Leadership Compass

IT Service Management

This report provides an overview of the market for IT Service Management (ITSM) and provides you with a compass to help you to find the solution that best meets your needs. We examine the market segment, vendor service functionality, relative market share, and innovative approaches to providing ITSM solutions.

Warwick Ashford

wa@kuppingercole.com

1 Introduction

The growing reliance of business on information technology (IT) has led to the development of the IT service management (ITSM) solutions market aimed at delivering IT management capabilities to help organizations to continually optimize the design, delivery, support, use and governance of IT to cut costs, increase productivity and efficiency, and improve employee and customer satisfaction.

ITSM is based on the concept of IT delivered as a service to meet business needs. ITSM is essentially about improving business performance through better IT services and delivery or enabling business to get the most value from IT investments. ITSM activities are typically divided into several IT management capabilities or business processes that follow procedures directed by organizational policies.

At the outset, it would be useful to define an “IT service” in the context of ITSM. While ITIL 4 defines a service as: “A means of enabling value co-creation by facilitating outcomes that customers want to achieve, without the customer having to manage specific costs and risks,” it is more useful to think of an IT service in terms of an “IT resource” that is provided and consumed to achieve business outcomes.

In other words, an IT service is any piece of IT that enables users to find, access, view, update, report, and exchange data to achieve the outcome of meeting business needs and potentially improving the satisfaction of service users through improved ease of use, efficiency, and productivity. IT services include laptops, applications, email, managed desktop services, and shared IT resources such as printers.

In the context of ITSM, an IT service provider can be an internal IT department or a third-party supplier, while an IT service customer is any consumer of those services, such as employees and partners or anyone who interacts with an organization using IT such as consumers or customers.

The ITIL 4 definition of a service introduces the term “co-creation” to highlight that value is created through the collaboration of service provider and consumer, and that both parties benefit. The consumer gets the means to achieve a desired outcome, while the service provider gets the opportunity to improve the service through a better understanding of customer needs and even develop new services.

In the digital era, the demand for ITSM is set to grow as organizations across all industry sectors pursue digital transformation projects to achieve the goals of reduced cost and increased efficiency, productivity, and user/customer satisfaction. This drive to digital transformation and the growing need to support working from home in the post-Covid era will increase the reliance of businesses on IT services. This, in turn, increases the need to ensure those services are well-managed and secure.

ITSM solutions focus on IT service operation and improvement. ITSM aims to increase the efficiency and benefits of IT services. ITSM solutions, therefore, typically include all the tools necessary to create, deploy, manage, optimize, retire, and support an IT service throughout its lifecycle.

The most comprehensive ITSM solutions also include tools to support things like:

  • Identification and management of BYOD/Shadow IT
  • Real-time and predictive analytics

Measuring the right metrics is key to any successful management program. In the context of ITSM, there are five key metrics that ITSM solutions should enable organizations to measure and track. These are:

  • Customer Satisfaction (CSAT)
  • First-contact resolution (FCR) [% of contacts resolved on first contact]
  • First-level resolution (FLR) [% of contacts resolved without escalation]
  • Cost per ticket.
  • Mean time to resolution (MTTR)

There are several frameworks that organizations can use to set an ITSM strategy, create a design, manage change, handle service operation and management, and make continual improvements to
ensure that the right ITSM processes, technology, and skills are in place to enable organizations to meet their business goals.

Popular frameworks that provide guidance on and best practices in delivering ITSM include:

  • ITIL
  • COBIT
  • Microsoft Operations Framework (MOF)
  • Six Sigma
  • ISO 20000
  • TOGAF (The Open Group Architecture Framework).

The products covered by this report range from supporting none of these frameworks to all of them, with ITIL being the most widely supported framework.

This Leadership Compass is aimed at providing insight into the ITSM market. The key capabilities that make a comprehensive ITSM solution are explained, and the different approaches that vendors take to providing a solution are evaluated. The leading vendors are identified according to Product Leadership, Innovation Leadership, and Market Leadership, each with detailed profiles and assessments.

1.1 Highlights

  • The ITSM market continues to evolve and grow driven by accelerated digital transformation in the post-Covid era.
  • ITSM is essential to business as a strategic approach to design, deliver, manage, and improve the way businesses use information technology.
  • Businesses are looking to ITSM as a way of ensuring better alignment between IT and the business to cut costs and boost efficiencies to remain competitive.
  • Many ITSM vendors are shifting to a broader Enterprise Service Management (ESM) approach to support collaboration and unified management across all service departments.
  • Automation is a key trend in ITSM to improve services by automating tasks and workflows, and reduce tickets by automating actions to resolve issues before tickets are raised.
  • Leading ITSM vendors are increasingly focusing on supporting interoperability with other products and services through the provision of secure APIs.
  • Overall leading vendors in the ITSM market are ServiceNow and BMC Software, followed by IBM, Matrix42 and Micro Focus.
  • ServiceNow and BMC Software are consistently the top scoring vendors in terms of Product Leadership, Innovation Leadership, and Market Leadership.
  • ServiceNow, BMC, and IBM are Market Champions that are performing above expectations for their current position in product leadership.
  • In the ITSM market, there is a strong correlation between innovation and product leadership, with ServiceNow the top Technology Leader, followed by BMC, Matrix42, Alemba, and IBM.

1.2 Market Segment

While ITSM is a mature software market, as the drive for digital transformation accelerates in the post-Covid era and most companies seek to cut costs in the face of fierce competition during a global economic downturn, this market is evolving and growing.

As a strategic approach to design, deliver, manage, and improve the way businesses use information technology, ITSM is becoming essential to most businesses. Companies are increasingly looking to introduce ITSM or improve existing ITSM capabilities to drive productivity and cut costs in a competitive global market, particularly as businesses become increasingly reliant on IT in the digital era.

There is a wide variety of vendors serving the ITSM market ranging from specialists to large IT services firms, each with a particular focus that will appeal to different companies depending on the size of the organization and where they are in their ITSM journey.

In addition to driving productivity and cutting costs, companies are looking to ITSM as a way of ensuring better alignment between IT and the business, especially when it comes to the ability of IT services to adapt and respond to changing business needs and goals in an effort to remain competitive in a constantly changing business, IT, and regulatory environment.

Benefits of ITSM include:

  • Better business-IT alignment.
  • Reduced IT costs by increasing IT efficiency and reducing IT wastage.
  • Predictable IT performance and cost.
  • Reduced risk in IT implementations through improved change management.
  • Ability to establish well-defined, repeatable, and manageable IT processes.
  • Continual improvement in effectiveness and capabilities of IT services.
  • Improved satisfaction of employees, customers, and IT department.
  • Improved governance and reduced risk.

The basic ITSM capabilities are met by all vendors, with all offering the defining service, change, problem, incident, asset, and configuration management facilities. An increasingly important differentiator for vendors is the ability of their product or service to work with other vendors’ products, standards, or technologies. Vendors that score highly in terms of interoperability, typically support access through a well-documented and secure set of APIs.

Other differentiators include a focus on user experience, the provision of management facilities for BYOD/Shadow IT, and support for enabling organizations to automate repetitive, manual tasks to free up employees to do more strategic work.

Automation is an emerging and important trend within the ITSM market, not only for automating tasks and workflows once a ticket has been raised, but also for automating actions to remediate issues or to initiate investigations by incident response teams to reduce the number of tickets being generated. Automation is increasingly being applied to ensure issues are resolved before employees are impacted and need to ask for help.

In future, this automation of proactive remediation, tasks and workflows will increasingly be supported by machine learning (ML), natural language processing (NLP), virtual assistants, chatbots and other artificial intelligence (AI) technologies.

Supported by these AI technologies, ITSM solutions will increasingly enable organizations to:

  • Provide self-service capabilities.
  • Automate things like level-1 ticket resolution and predictive maintenance.
  • Build knowledge bases to help service desk staff to do root cause analysis and identify solutions.
  • Monitor IT asset performance and identify the need for replacement or upgrades.
  • Proactively identify potential IT issues.
  • Classify and route issues more efficiently.
  • Analyze ticket sentiment to help improve the CSAT score.

The ITSM market is clearly evolving not only to respond to changing business requirements and tap into the benefits of new and emerging technologies, but also to expand beyond IT services. While at present the scope of this report has been limited to products supporting IT service management, a growing number of ITSM suppliers are being joined by new market entrants in focusing on improving collaboration between service departments and applying ITSM principles and goals to non-IT assets in other business areas such as human resources (HR), finance, facilities, and procurement.

As a result, many ITSM products are either being expanded to provide collaboration across service departments or re-engineered as Enterprise Service Management (ESM) solutions, which is beyond the scope of this report. However, we see ESM as a major trend, with a growing number of vendors shifting to this broader focus, including ServiceNow, IBM, Micro Focus, Ivanti, Matrix42 and others.

1.3 Delivery models

As noted previously, while the ITSM is a well-established and mature market, it is continually evolving and consequently even the longest standing vendors have cloud-based versions available, giving companies the flexibility of deployments in the cloud, on premises or a hybrid. However, not all vendors offer all three modes of deployment, with some born-in-the cloud vendors providing a cloud-only option.

Of the vendors featured in this report that offer on-premises deployments, the percentage of customers using the cloud version ranges from less than 1% to 55%, indicating that while a growing number of organizations using ITSM are moving to the cloud, there is still a significant proportion that have not yet made the move.

It is interesting to note, that while not all vendors offer on-premises deployments, all those featured in this report offer some form of ITSM managed service that includes:

  • Support for ITIL processes
  • Incident/Problem/Change Management
  • Service Integration and Service Management
  • Supplier Management and Reporting
  • Supplier Integration and Management
  • IT Operations Management and Reporting

With some, but not all vendors also offering IT CRM engagement management and reporting as part of their ITSM managed services offering.

1.4 Required capabilities

When evaluating ITSM solutions, we begin by assessing standard criteria such as:

  • Overall functionality
  • Size of the company
  • Number of customers
  • Number of developers
  • Partner ecosystem
  • Licensing models
  • Platform support

Each of the features and criteria listed above are considered in the product evaluations below. We also consider unique selling propositions (USPs) and innovative features of products that distinguish them from other offerings available in the market.

Baseline criteria that we look for in an ITSM solution are:

  • Incident Management
  • Problem Management
  • Configuration Management
  • Change Management
  • Release Management
  • IT Knowledge Management
  • Asset Lifecycle Management (ITAM)
  • SLA Management
  • Self-Service Portal
  • Service Desk

Advanced capabilities we are interested in seeing as part of these products:

  • Workflows
  • Automation
  • User collaboration
  • Predictive analytics
  • AI/ML capabilities
  • Integration or connectors to supporting systems or tools
  • Centralized management view

Inclusion Criteria

  • Support for several of the criteria above

Exclusion Criteria

  • Point solutions that support only isolated capabilities, such as:

    • Solutions that only provide integration or a connector to ITSM solutions
    • Solutions that are more ESM business focused than IT focused
    • Solutions with a primary focus on only a few ITSM capabilities such as service desk, knowledge management, or SLA tracking

    We invited numerous vendors to participate in this report to provide a comprehensive overview of the current state of the market. This information should help inform you to choose a vendor that fits your specific requirements, both now and in the future.

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