto stay with a relatively older framework than the latest in themarket. It is implicit that a lot of thebusiness based logic would makesense in making a decision like this.

We will end up using the financelogics of NPV and IRR whendeciding on whether and whichproject (v2 or v3) to choose. But toget there, one of the most importantnotions that we will have to getthrough is Game Theory in perfectcompetition. It seems that to get abusiness answer to the question, wewill have to look at the competitionand then decide the optimal move for

us.In a way, this is a simple game withjust two decisions v2 or v3,however, in the longer run, thedecision also involves a clear understanding of the Time-value-of-money and effect of efficiency of implementation. Without a clear

understanding of the effectiveness that canbe achieved given the capabilities currentlyin the organization and the time it wouldtake to either finish one and move to thenext or to just implement the best practices

of the newer one, it is almost impossible tomake an informed decision.

Business ApproachThe suggested approach considers variouspossibilities for both large and smallorganizations, and lays out a plan for theimplementation of ITIL irrespective of thesize and position of the organization in themarket.

Historically, we have seen that any of theversions of ITIL (be it v1, or v2) have beenin the market for long enough before havinga refresh issued on them. The experts wouldalso agree with the fact that an ITILv4 willtake another 5-7 years in the making. Agood, clean and complete implementation of Service Management following theframework of ITIL v2 takes approximately3-4 months on a fast track. And as far asclean implementations using ITIL v3, they

are still in the process since the release. Thesuggested approach looks to provide theoption for newbies to enter into ServiceManagement following basics of ITIL v2,and then come out with ITIL v3, withoutspending extensive amounts of time andmoney. Competing with the big players inthe industry is a task that involves placing alot of time and money into the IT of thebusiness. The solution to the problem has toincorporate an optimal amount of investment which is perfect for not just thenew companies, but also for companies thatintend to expand their business from merelysupporting their own internal IT to providingmanaged IT services to other clients as well.

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Approach Plan Outline

There are three critical elements of this plan:

a)

Resources

b) Steps in the Processc)

Milestones

The ideal team for this project needssome critical players. The consultingteam should include separatepersonnel with in depth knowledgeof both ITIL v2 and ITIL v3. Itshould also consist of members fromthe client facing operations team andleading support engineers who are

expected to go on the floor. Onceagain, it is an implicit assumptionthat the people involved in this teamwill have relevant experience in their fields. The knowledge of the basicsteps and expectations from clients iswhat makes a critical difference. Atleast one person who has a clear understanding of the v2-v3 bridgewould be a strong asset on the team.The core of the implementationexists at the CMDB. The stepsshould be pre-empted by a strongunderstanding and conceptualcreation of the CMDB. Therecommended method considers thefact that ITILv3 is nothing but amore holistic, lifestyle basedapproach towards ServiceManagement.The implementation should then bestarted by breaking the entire teaminto two groups. One group, lead bythe ITILv2 expert should start theimplementation by deployingprocesses that have remainedunchanged during the upgrade to v3.They implement the processes end-to-end including the tool and traininginvolved for these processes.

The other group, lead by the ITIL bridgeexpert, should follow the processes thathave been implemented and connect theminto the lifecycle approach of the ITIL v3.

The overall intention of this method is toensure that the business is ready to go live atearly stages while still performing acontinual improvement on their practices.

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The task for the ITIL v3 expert inthis entire project will be to knit aprocess outline which fits thecontinuously being defined ITIL v2framework, and implement the

Continual Services Improvementphase of the process parallel acrossall implementations. This wouldensure that the processes that alreadyexist in the business willcontinuously be improved and areprepared for their evolution into theITIL v3 lifecycle approach. Thepurpose of this smaller teamsworking in synchronizationapproach is to get the firm up and

running for the market and yet havethe capability to be on the fast track towards an ITIL v3 organization.Milestones are a very key aspect of the method. They define the timelines of the project when one groupfinishes a task and the other takesover the follow up tasks. Themilestones need to be criticallydefined at the end of every individualprocess deployment. Every milestonediscussion should consider issuesthat possibly will arise during thenext steps and the entire impactanalysis and FMEA of the same.

Implementation TipsHeres a set of tips that would makea good checklist at key points in theproject:

Understand both your processes and your painpoints.

Ask yourself what youretrying to achieve at thebusiness (not IT) level. Thatwill tell you what is the

objective of your implementation.

Milestones are the perfect time for gap analysis.

Project plan should only be modifiedat the Milestone check-point.

Modification does not meancomplete change. If you see yourself changing the plan too quickly andtoo soon, there is a problem and youmay need to go back to theblackboard.

Consider how you approach IT. For example, where are your bottlenecks? Then determine whichphases of the ITIL lifecycle matchyour needs. Let the problem lead you

to the order in which you proceed.

While ITIL V3 takes you into thefuture, not everyone will pick up andmove to it overnight. Gain someexperience, build credibility andshow results before moving on.

Ensure that over a longer cycle, youadopt service portfolio management.It is a great tool to help you takeinventory of your current and futureneeds.

KPIs are very important in assessingthe progress of the project, and theprogress of the organization as well.Use them well.

Tool TipsOne of the most key aspects of ensuring astrong and efficient service management ischoosing the right set of applications tosupport your implementation. The followingtips would enable you to think on the linesof an effective solution:

The application solution should beone that existed and was successfulduring the regime of ITIL v2. Anapplication that was vastly beingused with v2 will have the maturity

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that your processes may lack initially.

The solution should becompatible with ITIL v3, andshould also have the process

compatibility to expand andcustomize based on the clientrequirements.

Pick a solution that gives youa support system as well.Sometimes it is good to havea strong support system towork with.

Ensure proper training on theapplication for all the teammembers involved.

Ensure that the persondeploying the solution knowsthe long term goals and iscapable of managingcustomizations andmodifications. Pick an expertfor the job, who knows theend to end of applications,not one who knows one toolthat you have shortlisted.

The criteria for selection of the tool should be based onthe long term vision and notjust the immediaterequirements.

Never fall in the trap of Whether the process shoulddrive the tool, or the toolshould drive the process.The tool and process go handin hand one without theother is not going to bebeneficial.

SummaryThe solution provided in this whitepaper looks at the initial question of what is the best approach for a

newbie company towards ITIL. It alsoanswers the question that most businesswould seek, in order to be a competitiveplayer in the market. The solution providedis a collection of the best practices and

experiential learning. The solution is acombination of the implementation projectand the application solution. Theimplementation project still has a strong itdepends associated with the final answer and thats why the requirement of thesubject matter experts or consultants on theteam is justified. The selection of the correctapplication solution, often thought of as atrivial matter, plays a very crucial role aswell. That is why it is recommended that the

application be selected with a long term goalin mind. It is advisable that the detailedreports about the Service Management Tools(also called Helpdesk tools trivially) fromrenowned research publishers like Gartner and Forrester be consulted, while makingthe decision about the tool.

References:

1 Article in CIO.com

http://advice.cio.com/kewendle/top_ten_things_the_cio_needs_to_know_about_itil_now