Two weeks ago I presented to a customer how their IT improvement program can be improved by adopting principles from ITIL. I used this slide to illustrate another way to think about the issue.
Recipient of Benefits
The Y-axis who receives most of the immediate benefit of the activity. “Inside” refers to IT, either a component of IT or the entire department.
Outside refers to the outside stakeholders for IT services. Generally they fall into one of these groups:
- Users: those who directly use the services. Generally the users also request the service.
- Internal customers: those who request or authorize services on behalf of the users. Generally customers are the users, but sometimes they are distinct.
- External customers: The ultimate customer who exchanges value with the organization.
Focus of Change
The focus or perspective of change describes where most of the change or improvement takes place. We are also describing this as within IT or out of IT.
The change or improvement may or may not be limited to the primary location. There are often spillover benefits for related stakeholders that are less immediate.
Examining the Quadrants
This quadrant describes change or improvement activities that are limited exclusively to IT. Some examples may include:
- Code refactoring
- Process improvement
- Service Asset and Configuration Management
Inside-In activities may be thought of as “charging the batteries”. External stakeholders will not see immediate benefits, but the benefits will accrue over time as the IT organization becomes more agile, flexible, efficient and effective.
Inside-Out activities are those that modify the behavior of external stakeholders in order to maximize the capabilities of IT. Some examples may include Demand Management and Financial Management of IT Services, specifically charging for IT services in a way that encourages their efficient use.
Service Catalog Management and Service Portfolio Management also create activities in this quadrant, specifically those that describe prerequisites or costs to external stakeholders.
Outside-In activities are those that benefit external stakeholders by modifying the services or processes of IT. Service Level Management sits firmly in this area. The Service Improvement initiatives within CSI certainly fit here too. Alignment of IT with organizational strategy also reside predominantly in this quadrant.
Does IT ever perform Outside-Out activities? With a few exceptions, yes, all IT organizations do.
Outside-Out efforts or improvement activities take place whenever IT acts as a consultant to the organization by bringing its unique capabilities and resources to business problems.
Some examples may include:
- Strategic planning
- Creating new lines of business
- Due diligence of partnerships or acquisitions
- Enterprise Risk Management and Business Continuity Planning
From an ITIL process perspective, Outside-Out quadrant is best illustrated by Business Relationship Management (SS) and Supplier Management (SD), and some activities of Change Management (ST) and Knowledge Management (ST).
Optimizing the matrix
In no case did we ever claim that any one quadrant is better than another. IT departments of the last century received criticism for focusing too much on inward benefits and losing focus on the broader context in which IT operates. That situation was expensive, frustrating to users, and ultimately untenable.
IT organizations in this century must and do perform activities in all four quadrants. Neglecting any quadrant can lead to the following outcomes.
Using frameworks such as ITIL, COBIT 5, or ISO/IEC 20000 to guide improvement initiatives can help IT organizations balance their efforts in all quadrants.