The modern Service Desk

8:30 AM The marketing assistant calls for a password reset and the service desk representative logs it on his manual call logging spreadsheet

8:33 AM A branch executive requests for assistance on application installation

8:34 AM A sales representative complains about her laptop’s dead LCD screen

8:44 AM Emails start to flood in - from service and status requests to inquiries and complaints

10:20 AM Calls are already abandoned, several calls are declined, requests are left in the queue, and the list of unresolved infrastructure problems piles up

This is a typical morning for your information technology (IT) department’s service desk unit. Based on various industry reports, an end user calls the service desk an average of 0.8 to 1.2 times per month. And when these calls and requests are neither resolved nor fulfilled, end users are usually left with an impression of dissatisfaction towards the quality of service that the IT department is providing. Service level agreements are also not met and end-users are unable to efficiently perform their business functions.

The importance of a Service Desk

Based on the Information Technology Infrastructure Library (ITIL), an approach for IT service management that is widely used by big businesses, “the value of an effective Service Desk should not be underrated - a good Service Desk can often compensate for deficiencies elsewhere in an organization’s IT department, but a poor Service Desk (or the lack of a Service Desk) can give a poor impression of an otherwise very effective organization.” This emphasizes the importance of the Service Desk’s role within an organization’s quality service delivery.

The current state of Service Desks

Responding to service requests and proactively managing IT infrastructure (through event, incident and problem management, to name a few) has become an increasingly important IT Service Desk function. However, organizations still struggle to align IT service support with business expectations, costs cutting, high end-user satisfaction, and streamlining processes -- making it all possible with a limited IT Service Management (ITSM) toolset.

Need for transformation

The customer service operations are no exception to automation and optimization. In order to provide quality service, organizations may have to transform their IT Service Desk functions into a robust and capable business unit.

Where to look for ITSM tools

When organizations go out in the IT market place today they’ll be greeted by a dizzying number of software products that promise to deliver critical IT Service Desk functions. Without the right strategy, it can be challenging, and at times frustrating, for organizations to navigate the myriad of vendors and products. So the question remains, what solution is right for your organization?

Choosing the right ITSM solution

Here are some practical steps in choosing the right ITSM solution:

1. Conduct a needs assessment.

It is always important to conduct a business case or a needs assessment. There are still a number of organizations that start with product search as opposed to clearly defining needs at the onset. This is similar to adopting ITIL best practices without assessing the organization’s current state and capabilities, as well as its desired future state of operations. A business case is fundamental in defining the organizational needs and the strategic benefits before an acquisition of a new software. It is critical to understand the various processes in your organization and identify areas where opportunities for improvement exist.

2. Define your requirements.

Determining requirements is not about choosing features from the vendors’ marketing materials, brochures, data sheets or whitepapers as if you’re ordering off their catalogue. The organization must be able to generate a comprehensive list of requirements that details the features and functionalities of the needed product including report requirements, audit trails, data integration, performance, scalability, usability and cosmetics, backup and archiving requirements, and security aspects. This list of requirements should include what the solutions are expected to provide, limitations of the current tools, and how future processes are expected to operate.

3. Look at the market and do your research.

The IT Service Desk market is dynamic. As more players enter the market, the vendor landscape changes and shifts, making it harder for organizations to navigate. Conducting thorough research on the current IT Service Desk market and the trends that are causing the shifts -- e.g., vendor consolidation, tool acquisition and service desk business plans, newer licensing cost models, service support scope and ITSM tool integrations -- will help you understand and make a sound decision in choosing your IT service desk provider.

4. Short-list your solutions providers

Vendors are currently looking to differentiate themselves through innovative features and functionalities, ease of implementation, licensing model flexibility, embedded best practices, and integration with ITSM tools. By listing and defining selection criteria that reflect the identified requirements, you can vet, compare, grade and evaluate vendors in an organized manner. You can then narrow down the solutions that are responsive and aligned to your overall business needs.

5. Call for a proof of concept(s) and identify the need for customization.

Vendors are more than willing to provide proof of their products’ concepts. So go ahead and require a demonstration to be able to perform a detailed evaluation of the product. The comprehensive requirements list that you have prepared can be drilled down to determine the product’s actual capabilities in meeting your requirements. It is important to remember that more often than not, some necessary tweaks are required for new products to work. Identifying what works and what calls for further configuration is vital in identifying the most suitable solution to your requirements.

Implementing the right ITSM solution

Choosing the right solution for your Service Desk is primarily dependent on the organization and not on the solutions provider.  It is critical for organizations to understand their needs, identify their requirements, do diligent research, select eligible vendors and validate the product’s functionalities, features and capabilities. With the proper strategies, an organization can successfully identify and implement the right ITSM solution.

By Paul L. Gonzales CPA, CIA, CISA is a Managing Consultant with the Advisory Services Division of Punongbayan & Araullo.

Executive Brief – September 2012

Punongbayan and Araullo

Why are you so controlling?

“I can’t move. These things that they call controls make my life miserable. I feel like I’m being heavily guarded. Don’t they trust me? A process with three steps becomes four, and four steps become three. I don’t think there’s a difference at all. This just consumes my time and effort.”

-Typical reaction of process owners, protesting in silence

No one likes to be controlled. Autonomy and freedom are sought for by individuals especially when it comes to performing their work. However, controls are indispensable to the success of organizations. According to the Internal Control – Integrated Framework, a report on internal control prepared by the Committee of Sponsoring Organizations of the Treadway Commission, internal control is in place to provide reasonable assurance on the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

In order for companies to attain their goals and spur growth, they have to manage risks through robust internal controls. But while executive management appreciates and understands the need to have these controls in place, this appreciation is not necessarily shared by process owners who have to deal with these controls on a daily basis.

When the value of controls is not fully understood, process owners may perceive them as unnecessary and counterproductive. They may also feel that controls are there so that management can nitpick on their errors and mistakes. At times, process owners feel offended by the imposition of safeguards especially when this leads to a more stringent review and approval of their work, the addition of performance metrics, access revocation, divestment of incompatible duties, and other changes in the normal operating procedures. In worst cases, hostility may arise causing process owners to disregard the controls and impede operations.

In a simpler and similar context, this initial resistance may be likened to the rebellion of teens when parents impose curfews, regulate allowances, limit the use of gadgets, or require target grades. But as teens mature and grow in a family that fosters open dialogue, they eventually understand that rules are meant for their safety and well-being.

In the same manner, in order to effectively handle adverse reactions towards controls, management should properly communicate and demonstrate the benefits of implementing controls. With open and consistent communication, management can inculcate in its employees the overall control objectives.  According to Nitin Nohria, Dean of Harvard Business School, “Communication is the real work of leadership.” When effective communication is in place, process owners can better appreciate controls and work towards helping management implement them successfully.

The following are some ways by which the value of controls can be communicated:

• Mission and values statements

• Standards or codes of conduct

• Policies and practices

• Operating principles

• Directives, guidelines and other supporting communications

• Actions and decisions of the board of directors and of management at various levels

• Attitudes and responses to deviations from expected standards of conduct

• Informal and routine actions and communication of leaders at all levels of the entity

Regardless of the forms of communication that you use, the tone must be consistent — from executive management down to the front-liners — to ensure that values, business drivers, and resulting behaviors are shared among all employees and partners of the organization. Management should make sure process owners understand that controls are designed to help accomplish specific goals and objectives, and that they are essential in preventing and detecting minor problems before they become catastrophes. Having a unified direction helps process owners grasp that the minutest control is an important piece in the armor of organizations against risks.

In the quest for effective risk management and growth, companies will always face the challenge of dealing with different levels of maturity and comprehension amongst process owners when organizational changes are made to accommodate controls. But while birthing pains and initial resistance are inevitable, they can be mitigated through dynamic dialogue and clear communication. If the message is effectively packaged, everyone in the organization will appreciate that controls are there to aid, not suffocate.

Irish Ching CPA is a Lead Consultant with the Advisory Services Division of Punongbayan & Araullo.

Executive Brief – October 2012

Punongbayan and Araullo

Securing your stars: Responsible use of financial models

In ancient times, powerful men and women looked to stars to help them decide on the state of their affairs. The cosmos was widely believed to contain information on what the future holds. Today, decision-makers no longer gaze at constellations when weighing their options. In business, seemingly charmed tools called financial models are viewed as necessary instruments in evaluating prospective investments or strategies.

However, like astrological speculations, financial models are not always accurate in their predictions. As uncertainties permeate the rising number of financial transactions, investment bankers, top-level executives, and various stakeholders are constantly navigating an environment where marginal errors in judgment can either make or break a company. Absolute reliance on financial models exposes users to the risk of suffering financial losses and other similar adverse consequences due to flaws in model assumptions and structure, and misinterpretation of intended use. While models are really helpful tools, it is important to closely examine their key assumptions and features, before using them to seal your company’s fate.

Perceive before you believe

As they are built to capture the position of the company in the future, financial models are heavily dependent on financial, operational and economic assumptions and projections. As such, the choice of assumptions, such as revenue growth rates and cost bases, should be carefully probed.

Assumptions should be reasonable and justifiable in such a way that they are able to exhibit the realities of the company and the environment where it operates. Thus, information on what the company has done in the past, what it is currently doing, and where it is headed should all be considered. In addition to company information, the market trends and forecasts should also be closely examined. Are they behaving similarly to the company’s projections? Are there forecasted fluctuations that may impact the company? If so, how will these affect the assumptions in the model?

Recognize that the market is unpredictable, and so are the assumptions grounded on it. Therefore, you have to constantly benchmark the numbers in a model with the company’s track record, the industry where it operates, and the country it operates in. If deviations are noted, reconsider the assumptions—if needed, even the structure itself—and check for consonance with realistic scenarios.

Scrutinize, then initialize

In addition to checking the primary assumptions, it is also important to examine the structure of the model, particularly its level of complexity. Generally, the more complicated the model, the more prone it is to spreadsheet errors related to formulas and linking. A simple mistake in entering a formula in a single cell could have an exponential effect on the entire model structure which, ultimately, could adversely impact its integrity.

Moreover, you have to test the model for extreme simulations involving worst case scenarios. This will show how sensitive your model is relative to changes in key assumptions that drive it. If your model turns out to be unresponsive to sensitivities, further revisions may need to be made.

The structure of the model is the skeleton that binds all the assumptions together to show various scenarios to which decisions will be anchored. Hence, it is important to scrutinize its structure to better understand the model’s purpose and how to best use it.

Be conscious of purpose

In his article “Financial tools must be handled with care”, Professor Salvatore Cantale of International Institute of Management Development Business School underscored that, “not all models can be used in all situations.” In other words, you should first analyze the reason why the financial model was built before using it to place your bets.

Each model is tailored to serve a specific decision making problem. Some models, for example, are structured to determine the additional leveraging required for a particular project. Framing your decision on this model when what you need is to determine the allowable increase in variable costs to hit break-even will be very risky since it is not built for break-even analysis scenarios.

Most often, no matter how dependable your model is, its relevance suffers if it is used for a purpose other than what it is intended for.

Navigation, not prediction

When deciding on the future, the ancients would probably advise today’s decision-makers to watch out for “the fault in their stars.” Since financial transactions are constantly tangled with complexities and uncertainties, prudence and due diligence should be exercised when basing decisions on financial models. Know that they have limitations and understand that they are merely indicative of the company’s projected position.

Nowadays, stars are no longer trusted for their predictive powers, but they continue to be reliable tools in navigation. Similarly, although financial models cannot guarantee future conditions, they can certainly point you in the right direction provided you understand them and use them wisely.

Renante Bere CPA is a Lead Consultant with the Advisory Services Division of Punongbayan & Araullo.

Executive Brief – October 2012

Punongbayan and Araullo

Online shopping: What could make Filipinos buy?

It’s the run-up to the holiday season. The time for Christmas parties, exchange gifts, and family reunions is almost at hand. Among majority of Filipinos, the most joyous part of the year has always been the Christmas season. However, chances are the Christmas season may also be the most stressful holiday period. Typical culprits can include the heavier-than-regular vehicular traffic, crowds and chaos in shops (in malls and more so in discount centers), and the seemingly non-ending (and confusing) choices for those gifts for family, loved ones, friends and colleagues. Under these settings, online shopping can be an attractive alternative.

The Philippines is relatively late in online shopping even among its Asian neighbors. This may be a function of the country’s low internet penetration rate (the share of internet users to total population), which was at 33% as of December 2011 (source: Internet World Stats). This is much lower than the rate in the Philippines’ more developed neighbors but is at par with the country’s relative economic equals.

ASEAN penetration rate
		Internet users	Penetration rate
Country	Period	(miilions)	(%)
Singapore	Jun-10	3.7	77.2
Brunei	Jun-10	0.3	70
Malaysia	Dec-11	17.7	61.7
Vietnam	Jun-12	31	33.9
Philippines	Dec-11	33.6	33
Thailand	Dec-11	18.3	27.4
Indonesia	Dec-11	55	22.1
Laos	Dec-11	0.5	8.1
Cambodia	Sep-12	0.7	4.4
Myanmar	Jun-10	0.1	0.2

Source: Internet World Stats

However, despite just being in the middle of the pack in terms of internet penetration, the Philippines is among the top countries worldwide in terms of social media network usage. The Philippines ranks 8th in the world in number of Facebook users (source: Socialbakers) and 10th in Twitter users (source: Semiocast). The interesting question then is: does the relatively large number of social network users in the Philippines translate to a large online shopping market?

Based purely on the size of the social networking population, the potential online shopping market in the country is huge. Unfortunately, there is a dearth of statistics to conclude if social network users indeed generate actual online shopping in the Philippine setting. There are some indications, however, that online shopping is gaining popularity.

Sulit.com, which used to be the dominant online buy-and-sell site, is now facing stiff competition from AyosDito.com. There is already an eBay site for the Philippines as well. Online shops such as lazada.com, zalora.com, and Kimstore.multiply.com are now quite popular. Group buying sites, such as Ensogo, dealSPOT and Deal Grocer, have also gained traction over the last couple of years.

Be that as it may, the volume and growth of online shopping do not just depend on the size of the market. On the assumption that all technical requirements are properly in place, the characteristics of such a market may prove to be even more important than its size. Just as with any business venture, an understanding of the characteristics of such target market may eventually define the success of Philippine online merchants.

While Filipino buyers may consider the same thing as other buyers — e.g., finding the right balance between price and quality, looking for a good deal — there are some peculiarities that need to be acknowledged (and addressed) by online merchants. Some of these peculiarities and their possible implications include the following:

1. Filipinos have the “suki” (or favorite) mentality. It is not uncommon for Filipinos to search and find an item they like from a shop or site, and then go to their suki merchant to purchase the said item. Aside from possibly getting a good deal, Filipino consumers trust their suki to sell only quality items. Online merchants would thus do well to obtain and present all the necessary certifications and testimonials about their service. Word of mouth endorsement is also very powerful for Filipinos.

2. Filipinos also have a “tingi” mentality, typically buying regular goods in micro packages. This is mainly due to the perceived affordability of smaller sizes. For online merchants to succeed, the products and services they offer must be (or at least perceived to be) affordable. The increased popularity of group buying sites may be due to the perceived affordability of its offerings.

3. Physically touching (and sometimes even smelling) merchandise is important to a lot of Filipino shoppers. To give potential online shoppers a chance to do this, online merchants may consider establishing a small physical store or even a kiosk.

Would addressing these characteristics ensure success? Not necessarily. However, adding in the Filipino tradition of warmth and excellent customer service, the probability of being an online hit should be further enhanced.

By Raul S. Tomas CIA is a Managing Consultant with the Advisory Services Division of Punongbayan & Araullo.

Executive Brief – November 2012

Punongbayan and Araullo