Strategizing IT service management through ITIL ...

Strategizing IT service management through ITIL implementation: model and empirical test Tom R. Eikebrokk and Jon Iden

The version of Record of this manuscript has been published and is available in Total Quality Management & Business Excellence, published online 19 Aug 2015, http://www.tandfonline.com/doi/full/10.1080/14783363.2015.1075872

Strategizing IT service management through ITIL implementation: model and empirical test

Tom R. Eikebrokk (corresponding author). University of Agder, Department of Information Systems, Service box 422, NO-4604 Kristiansand, Norway. Phone: +4738141048. E-mail: [email protected] Jon Iden. Norwegian School of Economics, Department of Strategy and Management, Helleveien 30, NO-5045 Bergen, Norway. Phone: +4755959690. E-mail: [email protected]

Abstract Research on the Information Technology Infrastructure Library (ITIL) lacks appropriate theories and models that capture the distinct characteristics and implications of the ITIL implementation practice. The purpose of this study is to close this gap. Based on a literature review, we develop and empirically validate a theoretical model: the ITIL Implementation Project Model (ITIL-IPM). The model includes significant antecedents, which provide a foundation upon which an effective ITIL implementation project can be built, as well as the pertinent effects of implementing ITIL. The results contribute to the current research stream on the strategizing of IT service management (ITSM) as well as to an improved understanding of the IT function in organizations. The model provides IT executives with practices for improving ITIL implementation quality and for assessing the benefits of their efforts. Keywords: IT service management; ITSM; Information technology infrastructure library; ITIL; the ITIL implementation project model; IT function; Information systems strategizing

1. Introduction There has been a steady increase in research on the concept of service in the IS discipline (Bose & Luo, 2011; Fielt, Böhmann, Korthaus, Conger, & Gable, 2013; Jia & Reich, 2013). IT services is one of the fastest-growing sectors of the service economy. One recent stream of this research is IT service management, which focuses on the servitization of the IT function

and the organization and management of IT service provision (Fielt et al., 2013). In order to establish an “organizational infrastructure” (Galliers, 1993) for IT services, IT practitioners strategize IT service delivery by developing and implementing a reference process: the IT Infrastructure Library (ITIL). Interestingly, IT professionals are collaborating in this endeavor through the IT Service Management Forum (itSMF), a global non-profit community. Research reports that IT executives worldwide consider ITIL to be a suitable organizational infrastructure for IT services (de Espindola, Luciano, & Audy, 2009; Marrone, Gacenga, Cater-Steel, & Kolbe, 2014; Zajac & Soja, 2012). IT service management as a management concept places emphasis on IT services, customers, service-level agreements and the handling of the daily activities of an IT department through processes. As such, it contrasts more technology-centered approaches to IT operations by focusing on the quality of IT services and the relationship with customers, rather than on technology and internal IT organization (van Bon, 2000). Of the reference processes to achieve quality of IT services, ITIL is the most accepted and used (Cater-Steel et al., 2009). ITIL version 1 was developed in the 1980s by a British public body (the Central Computer and Telecommunications Agency, CCTA) as a collection of best practices observed in the industry. Ten years later the popularity of ITIL had grown substantially and between 2000 and 2002 version 2 was released. At that time ITIL was regarded as a de facto standard for IT service management world-wide. Today, ITIL version 3 details 25 processes that explain how the various tasks of a supplier of IT services must perform to move an IT service through its life cycle from design, validation, test and deployment, and how events along the path should be handled and operational problems solved. ITIL implementation is a typical example of how IS functions are actively approaching the challenge of creating strategic IT benefits. Following Galliers’ framework for understanding IS strategizing (Galliers, 2011, p. 331), ITIL implementation represents the intention to

realize benefits through the adoption of reference processes that explain how IT should be exploited and delivered as IT services. These ITIL processes represent aggregated knowledge of best practice, developed through experience and shared in a community of IT practitioners working to servitize the IT function. As such, ITIL implementation can be seen as both an approach and a tool adopted by IT executives for realizing a service-oriented strategy. The phenomenon of ITIL—its reference processes, its implementation, and its community—is attractive to the strategic IS field for several reasons. First, ITIL and its implementation are rarely studied within the strategic IS field despite ITIL’s popularity amongst practitioners: “There is still much potential for further advancing the knowledge base on phenomena related to IT-based services” (Fielt et al., 2013, p. 46). Second, and even more motivating, is the fact that practitioners themselves see ITIL as an important strategic initiative and tool to secure a reliable organizational infrastructure and reliable IT services (Teubner, Pellengahr, & Mocker, 2012). ITIL can increase our understanding of the nature of strategizing in general and within IT service management in particular. Finally, the worldwide community of IT practitioners cooperating in this effort represents a network of practice that undoubtedly influences strategizing, and as such should receive increased interest from strategic IS researchers as an example of how collaboration can influence strategizing (Buhl, Fridgen, König, Röglinger, & Wagner, 2012).1 ITIL and other examples of strategy as practice are current topics in the strategic IS literature (Peppard, Galliers, & Thorogood, 2014). These initiatives represent a micro-focus on how companies in practice develop and implement their strategies, and they can increase our understanding of IT strategy in general (Peppard et al., 2014; Whittington, 2014). In this regard, the adoption and implementation of ITIL represents an area where strategy as practice

1

At a recent (2014) large international itSMF conference, a panel of ITIL authors and influential publicists were asked about their familiarity with academic research on ITIL implementation. None of them was able to point to any research or research community in this field.

influences the delivery of IT services and creates IT benefits in many companies. Despite its potential, reports indicate that implementing ITIL is not straightforward, but rather a challenging undertaking (Cater-Steel, 2009; Cater-Steel & Pollard, 2008; Iden, 2009; Pollard, Gupta, & Satzinger, 2009) with the potential to reduce the quality of companies’ strategizing (Galliers, 2011). Many organizations fail. Many others keep implementing ITIL long after the planned deadline. Research reveals that IT executives frequently underestimate the time, effort, risk, and costs of implementing ITIL (Pereira & da Silva, 2010). However, the prevailing research provides little empirical evidence or guidance on how to conduct an ITIL implementation project successfully. Although ITIL implementation research is increasing, most ITIL studies to date are not based on a theoretical framework (Iden & Eikebrokk, 2013), which makes theoretical progress in this area difficult. In light of this fact, our specific research questions are: RQ1: What elements are central in an ITIL implementation project, and how can these elements be conceptualized and measured? RQ2: What elements influence the progress and outcomes of ITIL implementation projects? The study’s unit of analysis is the ITIL implementation project, which encompasses the project’s driving forces, its implementation progress, and its outcomes. The purpose of this research is to develop and validate a model of the ITIL implementation project as an important step in learning more about the strategizing of IT service management. Practitioners may address the model, its dimensions, and its measures when planning and evaluating their strategic ITIL initiatives. In research, this model can serve as basis for further improvements in both theorizing and instrumentation as steps to understand more of the strategizing role of ITIL implementation. This paper proceeds as follows. First, it combines interviews in context with a review of major research streams to derive a theoretical model, articulate hypotheses, and develop

operational measures. Next, it validates the model using quantitative methods and survey data. Finally, it concludes by suggesting implications and avenues for further research. 2. Literature review At its heart, ITIL is service-centered and prescribes an organizational infrastructure for delivering IT services through processes (Marrone & Kolbe, 2011). The latest version, ITIL V3, published in 2007 and revised in 2011, explains in five volumes (Service Strategy, Service Design, Service Transition, Service Operation, and Continual Service Improvement) the set of processes that an IT service must perform. These processes delineate how an IT service moves through its lifecycle: how the IT service should be planned for and built; how the IT service and related changes should be validated, tested, and deployed; how events and requests regarding the IT service should be handled; how the basic configuration supporting the IT service should be controlled; and how operational problems should be solved (Taylor, 2007). An important question regarding process reference models like ITIL is what makes them applicable (vom Brocke & Thomas, 2006). An IT department will acknowledge the usefulness of process reference models when using the reference models reduces the effort needed for the construction of its own processes. However, the more specific a reference process model is, the fewer the IT departments to which it can be applied: “the dilemma of reference modeling” (Becker, Delfman, Knackstedt, & Kuropka, 2002). The authors of ITIL have chosen the less specific approach, and thus have made ITIL attractive to a large number of IT departments around the world. Research attests to its attractiveness. In a 2009 survey, 45% of US IT managers were using ITIL and 15% were in the planning stages (Winniford, Conger, & Erickson-Harris, 2009). Similar evidence is found in other countries (de Espindola et al., 2009; Zajac & Soja, 2012).

The Information Technology Infrastructure Library (ITIL) contextualizes itself within the perspective and evolution of process reengineering and business process management (van Bon, 2002). The process perspective has become an accepted approach to the way organizations think about and manage their business (Harmon, 2010). In its early days, process thinking (then called process reengineering) was positioned as an episodic, rather than an ongoing, effort (Hammer, 2010). Gradually, process orientation has evolved to what is today understood as business process management, a discipline that encompasses not only the redesign and deployment of business processes, but also the ongoing administrative and supervisory control to ensure that they remain compliant with business objectives and customer needs (Smith & Fingar, 2003). Despite considerable investments in the area, most reviews report as many as 60–80% of process reengineering initiatives as unsuccessful (Trkman, 2010). Consequently, critical success factors (CSF) are the most actively researched topics in this field (Grover, Jeong, Kettinger, & Teng, 1995; Trkman, 2010). The research literature offers similar CSFs for process reengineering, and top management involvement is frequently considered the most important factor. A second major research theme is outcome, the organizational benefits that businesses achieve by taking a processes-oriented view of organizational improvement (Gulledge & Sommer, 2002; Kohlbacher, 2010; Larsen & Myers, 1997; Mansar & Reijers, 2007). Although early researchers argue that firms should strive for radical changes with dramatic effects on productivity and costs (Hammer & Champy, 1993), current research has found that most projects find the radical approach too challenging, and therefore realize more modest benefits (Albizu & Olazaran, 2006; Grover et al., 1995), whether effectiveness or efficiency gains. Implementing the ITIL reference processes in an IT department differs from traditional process reengineering in that the goal of an ITIL implementation project is to adapt existing

organizational practices to those prescribed by ITIL, while a standard process-reengineering project has more freedom in its analysis and redesign activities. While the ability to think outside the box is a sought-after quality in process reengineering, the ITIL project is dependent on project members’ in-depth knowledge of the ITIL reference processes and their ability to introduce these processes effectively in the IT department. ITIL pragmatically acknowledges the design challenges in process reengineering by offering predesigned processes. Scope is another issue. Implementing ITIL may involve a large number of processes, and is thus an organization-wide initiative; a process-reengineering project may limit itself to one or a few processes. Apart from this, the methodological approaches of process reengineering and ITIL process implementation are basically equivalent as presented in the process reengineering and ITIL literature: a) definition, b) analysis, c) design, d) implementation, and e) management (Adesola & Baines, 2005; Taylor, Case, & Spalding, 2007). However, their differences must be reflected in a theoretical model for the ITIL implementation project. ITIL implementation research is increasing. Through a literature review, Iden and Eikebrokk (2013) find that the research sorts itself into the following categories: antecedents to implementation, implementation progress, and consequences. Within the antecedent category, the most popular research question is related to factors for successful implementation, which is also the most frequently asked research question overall. Existing research studies implementation progress on three different levels of analysis: the national level (if and to what extent IT functions in a country are implementing or planning to implement ITIL); the firm level (the overall implementation progress in firms); and the process level (the implementation progress for each ITIL process in a firm). In terms of consequences, the research focuses primarily on the outcomes and benefits of ITIL implementation. The relationship between ITIL and process management is less explored and represents a gap in

the research literature (Iden & Eikebrokk, 2013). In general, the ITIL literature includes few studies that are based on a theoretical framework (Iden & Eikebrokk, 2013). 3. The ITIL Implementation Project Model This paper provides a theoretical basis for ITIL research by developing a conceptual model of the ITIL implementation project. The model describes a process where antecedents influence outcomes of an ITIL implementation project, via process implementation. In developing the ITIL Implementation Project Model (ITIL-IPM), we used a recent literature review on ITIL implementation (Iden & Eikebrokk, 2013) and introduced literature on business process reengineering (BPR), business process management (BPM), and project management (PM). We included BPR and BPM due to ITIL’s process orientation, and PM was included due to the project nature of ITIL implementation. Based on this literature we identified several antecedents and outcomes of ITIL implementation. 3.1 ITIL implementation progress The five ITIL V3 volumes describe a set of processes that suggest how an IT function should design, build, and deliver IT services to its customer (see Table 1 for an overview of ITIL processes). The goal of the ITIL implementation project is to implement these processes in the organization (Conger, Winniford, & Erickson-Harris, 2008) and the progress can be tracked by measuring the implementation status of the selected ITIL processes (Cater-Steel, Tan, & Toleman, 2009; Iden, 2010; Marrone & Kolbe, 2011). Based on this literature, we define ITIL implementation progress as the extent to which the IT function has implemented ITIL processes. 3.2 Antecedents to ITIL implementation 3.2.1 Senior management involvement

Research highlights senior management involvement as an antecedent to organizational development success. McDonough (2000) suggests that top managers help projects through a variety of means, such as demonstrating commitment, helping the project to surmount obstacles, making things happen, and providing encouragement to the team. Senior management involvement is found to be the number-one key factor for success in process reengineering and process management (Balaji, Ranganathan, & Coleman, 2011; Grover et al., 1995; Trkman, 2010). This involvement must manifest itself in ongoing leadership and project support and a senior manager that champions the initiative (Grover et al., 1995). Similar evidence can be found in project management (Fortune & White, 2006). Within ITIL, senior management involvement means that IT executives commit themselves and provide strong support, guidance, and feedback to the project during implementation (Cater-Steel et al., 2009; Conger et al., 2008; Marrone & Kolbe, 2011; Pollard & Cater-Steel, 2009). However, as Iden and Langeland (2010) point out, IT managers at all levels must have ownership of the goal of redesigning their own processes in accordance with the processes prescribed by ITIL, although it is normal for a single person from IT management to champion and advocate for ITIL. Based on the above literature, we define senior management involvement in the context of ITIL as IT executives’ commitment to the ITIL implementation effort by providing support to the project from initiation to its completion. We hypothesize the following: H1: There is a positive relationship between senior management involvement and ITIL implementation progress. 3.2.2 Organizational commitment Organizational commitment has been repeatedly identified as an important variable in understanding the behavior of employees in organizations and the effects of improvement initiatives (Mowday, Steers, & Porter, 1979). Definitions of organizational commitment vary,

but tend to focus on employees’ behavior (Salancik, 1977; Sheldon, 1971; Staw, 1977). High commitment presents itself as a strong belief in and acceptance of the firm’s goals and values, and a willingness to exert considerable effort in reaching them. Organizational commitment, in the form of broad participation, is also found to be one of the key success factors for process reengineering (Balaji et al., 2011; Ranganathan & Dhaliwal, 2001; Sedera, Gable, Rosemann, & Smyth, 2004). Grover et al. (1995) found that organizations often fail to commit the required human and financial resources needed to carry out the reengineering effort. These findings are backed by research on project management in general (Fortune & White, 2006). In the context of ITIL, organizational commitment means broad support for the ITIL implementation effort, as indicated by the presence of sufficient resources (Cater-Steel et al., 2009), organization-wide involvement (Iden, 2009), and marketing campaigns within the organization to create acceptance and understanding of what ITIL entails (Hochstein, Zarnekow, & Brenner, 2005). It also means involving key people in the process design and improvement activities and keeping them on the project to maintain continuity (Iden & Langeland, 2010). The need for organizational improvement must be strongly recognized by the organization’s employees and the ITIL project members must try their hardest to implement ITIL in order for it to succeed (Iden, 2009). Based on the above arguments, we define organizational commitment in the context of ITIL as the organization’s willingness to exert considerable effort toward the ITIL project. We advance the following hypothesis: H2: There is a positive relationship between organizational commitment and ITIL implementation progress. 3.2.3 Group efficacy Group efficacy represents the project team’s belief in its ability to perform effectively (Gibson, 1999). Enhanced task performance is the most significant result of a strong state of

efficacy perception (Sadri & Robertson, 1993). Through observational and self-reporting techniques, researchers have found group efficacy to be a meaningful group attribute that varies among groups (Gibson, 1999). Because group efficacy reflects what a group thinks it can accomplish, the perception of group efficacy is often related to how much effort the group expends (Gibson, 1999). This follows logically from social cognitive research on individual work behavior, which has demonstrated that the higher the level of self-efficacy, the better an individual performs (Bandura, 1997). With respect to process reengineering, knowledge, expertise, and appropriate training are frequently highlighted as essential components of a successful outcome (Grover et al., 1995; Sedera et al., 2004; Trkman, 2010). It is also evident that an appropriate reengineering methodology is necessary in order for reengineering to be performed well (Grover et al., 1995; Sedera et al., 2004; Trkman, 2010). Resistance, lack of motivation, and poor communication among reengineering team members reduce project members’ efforts (Grover et al., 1995). Competence and suitable method are found to be crucial factors for project management success (Fortune & White, 2006). In the context of ITIL, group efficacy means that the project members are sufficiently trained, possess sufficient knowledge about ITIL and process thinking (Cater-Steel et al., 2009; Hochstein et al., 2005; Iden & Langeland, 2010), and have the necessary skills to identify, analyze, and improve processes through a well-defined method. They must be dedicated to the effort and must try their hardest to implement ITIL in order for the implementation to succeed (Iden, 2009). Based on this literature, we define group efficacy as the project group’s belief in its ability to implement ITIL effectively. We hypothesize the following: H3: There is a positive relationship between group efficacy and ITIL implementation progress. 3.2.4 Project management capability

Firms organize ITIL implementation as a project. Standard criteria for evaluating a project are time, budget, and quality (Kerzner, 2013). Quality is problematic to conceptualize in this context. Consequently, we suggest that the degree of IT management satisfaction and IT staff satisfaction be used as quality indicators. Based on the above arguments, we define project management capability as the ability of the ITIL implementation project to comply with budget and time limits as well as the expectations of management and staff. We suggest the following hypothesis: H4: There is a positive relationship between project management capability and ITIL implementation progress. 3.2.5 Software quality In the process reengineering literature, IT is regarded as an important enabler for process redesign and implementation (Davenport, 1993; Hammer, 1990), as well as for process management (Hammer, 2010). Technology that has been proven effective is found to be an important antecedent for project success in general (Fortune & White, 2006). In ITIL, specialized software packages are used for logging and tracking cases and include a database comprising key ITIL elements, such as assets, configuration items, capacities, and availabilities. ITIL software is module-based; most commonly, there is one module per ITIL process, although not all processes are supported. In addition, companies are developing their own software tools based on open-source software (Iden, 2009). Based on this, we define software quality as the ability of the ITIL software to ease, speed up, and improve the outcomes of the ITIL implementation project. We propose the following hypothesis: H5: There is a positive relationship between software quality and ITIL implementation progress.

3.2.6 Organizational resources Organizational resources are critical for ITIL implementation success. Several studies have documented the importance of the budget allocated to the ITIL project (Cater-Steel et al., 2009; Cater-Steel, Toleman, & Tan, 2006). Nah et al. (2001) found that not only were managers and project team members required for successful implementation of ERP systems, but so were other implementation partners, including IT specialists and external consultants. Firms with monetary resources and access to these partnerships are believed to be more successful. Based on this view, we define organizational resources in the context of ITIL implementation as the organization’s ability to provide monetary and human resources to support the ITIL project. We propose the following hypothesis: H6: There is a positive relationship between organizational resources and ITIL implementation progress. 3.3 Outcomes of ITIL implementation We include two types of ITIL implementation outcomes in organizations: benefits achieved and business process management practices. 3.3.1 Benefits achieved This construct reflects the degree to which the ITIL implementation project has created positive outcomes for the organization. The first reports on benefits from process reengineering emphasized more streamlined processes and thus rationalization and cost reduction (Davenport & Short, 1990; Hammer, 1990). More recent research has discussed a number of effects, such as reduced cycle time, reduced time to market, and increased productivity (Balaji et al., 2011; Küng & Hagen, 2007; Mansar & Reijers, 2007), meaning that the organization has been more effective (Kohlbacher, 2010) and has clearer organizational roles (Küng & Hagen, 2007), a more service-oriented business (Bask, Tinnilä,

& Rajahonka, 2010), and improved customer satisfaction (Balaji et al., 2011; Kohlbacher, 2010). Based on a review of prevailing research, Iden and Eikebrokk (2013) found that ITIL may lead to a variety of benefits, of which improved service orientation and customer satisfaction seem to be the most frequently mentioned. Findings also indicate that ITIL leads to improved structure and coordination within the IT function. This conclusion is supported by findings like improved, standardized, and documented processes and clarified roles and responsibilities. Based on this literature, we define benefits achieved the degree to which the ITIL implementation project has created positive outcomes for the organization. We hypothesize the following: H7: There is a positive relationship between ITIL implementation progress and benefits achieved.

3.3.2 Business process management practices Since ITIL is about delivering IT services through a set of standardized processes, business process management practices are a requirement (Marrone & Kolbe, 2010). Without process management, ITIL will not be a success beyond its initial implementation. Although the literature offers various models for business process management (Fisher, 2004; Hammer, 2007; Rosemann, de Bruin, & Power, 2006), a number of characteristics are representative (Iden, 2012). Based on this literature, we define business process management practices in the context of ITIL implementation as the executive, administrative, and supervisory control that ensures that the organization’s processes are compliant with business objectives. We advance the following hypothesis:

H8: There is a positive relationship between ITIL implementation progress and business process management practices. The variables and hypotheses introduced above are shown in Figure 1. Figure 1 represents the ITIL implementation project model (ITIL-IPM) that conceptualizes the antecedents and outcomes of the ITIL implementation project.

Figure 1. The ITIL implementation project model (ITIL-IPM) with hypotheses.

4

Methods

4.1 Exploratory interviews and sampling frame In parallel with the literature study, we conducted interviews with 13 ITIL experts: nine IT professionals who have actively been working with ITIL in their organizations and four IT consultants who have been helping organizations with ITIL implementation projects. Their experience with ITIL varies from 2.5 years to 15 years, with an average of seven years. The purpose of these interviews, which were recorded and transcribed, was threefold: a) to provide insight into the nature of the ITIL implementation project, and thus to validate our selection of

constructs for our conceptual model (Figure 1); b) to discuss the design and content of our subsequent survey; and c) to identify a target population for our survey. The results of the interviews were constructive and made significant contributions to our model and survey design. Regarding the sampling frame, the interviewees directed us to the IT Service Management Forum (itSMF), as almost all firms implementing ITIL are members of this organization.

4.2 Data collection Based on the recommendation of our interviewees, we contacted the four Nordic chapters of itSMF (Finland, Sweden, Denmark, and Norway) and received their permission to involve their members in the survey. Each chapter sent us a list of e-mails for the contact person for each member company. The itSMF board considered these identified contacts to be the right audience for this research. This gave us a total sample of 950 firms. We e-mailed each firm an invitation containing an introduction letter (in their native language and in English). In the letter, we explained the purpose of the survey, emphasizing that participation was anonymous, and thus motivated them to participate. The survey was active for three weeks in January and February 2012, and we conducted two reminders. The survey instrument was pretested on four ITIL experts to verify wording and consistency, which resulted in some minor changes (see Appendix for the survey instrument).

4.3 Operationalization and measurement To observe and empirically test the relationships between antecedents to and outcomes from ITIL implementation, we used multi-item scales to operationalize and measure the constructs of the research model. The operationalizations were adopted from the literature as much as possible, and thus were based on previous research. Table 1 provides an overview of the

constructs, their definitions and indicators, and response formats used in the survey instrument. Table 1. Constructs with definitions, indicators and response format. Antecedents Senior management involvement: commitment of senior management to the ITIL implementation effort Organizational commitment: org.’s willingness to exert considerable effort in the ITIL project Group efficacy: belief that the ITIL team can implement ITIL effectively Project management capability: ability of ITIL project to comply with budget, time, and expectations Software quality: ability of ITIL software to ease, speed up, and improve outcomes of the ITIL project Org. resources: the organization’s access to monetary and human resources to support the ITIL project ITIL implementation progress: the extent the org. has implemented ITIL processes ITIL service strategy ITIL service design

ITIL service transition

ITIL service

Indicators Response format: 1 (low validity) to 5 (high validity) SMI1—Senior management is strongly involved in the project SMI2—Senior management provides continuous feedback and guidance to the ITIL project SMI3— A member of senior management champions the ITIL project OC1—Sufficient resources have been allocated for the ITIL project OC2—Key people are staying on the ITIL project from start to finish to maintain continuity OC3—The IT staff strongly supports the ITIL project GE1—The project group has sufficient knowledge of ITIL GE2—The project group is using a formalized method for developing ITIL processes GE3—The project members are working hard to implement ITIL PMC1—The project has managed to stay within budget PMC2—The project has managed to stay within time limits PMC3—Management is satisfied with the ITIL implementation PMC4—IT staff is satisfied with the ITIL implementation SQ1—ITIL software makes it easier to align own needs with ITIL’s recommendations SQ2—ITIL software helps implement ITIL faster SQ3—ITIL software improves the results of the ITIL implementation SQ4—ITIL software helps perform the processes more efficiently SQ5—It is easy for staff to use the ITIL software OR1—Number of full-time IT professionals in the organization OR2—Budget allocated to the ITIL project

Response format: not started (0%), early stage, halfway (50%), advanced stage, or completed (100%)

ISS1—Financial management ISS2—Service portfolio management ISD1—Service catalog management ISD2—Service level management ISD3—Capacity management ISD4—Availability management ISD5—IT service continuity management ISD6—Information security management ISD7—Supplier management IST1—Transition planning and support IST2—Change management IST3—Service asset and configuration management IST4—Release and deployment management IST5—Service validation and testing IST6—Evaluation IST7—Knowledge management ISO1—Event management

operation

ITIL continual service improvement Outcomes Benefits achieved: the degree the ITIL project has created positive outcomes for the organization

Business process management practices: executive, administrative, and supervisory controls that secure business processes’ compliance with objectives

ISO2—Incident management ISO3—Request fulfillment ISO4—Problem management ISO5—Access management ISO6—Service desk CSI—The seven-step improvement process Response format: 1 (low validity) to 5 (high validity) BA1—IT operations have been improved BA2—The organization has been more effective BA3—The processes have been improved BA4—Roles and responsibilities have been clarified BA5—Service orientation has been improved BA6—Customer satisfaction has been improved BA7—IT costs have been reduced BPM1—Processes are well standardized BPM2—Processes are well documented BPM3—Process ownership is well established BPM4—Performance goals are set for the processes BPM5—Process performance is systematically being monitored BPM6—Processes are continuously being improved BPM7—The IT department is certified (ISO 9000 or ISO 20000)

In measuring the constructs, we include both formative and reflective indicators. The use of formative indicators reflects the nature of ITIL implementation projects in organizations where the organization typically selects some processes to implement based on its own preferences. The final measure of implementation progress will thus appear as a composite measure containing the selected processes as formative indicators. The organizations’ selection of ITIL processes will also influence which outcomes are relevant, thus creating a composite measure formed by the relevant types of outcomes as formative indicators. The indicators of the antecedents are all reflective and the construct measures are created based on the inter-correlations of their reflective indicators.

4.4 Analyses In validating the ITIL implementation project model (ITIL-IPM) with constructs and indicators, we analyze two types of validity related to the instrument and one type of validity for the research model. Content validity and construct validity are used to measure the quality

of the instrument in operationalizing the research model. To validate how well constructs were represented by their respective indicators, we used separate procedures for formative and reflective indicators as suggested by Götz et al. (2010), Gefen and Straub (2005), and Straub et al. (2004). In validating the research model we will test its predictive validity as its ability to predict ITIL implementation progress and outcomes. This also involves testing the hypotheses. As the method of analysis, we chose partial least square (PLS) in XLSTAT-PLSPM (http://www.xlstat.com) due to its ability to handle complex models and both formative and reflective indicators (Barroso, Carrion, & Roldán, 2010).

5. Results This section is organized as follows: first, we present the final sample with descriptive data. We then validate the instrument with separate procedures for formative and reflective indicators before we continue to the validation of our research model, the ITIL-IPM, with a test of the hypotheses. Of the 950 e-mails sent, we received 160 responses: 25 from Finland, 63 from Sweden, 24 from Denmark, and 48 from Norway, representing a response rate of 17%. The resulting sample represents a wide range of firms. Fifty-eight percent belong to the private sector and 42% to the public sector. Over 50% of the sample represents large companies with more than 2,000 employees. Twenty-five percent of the respondents work in firms with more than 300 IT professionals. Still, firms of various sizes and with varying numbers of IT personnel are well represented. The respondents represent different roles in their ITIL projects: project managers, project members, and process owners. Ninety-three percent of the respondents have ITIL

training certificates, most of them at the ITIL Foundation level2. About 70% of the respondents have at least four years of experience with ITIL. Overall, our sample represents a variety of firms and project characteristics, and we find that the respondents are well qualified to answer the survey. Table 2 shows the characteristics of the final sample with its respondents and their organizations. Table 2. Respondents and their organizations. # of respondents Denmark 24 Norway

48

Sweden Finland

63 25

Respondents’ roles Process 31% owner Project 38% manager Process 32% member

Business sector Public sector Private sector

# of employees 42%

< 100

9%

# of IT professionals < 50 34%

58%

100–499

22%

50–99

14%

500–2,000 >2,000

13% 55%

100–300 > 300

26% 25%

Descriptive data showed that most companies in our Nordic sample were not able to provide accurate information on the budget allocated to the ITIL project, and most companies had not yet adopted the ITIL processes of service strategy (ISS1 and ISS2) and continual service improvements (CSI). As a result, the indicator for budget could not be used as partial operationalization of organizational resources, and it was not possible to test hypotheses for processes involving ITIL service strategy and ITIL continual service improvements.

5.1 Instrument validation Content validity is present if the indicators capture the full domain and scope of their respective construct. As described in the previous section, the first step of content validity involved operationalizing the constructs with indicators from previously published research. The second step involved a pretest with a qualitative assessment through interviews and

2

In increasing order of sophistication, ITIL certification has these levels: ITIL Foundation, ITIL Immediate, ITIL Expert, and ITIL Master.

expert statements, as Götz et al. (2010) suggest. These procedures indicated that the ITIL implementation project model and the instrument were both relevant and had content validity. The next step of validation involves construct validity, which reflects whether the instrument has sufficient discriminant and convergent validity.

5.1.1 Constructs with reflective indicators In validating constructs with reflective indicators, we investigated their discriminant and convergent validity. At the construct level, discriminant validity is sufficient if the average variance extracted (AVE) is higher than the squared cross-loadings between constructs, and the convergent validity is sufficient if the coefficient alpha is above 0.7. Table 3 shows that all AVEs are higher than the squared cross-loadings and that all coefficient alphas are above 0.7, indicating sufficient discriminant and convergent validity at the construct level. Table 3. Discriminant and convergent validity for constructs with reflective indicators.

Senior mgmt. involvement Org. commitment Group efficacy Project mgmt. capability Software quality Org. resources Cronbach’s alpha

Senior mgmt. involvement 1 0.35 0.19 0.20 0.07 0.02 0.89

Org. commitment 0.35 1 0.24 0.27 0.07 0.01 0.71

Group efficacy 0.19 0.24 1 0.15 0.06 0.06 0.74

Project mgmt. capability 0.20 0.27 0.15 1 0.09 0.01 0.83

Softw. quality 0.07 0.07 0.06 0.09 1 0.01 0.87

Org. Resources 0.02 0.01 0.06 0.01 0.01 1 -

AVE 0.81 0.63 0.65 0.67 0.66 -

The reliability for each reflective indicator is expressed by its standardized loading. Table 4 shows these values and their significance. Three indicators (OC3: the IT staff strongly supports the ITIL project; PMC1: the project has managed to stay within budget; and SQ5: it is easy for our staff to use the ITIL software) were slightly below the recommended level of 0.707, indicating insufficient reliability at the indicator level. These indicators were removed

in the subsequent validation. Organizational resources and sector had only one indicator each, and these values could not be calculated. Table 4. Standardized loadings and significance for reflective indicators. Latent variable Senior management involvement Organizational commitment Group efficacy

ITIL software makes it easier to align needs ITIL software helps us implement ITIL faster ITIL software improves the results of ITIL implementation ITIL software helps us perform processes effect It is easy for our staff to use the ITIL software

0.702 0.860 0.868 0.835 0.859 0.804 0.867 0.806 0.703

Critical ratio 30.213 22.555 52.264 18.214 14.768 12.782 12.358 27.485 18.957 5.982 14.373 22.472 20.511 23.669 11.575 23.023 19.392 9.289

Approx. how many full-time IT professionals

1.00

-

Indicator Senior management is strongly involved in the project Senior management provides feedback and guidance A member of senior management champions the project Sufficient resources have been allocated Key people are staying on the ITIL project The IT staff strongly supports the ITIL project The project group has sufficient knowledge The project group is using a formalized method The project members are working hard to implement

The project has managed to stay within budget Project management The project has managed to stay within time capability Management is satisfied with the ITIL implementation The IT staff is satisfied with the ITIL implementation

Software quality

Organizational resources

Standardized loading 0.896 0.858 0.938 0.868 0.804 0.702 0.714 0.864 0.835

5.1.2 Constructs with formative indicators Theoretical and conceptual considerations and evaluations of content validity are the basis for developing the formative indicators, and indicators cannot be removed without the risk of altering their constructs. To validate the psychometric properties of the formative indicators, we start by inspecting the degree of multicollinearity between the indicators of each construct before we inspect their contribution to forming their latent constructs. Multicollinearity poses a serious threat to discriminant validity, since collinearity can influence multiple regression analyses where formative indicators lead to variance of their constructs (Diamantopoulos & Winklhofer, 2001; Petter, Straub, & Rai, 2007). Table 5 reflects the degree of multicollinearity through bivariate correlations between formative indicators of each construct. Two indicators of service design correlated above 0.8 (ISD3: capacity management, and ISD4: availability management), and four other formative

indicators showed bivariate correlations close to 0.8 (ISO2: Incident management; ISO6: Service desk; BA1: Our IT operations have been improved; and BA2: Our organization has been more effective). We kept these indicators for considerations of content validity, but chose PLS regression as the regression method for XLSTAT-PLSPM in the remaining validation because of its robustness in situations with multicollinearity between formative indicators of the same construct (Vinzi, Trinchera, & Amato, 2010). Table 5. Bivariate correlations between formative indicators. ITIL Service Design (ISD) ISD1 Service catalog management ISD2 Service level management ISD3 Capacity management ISD4 Availability management ISD5 IT service continuity management ISD6 Information security management ISD7 Supplier management ITIL Service Transition (IST) IST1 Transition planning and support IST2 Change management IST3 Service asset and configuration management IST4 Release and deployment management IST5 Service validation and testing IST6 Evaluation IST7 Knowledge management ITIL Service Operation (ISO) ISO1 Event management ISO2 Incident management ISO3 Request fulfillment ISO4 Problem management ISO5 Access management ISO6 Service desk Benefits Achieved (BA) BA1 Our IT operations have been improved BA2 Our organization has been more effective BA3 Our processes have been improved BA4 Roles and responsibilities have been clarified BA5 Service orientation has been improved BA6 Customer satisfaction has been improved BA7 Our IT costs have been reduced Business Process Mgmt. (BPM) practices BPM1 Our processes are well standardized BPM2 Our processes are well documented BPM3 Process ownership is well established BPM4 Performance goals are set for the processes BPM5 Process performance is being monitored BPM6 Our processes are continuously improved BPM7 IT department is certified (ISO9000/20000)

1

2

3

4

5

6

7

1.000 0.482 0.367 0.423 0.335 0.404 0.380

1.000 0.561 0.602 0.419 0.475 0.404

1.000 0.812 0.700 0.572 0.481

1.000 0.639 0.603 0.452

1.000 0.705 0.540

1.000 0.644

1.000

1.000 0.464 0.507 0.589 0.598 0.730 0.546

1.000 0.509 0.594 0.437 0.415 0.438

1.000 0.485 0.482 0.454 0.518

1.000 0.704 0.587 0.449

1.000 0.657 0.507

1.000 0.614

1.000

1.000 0.345 0.434 0.592 0.459 0.293

1.000 0.592 0.519 0.368 0.771

1.000 0.508 0.513 0.579

1.000 0.481 0.465

1.000 0.443

1.000

1.000 0.772 0.641 0.493 0.489 0.588 0.465

1.000 0.663 0.515 0.537 0.617 0.482

1.000 0.682 0.583 0.504 0.311

1.000 0.578 0.505 0.306

1.000 0.571 0.349

1.000 0.459

1.000

1.000 0.739 0.619 0.563 0.535 0.477 0.071

1.000 0.669 0.591 0.543 0.477 0.056

1.000 0.578 0.543 0.568 0.136

1.000 0.759 0.513 0.168

1.000 0.526 0.126

1.000 0.148

1.000

As the second step in validating formative indicators, we inspected their contributions to forming their latent variables. We followed the guidelines suggested by Cenfetelli and Basselier (2009) and Hair, Hult, Ringle, and Sarstedt (2014) and inspected the weights and loadings for insignificance and co-occurrences of both negative and positive weights for

indicators of each construct. Table 6 shows the weights, loadings, and significance for the formative indicators of each construct. Table 6. Weights, loadings, and significance for formative indicators. Latent variable

ITIL service design

ITIL service transition

ITIL service operation

Benefits achieved

Business process management practices

Indicators ISD1 ISD2 ISD3 ISD4 ISD5 ISD6 ISD7 IST1 IST2 IST3 IST4 IST5 IST6 IST7 ISO1 ISO2 ISO3 ISO4 ISO5 ISO6 BA1 BA2 BA3 BA4 BA5 BA6 BA7 BPM1 BPM2 BPM3 BPM4 BPM5 BPM6 BPM7

Weights

Critical ratio

Stand. loadings

Critical ratio

0.01 0.01 -0.01 0.02 0.01 -0.01 0.01 0.00 0.02 0.00 0.01 0.01 -0.01 0.01 0.00 0.04 0.01 0.01 0.00 -0.02 0.51 -0.12 0.44 0.25 -0.05 0.34 0.23 0.22 0.49 -0.03 -0.01 0.22 0.30 0.08

1.63 2.38 -1.76 3.50 1.15 -0.78 1.30 0.51 3.37 0.45 1.55 1.35 -0.79 2.07 -0.03 5.50 2.63 1.83 1.08 -3.49 2.20 -0.42 1.51 1.41 -0.24 1.79 1.12 1.56 3.51 -0.22 -0.07 1.45 2.40 1.32

0.67 0.79 0.66 0.85 0.67 0.63 0.66 0.67 0.86 0.66 0.82 0.74 0.61 0.71 0.50 0.87 0.80 0.68 0.53 0.56 0.86 0.77 0.83 0.75 0.63 0.78 0.61 0.82 0.88 0.73 0.73 0.76 0.76 0.22

6.76 10.89 5.44 12.03 5.89 6.69 5.67 7.52 14.18 7.68 12.01 10.22 5.81 8.72 4.67 14.66 9.26 8.94 4.49 6.14 14.27 8.28 8.94 8.64 5.70 9.76 4.14 13.35 17.38 8.20 10.09 10.81 11.51 1.81

Tables 5 and 6 show a co-occurrence of negative and positive weights for some indicators of the same construct, and a different valence of weights and loadings even though the intercorrelations between indicators are positive. This is difficult to interpret and complicates validation. Cenfetelli and Bassellier (2009, p. 696) argue that this situation can occur when the correlations between the indicators increase, even when collinearity is not a threat. They suggest suppression effects as a probable explanation, since suppression is caused by substantial overlap between predicting indicators. This overlap reduces the common variance

between the predicting indicator and the construct and can result in indicators with very low or even negative partial correlations or beta weights. If, however, indicator loadings are simultaneously substantial and significant for all formative indicators, as they are here, they reflect that the indicators have an absolute, partial contribution to forming the latent construct. This pattern of inconsistency between partial correlations, weights, and indicator loadings indicates that suppression is active, and we conclude that there is evidence for a suppression effect rather than that the formative indicators themselves are not valid. To further validate the indicators, we inspected each formative indicator’s contribution to forming its latent construct, as shown in Table 6 by the indicator weight and significance, expressed as the critical ratio. The table shows that service design has two processes (ISD2: service level management and ISD4: availability management) that contribute significantly to forming the latent construct. Of these, availability management has the greatest relative contribution. For service transition, two indicators are significant (IST2: change management and IST7: knowledge management), and of these, change management has the highest weight, showing that it contributes relatively more to forming the variance of service transition. For service operation, there are two significant indicators (ISO2: incident management and ISO3: request fulfillment), with incident management being the most important. Of the weights for benefits achieved, only the weight of BA1 (our IT operations have been improved) is significant, with the highest relative contribution. For business process management practices, two weights are significant, BPM2 (our processes are well documented) and BPM6 (our processes are continuously improved), with the first having the highest relative contribution. The relative contributions of the indicators in forming their constructs cannot be used to disregard any indicators. Rather, the significant loadings of the indicators make it more likely that the low weights observed for ITIL implementation progress reflect substantial overlap between indicators, and that most indicators do not contribute other than to influence the other

indicators of the construct. What can the reason be for this overlap? The obvious assumption is theoretical overlap between the indicators. Closer inspection of the indicators gives us no clear sign of such an overlap. ITIL implementation progress indicators reflect different processes and practices, described in detail in the five ITIL volumes. For the outcome of ITIL implementation, we can see a possible overlap between the indicators of benefits achieved, where BA2 (our organization has been more effective) is highly correlated with BA1 (our IT operations have been improved). The wording in the items can be interpreted as reflecting the same effect, thus explaining the negative weight for BA2. The same is possible for BA5 (service orientation has been improved), which also has a negative weight. One indicator of business process management practices, BPM7 (IT department is certified), seems less relevant due to its simultaneous lack of significant loading and weight. This indicator might be removed. Such discrepancies are to be expected in this early research.

5.2 Model validation In total, our research model, the ITIL-IPM, accounted for 20% and 46% of the variance in the dependent variables, respectively. The antecedents in the model accounted for 20-25% of the observed variance of ITIL implementation progress for the three groups of ITIL processes. For the outcomes of ITIL implementation, our research model captured 36% of the observed variance for benefits achieved and 46% for process management practices. Overall, the results show that the ITIL implementation project model with its constructs is theoretically relevant and able to account for a substantial part of the observed variance of both ITIL implementation progress and outcomes. Following Ringle et al.’s (2012) recommendation to use better statistical criteria to make a stronger case for a model’s predictive capability, we have included the Stone-Geisser criterion (Q2) that tests this degree of predictive relevance of the model. Values > 0 indicate predictive ability (Götz et al., 2010), which is the case for all

predicted dependent variables in our test of the ITIL-IPM. Table 7 provides an overview of the predictive ability of our research model and details of the hypotheses tests with path coefficients and significance levels. Since too few companies had implemented ITIL service strategy and ITIL continual service improvement, the related hypotheses (labeled a and e) could not be empirically tested. 5.2.1 Hypothesis test results: antecedents The test of the remaining hypotheses revealed the following: Hypothesis H1 states that senior management involvement is positively related to ITIL implementation progress, which was confirmed for H1b) Service design (0.11; p