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REVEAL THE FUTURE
GLOBAL
ORGANISATIONS
OF APPLICATION SUPPORT
& MAINTENANCE
A research
report from HCL
examining the
impact of
current ASM
practices across
300 large
enterprises
Survey participants
The research project involved interviewing Executives from 300
Large Enterprises from the UK (150 participants) and US (150
participants). The interviews were conducted between October and
November 2013.
The focus of the research was to understand the profile, priorities
and strategic intent of these organisations when it came to
Application Support & Maintenance (ASM). The organisations
surveyed were required to have at least 1,000 employees.
Demographic profile of project participants
31%
3001-5000 Employees Globally
34%
5000+ Employees Globally
35%
1001-3000 Employees Globally
Number of
Employees
Globally
02
Sector
06% Healthcare (public)
11% Healthcare (private)
12% Other commercial sector
13% Government & civil service
15% Other public sector
15% Manufacturing
15% Retail, distribution & transport
15% Financial Services
0%
2%
4%
6%
8%
10%
12%
14%
16%
Executive summary
• Organisations are spending 68% of their IT budget on run the business (RTB) activities; 31% of
organisations are spending 80% on RTB
• ASM accounts for 38% of large organisations’ overall IT budget each year, with 83% stating the cost of
maintaining and supporting applications was increasing year-on-year
• 87% of organisations see budgetary pressure impacting their ability to innovate with 83% saying they
need to reduce RTB costs in order innovate more
• 81% of organisations say only a small number of applications generate a disproportionally high number
of tickets
• The majority or organisations think that their in-house teams and/or outsourcer could be more
innovative when it comes to delivering ASM
• Only 14% of organisations have mapped business benefit from IT
• Through a 30% cost reduction in ASM Global 2000 organizations could free upto $6.8 billion of
working capital
Spiralling ASM costs in the face of reducing IT budgets
Software and applications are increasingly dominating the corporate IT landscape, playing an increasingly
pivotal role in enabling companies to launch new services and derive competitive advantage. Despite the
huge buzz around cloud and SaaS (Software-as-a-Service), the vast majority of organisations (87%)
believe on-premise applications are here to stay; therefore their ongoing support and maintenance
remains essential.
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Do you think on premise applications
are here to stay?
13% NO
87%YES
Our survey reveals that currently ASM (covering
incident resolution, service/change requests and
day-to-day application management) accounts
for 38% of large organisations’ overall IT budget
each year. Based on the IT expenditure of Global
2000 companies this equates to $11.3 million
per organisation annually. Furthermore, 83% of
respondents stated that the cost of maintaining
and supporting these applications was increasing
year on year, while over the last 12 months
organisations have on average seen a 29%
increase in support tickets for ASM. For those
organisations that primarily outsource their ASM
function, they in fact saw a 32% increase in
support tickets. This is a clear indication that
many organisations are struggling to meet users’
heightened expectations of application
performance, which in turn is leading to an ever
increasing number of support tickets.
%age
respondents
Approximately 10%
Approximately 20%
What percentage of your
overall IT budget is spent
on ASM each year?
Approximately 30%
Approximately 40%
Approximately 50%
Approximately 60%
Approximately 70%
Over 70% (please specify)
Average percentage of annual IT
budget spent on ASM each year
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3%
13%
26%
26%
20%
9%
3%
0%
38.47%
Is your ASM cost increasing year on year?
83%YES
17% NO
%age
respondents
100% RTB
What percentage of your
annual IT budget is spent on
running the business (RTB)
compared to innovation and
development projects that are
designed to change the
business (CTB)?
90% / 10%
80% / 20%
70% / 30%
60% / 40%
50% / 50%
Less than 50% RTB
0%
7%
24%
36%
20%
8%
5%
Average percentage of annual
IT budget spent on RTB
68.30%
Average percentage of annual
IT budget spent on CTB
31.70%
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45% of respondents believed that while their IT running costs had been steady, annual budget decreases
meant they were unable to take enough cost from IT to invest in change the business (CTB) initiatives. A
further 30% stated that their IT costs had in fact been increasing, which was leading to a higher RTB v
CTB ratio. Against this backdrop it is hardly surprising that 87% of respondents believed that budgetary
pressures were hindering their ability to undertake the innovation and development projects that could
transform their business. For many CIOs this is a considerable challenge; where previously business
transformation initiatives were only a small part of their overall activity, it is now a key part of their role.
15%
IT running costs have been decreasing
but we can sense a decrease
in quality of service
being provided
30%
06%
IT running costs have
been decreasing due to
scientific programs like
Lean implementation
which is having a positive
effect on CTB spend.
IT running costs have been
increasiing every year leading
to a higher RTB to CTB ratio
49%
IT running costs have been steady
but with budgets decreasing every
year morebudget is required
In our survey, the majority of respondents (83%) stated it was priority for them to reduce the proportion of
their organisation’s IT budget on running the business; so that they can invest more on transforming the
business through innovative technology projects. At the same time, CIOs are concerned that hammering
down RTB costs by too much and too quickly, could have a negative impact on overall business
performance. However, it is clear that ASM is a cost centre that can be reduced while at the same
delivering greater value to the business. Yet a worrying 86% of respondents indicated that they didn’t
expect their existing ASM function (whether in-house, outsourced or combined) to deliver any costs
savings in the next three years.
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Is it a priority for you to
reduce the proportion of
your organisation's IT
budget on running the
business, so that you can
invest more in transforming
the business through
innovative technology
projects?
86%YES
83%YES
17% NO
Do you expect any cost
saving from your own or
outsourced ASM function
in the next 3 years?
14% NO
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In today’s era, with the need to drive greater efficiencies and business value from IT, organisations can no
longer allow their ASM function to stagnate. These figures show that the commonly accepted rule that
ASM will consume a significant proportion of the IT budget no longer stacks up. Through a 30% cost
reduction in ASM Global 2000 organizations could free up to $6.8 billion of working capital
In-house vs. outsourced ASM function
When it comes to who actually undertakes ASM in an organisation, our survey revealed a number of
different approaches. 45% of respondents stated that ASM was primarily undertaken in-house, while 17%
said they outsourced the function. The remaining 38% stated that ASM was undertaken by both an
in-house team and an outsourcer.
17%
ASM is primarily
indertaken by an
outsourcer
38%
ASM is undertaken
by both our
in-house team and
an outsourcer
45%
ASM is primarily
undertaken by an
in-house team
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One of the biggest barriers towards
reducing ASM costs is a reluctance
to disrupt the current status quo. As
an industry, ASM hasn’t needed to
innovate as contracts are typically
renewed non-competitively every
three to five years. This continual
revenue stream for outsourcers has
meant it hasn’t been in their interests
to modernise or propose a new
model for ASM. Of those
organisations that outsourced part
or all of its ASM function, more than
three-quarters (78%) believed that
their outsourcer could be more
innovative in delivering ASM but was
reluctant to do so because it might
result in reduced work and revenue.
Furthermore, 72% of respondents
believed that their outsourcer tries to
keep the level of support tickets high
to ensure their revenues are not
reduced.
Do you believe that your
outsourcer could be more
innovative in delivering
ASM but is reluctant to do
so because it might result
in reduced work and
revenue?
72%YES
78%YES
22% NO
Do you believe that your
outsourcer tries to keep the
level of support tickets high
to ensure that to ensure
their revenues are not
reduced. ?
28% NO
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Lack of innovation isn’t just restricted to the outsourcer; our survey reveals that of those organisations that
undertake ASM in-house, 92% believe their team could be more innovative in transforming the model of ASM. This
illustrates that many in-house teams remain concerned that by making improvements to ASM they could be doing
themselves out of a job, rather than thinking about how their skills could be deployed elsewhere in the business.
Do you believe that your ASM team could be more
innovative in transforming the model of ASM?
92%YES
08% NO
For those organisations that have
outsourced, our survey revealed
that it has taken them nearly two
years to see tangible benefits from
outsourcing ASM. With IT having
to evolve at a rapid rate to
become more aligned with
business needs and deliver
tangible results in the form of cost
reduction and revenue growth, it
can no longer afford to support
approaches that don’t quickly
deliver tangible benefits. These
figures show that the traditional
approach to ASM is a hindrance
to the goals of a new lean,
performance-driven IT
department.
Approximately 6 months
From when you outsourced
ASM, how long did it take
before you saw tangible
improvements in the
performance of ASM?
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Approximately 1 year
Approximately 2 years
Approximately 3 years
Approximately 4 years
Approximately 5 years
We’ve not seen any tangible Improvements
Average time taken to see tangible
Improvements in ASM performance (year)
Total
11%
20%
35%
16%
8%
0%
9%
38.47%
Traditional approaches to ASM are inefficient and too reactive
When asked about their IT operations, a significant number of respondents (34%) said it needed
streamlining, and that the focus is on ITIL processes and implementing IT SLAs. A further 26% saw IT as
a cost centre, where the major focus is taking out operational cost. For those organisations where their
ASM function in primarily undertaken by an outsourcer, nearly half (47%) believed their IT operations
needed streamlining. This highlights inefficiencies with the current ASM process for many organisations.
Only 14% of organisations said they mapped the business benefit of IT. This indicates many organisations
are still working to IT-led rather than business-led KPIs, and an overall a lack of business and IT alignment.
Which of the following best descibes IT in your organisation?
25%
14%
Business benefits from IT
are well mapped,
delivering IT as a service
to the business?
IT is mature operationally and is now focusing
on business alignment with business SLAs
26%
IT is a cost centre - operational
cost take out is a major focus
34%
IT operations need
streamlining - Focus is on ITIL
processes and implementing
IT SLAs
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Indeed, when asked if they believe traditional ASM processes are inefficient, 83% of respondents agreed.
Typically this has been due to ASM teams dealing with and resolving application incidents on a
case-by-case basis rather than using an industrialised and consistent solution. As a result, every time an
error occurs the ASM team is required to start from scratch in order to roll out a solution; which is
extremely inefficient considering that on average, only 1 incident in every 5 is new.
Do you believe that traditional ASM processes are inefficient?
83%YES
17% NO
A lack of visibility and control is a significant challenge for the majority of organisations. 92% of respondents
said they found out about most IT issues and problems impacting end users through calls to the
helpdesk/service desk. Furthermore, when asked about how applications are supported and maintained
across their organisation, just over two-thirds of all respondents (67%) stated that their ASM function is
inflexible in terms of supporting business expansion and is not providing continuous improvement.
Interestingly, this figure rises to 86% when asking those organisations where ASM is primarily undertaken
by an outsourcer. This illustrates that for the vast majority of organisations, ASM is reactive and focused on
firefighting; as opposed to being proactive and keeping businesses on the front foot.
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92%YES
Typically do you find out
about most IT issues
and problems facing
end users through calls
to the helpdesk /
service desk?
08% NO
How are applications supported and maintained in your organisation?
Total
ASM is
primarily
undertaken by
an in-house
team
ASM is
primarily
undertaken by
an outsourcer
ASM is
undertaken by
both our
in-house team
and an
outsourcer
ASM is enabled by tools but is inflexible
in terms of business expansion and is
not providing continuous improvement
67%
75%
86%
49%
ASM is highly mature with minimum
human interference thereby reducing
errors and allows for business
expansion and continuous improvement
25%
16%
8%
43%
ASM is not enabled by tools and
therefore is error prone
8%
8%
6%
9%
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Application silos remain
For most organisations, the ASM function continues to be aligned to particular applications as opposed to
the business. So rather than having a team focused on supply chain management or e-commerce,
organisations will have individual support teams for major applications such as Oracle, SAP, trading
systems etc. Our survey revealed that 81% of organisations organised their ASM function around these
application silos. This is symptomatic of IT working to IT-led KPIs aimed at helping the business ‘keep the
lights on’ rather than looking at how the skills of the ASM team can be utilised for business transformation.
Do you have individual support teams for your major applications such
as Oracle, SAP, trading systems etc?
81%YES
19% NO
As the number of applications within the business grows and the landscape becomes more complex, this
siloed approach is starting to make IT rigid and reactive at a time when the demands on it are greater than
ever. 90% of respondents said they receive complaints from the business about application problems and
service requests not being dealt with quickly enough.
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Do you find that you will get complaints from the business
about applications problems and service requests not being
dealt with quickly enough?
90%YES
10% NO
The majority of respondents (81%) stated that a small number of applications created a disproportionately
high number of ASM tickets. However, with IT landscapes becoming more complex; where applications
are interconnected, third-party services being used and application components supporting wider
business processes, it is much more difficult for time-pressured ASM teams to identify and resolve the
root cause of specific incidents. Indeed, 91% of respondents said that root-cause analysis for application
related problems and incidents was taking longer due to the increasingly complex nature of the IT
landscape.
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81%YES
Do you agree that you
have a small number of
applications that create
a disproportionally high
number of ASM
tickets?"
91%YES
09% NO
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19% NO
Do you agree that root
cause analysis for
application related
problems and incidents is
taking longer due to the
increasingly complex
nature of the IT landscape?
Business & IT alignment remains a challenge
Business and IT alignment continues to be debated in a significant number of organisations. With
demands from the business growing and becoming increasingly varied, it is often difficult for IT to prioritise
dealing with application problems and/or service requests. Our survey shows that for the majority of
respondents (88%), prioritising problem and service requests is a headache. At the same time, with IT
underpinning an increasing number of business functions, 90% of respondents said that resource and
skills restraints were making it a challenge to align business and IT objectives.
Do you sometimes find prioritising problem and service
requests a headache?
88%YES
12% NO
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Do you think resource and skills restraints are making it a
challenge to align business and IT objectives?
90%YES
10% NO
Against this backdrop, it can be difficult for organisations to measure the true business impact of their
ASM function. 43% of respondents claim to use business focused KPIs (e.g. a reduction in order to
delivery time or an increase in customer acquisition), yet when asked what the primary metrics to measure
the effectiveness of their ASM operation are, 87% stated it was application availability, response and
problem resolution times. In fact, when the sample is broken down to focus solely on those organisations
where ASM is outsourced, less than a quarter (24%) stated they used business-focused KPIs.
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Which of the following metrics do you collect and use to measure
your in-house and outsourced ASM function?
ASM is
ASM is
undertaken by
primarily
both our in-house
undertaken by
team and an
an outsourcer
outsourcer
Total
ASM is primarily
undertaken by
an in-house
team
Mean time to resolution (MTR)
74%
65%
86%
78%
Application uptime
67%
67%
43%
77%
Reduction in high severity tickets
63%
60%
53%
70%
Productivity of ASM team
51%
45%
39%
64%
Business focused KPI's (for example, a
reduction in order to delivery time for an
online retailer or an increase in customer
acquisition for an insurance company)
43%
39%
24%
57%
Do you use application
availability, response times
and problem resolution
times as the primary
metrics to measure the
effectiveness of your ASM
operation?
87%YES
13% NO
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At a time when CIOs are being asked to change the business, the traditional IT-KPI focused approach
towards ASM is fast becoming outdated. CIOs need to be able to drive costs out of their operations,
while at the same time driving business performance.
Encouragingly, 91% of respondents believe that ASM can have an impact on improving business
performance; however this figure drops to 78% where the function is undertaken by an outsourcer.
Whether ASM is outsourced, undertaken in-house or by a combination of the two, it is clear in that an
alternative approach is required.
Do you believe that ASM can have an impact on improving
business performance?
ASM is
ASM is
undertaken by
primarily
both our in-house
undertaken by
team and an
an outsourcer
outsourcer
Total
ASM is primarily
undertaken by
an in-house
team
Yes
91%
93%
78%
94%
No
9%
7%
22%
6%
ALT ASM™ – Proactively reducing ASM while impacting
business performance
Recognizing that support, maintenance and business value are not mutually exclusive marks a new start
for IT sourcing models. Unlike traditional ASM, ALT ASM™ seeks to drive efficiencies at a fundamental
level using proactive ticket resolution, LEAN principles, pre-built self-healing solutions, self-funded
application portfolio optimization and a business aligned target operation model. The goal of ALT ASM™
is to create a zero ticket application landscape.
With that it is focused on impacting business performance through business process to IT landscape
linkage and being targeted on business process KPIs. This is a game changing and bold approach for a
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function or sector of the IT industry that hasn't evolved for the last decade. ALT ASM™ aims to create
Alternative solutions to five problems CIOs face in applications outsourcing:
Traditional ASM - Industry Practice
Alternative ASM
Ticket resolution focused
Proactive Workload Reduction
Focus on “Keeping the lights on”
Focus on Business Advantage
Non consultative approach to
transformation
Proactively Impacting IT Agility
Limited ability to support a dynamically
changing business demand
Limited visibility in service delivery
Reduced risk with a flexible egagement
Transparent Engagement
Proactive Workload Reduction
CIOs so far have been only presented with the cost savings achieved through offshoring and savings
delivered as part of the defined contract. To help CIOs see other alternatives, HCL has created a
paradigm shift in applications outsourcing through its ALT ASM™ proposition. It is derived from our
strategy of a shift from ticket resolution to ticket removal. ALT ASM™ aims to deliver unprecedented
Visibility, a faster resolution Velocity and generate Value, by bringing together a host of its IP, processes
and fundamentally approaching IT with a Business Process first, Technology second mind-set. If we
understand the business process, we understand the impact of an upstream failure on a downstream
process. This knowledge helps anticipate and focus resolution efforts irrespective of the “priority”
assigned to a ticket.
Focus on Business Advantage
There is a need to change how we deliver and what we target as part of our SLAs. An ASM engagement
in technology led silos is inefficient in terms of its resource use and is akin to a “horse with blinders”. HCL
has designed a Business Function Aligned Target Operating Model in which the engagement units
headed by client service managers are aligned to the various functions of the client. This creates an
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organization that is focused on achieving business objectives. Along with this ALT ASM™ uses HCL’s
proprietary tool Prizm™ to map the business process to the IT landscape. This enables the ASM
engagement to generate ideas that can impact the business. Another tool used is ProVantage™ which
monitors the Business KPIs and their linkage with IT KPIs. The final step is taking Business KPIs as SLAs.
This aligns the goals of the business and IT creating Business Advantage.
Proactively Impacting Agility
Transformation of IT landscape starts at the time of transition with the mapping of the IT Landscape to the
Business processes using HCL’s Application Optimization tool Prizm™. This creates a culture of
continuous improvement from the word go. With that we reinvest 3% of the total contract value in the
form of transformation consulting assignments which result in transformation opportunities being
identified. These opportunities can be realized with the unlocked capital resulting from optimization derived
from ALT ASM™ and are in the form of Application Portfolio Optimization, Application Modernization and
Cloud Enablement.
Flexibility in service delivery and resourcing
An ASM engagement, which is not flexible enough to provide for additional trained resources in case of an
urgent need, puts the client at risk rising from business fluctuations. Understanding this challenge, HCL
offers clients a flexible staffing model which provides run-the-business (RTB)-trained resources whenever
there is a need, as part of ALT ASM™. Inversely resources required for change-the-business (CTB)
activities can be sourced from ASM. Our Business-Aligned Target Operating Model (TOM) results in a
highly cross-skilled workforce and thus we are able to provide resources that are completely aware of the
company’s business process and are able to impact CTB activities in the right way. Flexible delivery is
achieved through the modularized Business Aligned TOM where in case of a business expansion a new
business aligned track is easily created.
Transparent Engagement
When it comes to creating visibility for the customer through strong collaboration models, advanced
reporting tools with frequent updates and clear role articulation for greater accountability, we look at
Managed Services. ALT ASM™ creates a transparent engagement through a 24X7 visibility dashboard,
Multi-Vendor governance framework, Business Process to IT landscape visibility and business process
KPI monitoring. It creates visibility at all three levels of Business, IT and Governance.
For further information, http://microsite.hcltech.com/altasm/
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