Capacity Management Tutorial

2.1 Capacity Management

Welcome to learning unit 2 on Capacity Management process. Let’s begin with the agenda.

2.2 Capacity Management

Here we will discuss about the purposes, objectives, scope, activities, key concepts, triggers, inputs & outputs, challenges, risks, CSFs and KPIs of Capacity Management process. In the next slide we will look at the purpose and objective of capacity management.

2.3 Capacity Management - Purpose and Objectives

The purpose of the capacity management process is to ensure that the capacity of IT services and the IT infrastructure meets the agreed capacity and performance-related requirements in a cost-effective and timely manner. Capacity management is concerned with meeting both the current and future capacity and performance needs of the business. Now we will discuss about the objectives of capacity management process The first objective would be to produce and maintain an appropriate and up-to-date Capacity Plan, which reflects the current and future needs of the business Capacity Management do provide advice and guidance to all other areas of the business and IT on all capacity- and performance related issues It also ensures that service performance achievements meet or exceed all of their agreed performance targets, by managing the performance and capacity of both services and resources Capacity Management do assist with the diagnosis and resolution of performance- and capacity-related incidents and problems Assessing the impact of all changes on the Capacity Plan, and the performance and capacity of all services and resources is also the objective of Capacity management Lastly it ensures that proactive measures to improve the performance of services are implemented wherever it is cost-justifiable to do so. Let us proceed to learn about the scope of the Capacity Management.

2.4 Capacity Management - Scope

The Capacity Management process should be the focal point for all IT performance and capacity issues. Technology management functions such as Network Support, Server Support or Operation Management may carry out the bulk of the day-to-day operational duties, but will provide performance information to the Capacity Management process. The process should encompass all areas of technology, both hardware and software, for all IT technology components and environments. Capacity Management should also consider space planning and environmental systems capacity as well as certain aspects of human resources, but only where a lack of human resources could result in a breach of SLA or OLA targets, a delay in the end-to-end performance or service response time, or an inability to meet future commitments and plans (e.g. overnight data backups not completed in time because no operators were present to load tapes). In general, human resource management is a line management responsibility, though the staffing of a Service Desk should use identical Capacity Management techniques. The scheduling of human resources, staffing levels, skill levels and capability levels should therefore be included within the scope of Capacity Management. The driving force for Capacity Management should be the business requirements of the organization and to plan the resources needed to provide service levels in line with SLAs and OLAs. Capacity Management needs to understand the total IT and business environments, including: • Monitoring patterns of business activity and service level plans through performance, utilization and throughput of IT services and the supporting infrastructure, environmental, data and applications components and the production of regular and ad hoc reports on service and component capacity and performance • Undertaking tuning activities to make the most efficient use of existing IT resources • Understanding the agreed current and future demands being made by the customer for IT resources, and producing forecasts for future requirements • Influencing demand management, perhaps in conjunction with Financial Management • Producing a Capacity Plan that enables the service provider to continue to provide services of the quality defined in SLAs and that covers a sufficient planning timeframe to meet future service levels required as defined in the Service Portfolio and SLRs • Assistance with the identification and resolution of any incidents and problems associated with service or component performance • The proactive improvement of service or component performance wherever it is cost-justifiable and meets the needs of the business. In the next slide we will look at Capacity Management as value to business.

2.5 Capacity Management - Value to the Business

Capacity Management does introduce lot of value to the entire service lifecycle starting from the designing phase till the operation phase. A well-executed capacity management process will benefit the business by: • Improving the performance and availability of IT services the business needs by helping to reduce capacity- and performance-related incidents and problems • Ensuring required capacity and performance are provided in the most cost-effective manner • Contributing to improved customer satisfaction and user productivity by ensuring that all capacity- and performance- related service levels are met • Supporting the efficient and effective design and transition of new or changed services through proactive capacity management activities • Improving the reliability of capacity-related budgeting through the use of a forward-looking capacity plan based on a sound understanding of business needs and plans • Improving the ability of the business to follow an environmentally responsible strategy by using green technologies and techniques in capacity management. Let us get familiarized with the policies of this process in the next slide.

2.6 Capacity Management - Policies

The driving force for capacity management should be the business requirements of the organization and to plan the resources needed to provide service levels in line with SLAs and OLAs. Policies should be established defining the required points of interface between the capacity management and SLM processes to ensure this connection to business requirements is appropriately established and maintained. Capacity management needs to understand the total IT and business environments, including: • The current business operation and its requirements, through the patterns of business activity (as provided by the demand management process) • The future business plans and requirements via the service portfolio • The service targets and the current IT service operation though SLAs and standard operating procedures • All areas of IT technology and its capacity and performance, including infrastructure, data, environment and applications. Understanding all of this will enable capacity management to ensure that all the current and future capacity and performance aspects of services are provided cost-effectively. It should be the service provider’s policy that capacity management processes and planning must be involved in all stages of the service lifecycle from strategy and design, through transition and operation to improvement. From a strategic perspective, the service portfolio contains the IT resources and capabilities. The advent of service oriented architecture, virtualization and the use of value networks in IT service provision are important factors in the management of capacity. The appropriate capacity and performance should be designed into services and components from the initial design stages. This will ensure not only that the performance of any new or changed service meets its expected targets, but also that all existing services continue to meet all of their targets. This is the basis of stable service provision. We will look at the principles of Capacity management in the next slide.

2.7 Capacity Management - Principles

Managing the capacity of large distributed IT infrastructures is a complex and demanding task, especially when the IT capacity and the financial investment required is ever-increasing. Therefore it makes even more sense to plan for growth. While the cost of the upgrade to an individual component in a distributed environment is usually less than the upgrade to a component in a mainframe environment, there are often many more components in the distributed environment that need to be upgraded. Also, there could now be economies of scale because the cost per individual component could be reduced when many components need to be purchased. Capacity management should have input to the service portfolio and procurement process to ensure that the best deals with suppliers are negotiated. Capacity management provides the necessary information on current and planned resource utilization of individual components to enable organizations to decide, with confidence: • Which components to upgrade (i.e. more memory, faster storage devices, faster processors, greater bandwidth) • When to upgrade – ideally this is not too early, resulting in expensive over-capacity, nor too late, failing to take advantage of advances in new technology, resulting in bottle-necks, inconsistent performance and, ultimately, customer dissatisfaction and lost business opportunities • How much the upgrade will cost – the forecasting and planning elements of capacity management feed into budgetary lifecycles, ensuring planned investment.

2.8 Capacity Management - Process Activities

As we know every process defines some of the activities that needs to be done. Let’s now discuss the activities defined for capacity management. Some activities in the Capacity Management process are reactive, while others are proactive. The proactive activities of Capacity Management should include: Preventing performance issues by taking necessary actions before they occur, producing trends of the current component utilization and estimating future requirements, using trends and thresholds for planning upgrades and enhancements. Proactive Activities also include modelling and trending the predicted changes in IT services, and identifying the changes that need to be made to services and components of the IT infrastructure and applications to ensure that appropriate resource is available and ensures that upgrades are budgeted, planned and implemented before SLAs and service targets are breached or performance issues occur. Other proactive activities include actively seeking to improve service performance wherever it is cost-justifiable and Tuning and optimizing the performance of services and components. The reactive activities of Capacity Management should include: • Monitoring, measuring, reporting and reviewing the current performance of both services and components • Responding to all capacity-related ‘threshold’ events and instigating corrective action • Reacting to and assisting with specific performance issues. For example, the Service Desk may refer incidents of poor performance to Technology Management, which will employ Capacity Management techniques to resolve them. In the next slide we will look at the sub processes of capacity management.

2.9 Capacity Management - Sub-processes

In this slide we will learn about the sub processes of capacity management in detail. Business Capacity Management This sub-process translates business needs and plans into requirements for service and IT infrastructure, ensuring that the future business requirements for IT services are quantified, designed, planned and implemented in a timely fashion. This can be achieved by using the existing data on the current resource utilization by the various services and resources to trend, forecast, model or predict future requirements. These future requirements come from the Service Strategy and Service Portfolio detailing new processes and service requirements, changes, improvements, and also the growth in the existing services. Service Capacity Management The focus of this sub-process is the management, control and prediction of the end-to-end performance and capacity of the live, operational IT services usage and workloads. It ensures that the performance of all services, as detailed in service targets within SLAs and SLRs, is monitored and measured, and that the collected data is recorded, analysed and reported. Wherever necessary, proactive and reactive action should be instigated, to ensure that the performance of all services meets their agreed business targets. This is performed by staff with knowledge of all the areas of technology used in the delivery of end-to-end service, and often involves seeking advice from the specialists involved in Component Capacity Management. Wherever possible, automated thresholds should be used to manage all operational services, to ensure that situations where service targets are breached or threatened are rapidly identified and cost-effective actions to reduce or avoid their potential impact implemented. Component Capacity Management The focus in this sub-process is the management, control and prediction of the performance, utilization and capacity of individual IT technology components. It ensures that all components within the IT infrastructure that have finite resource are monitored and measured, and that the collected data is recorded, analysed and reported. Again, wherever possible, automated thresholds should be implemented to manage all components, to ensure that situations where service targets are breached or threatened by component usage or performance are rapidly identified, and cost-effective actions to reduce or avoid their potential impact are implemented. Let us proceed to learn about the supporting activities of the sub-processes with help of a diagram in the next slide.

2.10 Capacity Management - Underpinning Iterative Activities

Capacity Management – Underpinning Iterative Activities The activities described in this picture are necessary to support the sub-processes of Capacity Management, and these activities can be done both reactively or proactively, or even pre-emptively. The major difference between the sub-processes is in the data that is being monitored and collected, and the perspective from which it is analysed. For example, the level of utilization of individual components in the infrastructure – such as processors, disks, and network links – is of interest in Component Capacity Management, while the transaction throughput rates and response times are of interest in Service Capacity Management. For Business Capacity Management, the transaction throughput rates for the online service need to be translated into business volumes – for example, in terms of sales invoices raised or orders taken. The biggest challenge facing Capacity Management is to understand the relationship between the demands and requirements of the business and the business workload, and to be able to translate these in terms of the impact and effect of these on the service and resource workloads and utilizations, so that appropriate thresholds can be set at each level. In the next slide we will look at threshold management and control.

2.11 Capacity Management - Thresholds Management and Control

When we are discussing the activities of capacity management we should know that threshold management and control is one of the major activities of capacity management. Event management does the monitoring part of the threshold but managing them and having a control of the entire threshold management is something capacity management does on an operation perspective. The management and control of service and component thresholds is fundamental to the effective delivery of services to meet their agreed service levels. It ensures that all service and component thresholds are maintained at the appropriate levels and are continuously, automatically monitored, and alerts and warnings generated when breaches occur. Whenever monitored thresholds are breached or threatened, then alarms are raised and breaches, warnings and exception reports are produced. Analysis of the situation should then be completed and remedial action taken whenever justified, ensuring that the situation does not recur. The same data items can be used to identify when SLAs are breached or likely to be breached or when component performance degrades or is likely to be degraded. By setting thresholds below or above the actual targets, action can be taken and a breach of the SLA targets avoided. Threshold monitoring should not only alarm on exceeding a threshold, but should also monitor the rate of change and predict when the threshold will be reached. In the next slide we will learn about the relationship between capacity and demand management.

2.12 Capacity Management - Demand Management

In this slide we will discuss about the relationship capacity and demand management processes share in the service lifecycle. We call them coupled as they do interact a lot among themselves as demand and supply needs to be in go in a synchronized way for a seamless delivery. The prime objective of Demand Management is to influence user and customer demand for IT services and manage the impact on IT resources. This activity can be carried out as a short-term requirement because there is insufficient current capacity to support the work being run, or, as a deliberate policy of IT management, to limit the required capacity in the long term. Short-term Demand Management may occur when there has been a partial failure of a critical resource in the IT infrastructure. For example, if there has been a failure of a processor within a multi-processor server, it may not be possible to run the full range of services. However, a limited subset of the services could be run. Capacity Management should be aware of the business priority of each of the services, know the resource requirements of each service (in this case, the amount of processor power required to run the service) and then be able to identify which services can be run while there is a limited amount of processor power available. Long-term Demand Management may be required when it is difficult to cost-justify an expensive upgrade. Next, we will learn about modelling and trending in Capacity management.

2.13 Capacity Management - Modeling and Trending

Here comes the next activity. Like others this also brings a lot of importance in the service lifecycle A prime objective of Capacity Management is to predict the behaviour of IT services under a given volume and variety of work. Modelling is an activity that can be used to beneficial effect in any of the sub-processes of Capacity Management. The different types of modelling range from making estimates based on experience and current resource utilization information, to pilot studies, prototypes and full scale benchmarks Baselining The first stage in modelling is to create a baseline model that reflects accurately the performance that is being achieved. When this baseline model has been created, predictive modelling can be done Trend analysis Trend analysis can be done on the resource utilization and service performance information that has been collected by the Capacity Management process. The data can be analysed in a spreadsheet, and the graphical and trending and forecasting facilities used to show the utilization of a particular resource over a previous period of time, and how it can be expected to change in the future. Analytical modelling Analytical models are representations of the behaviour of computer systems using mathematical techniques, e.g. multi-class network queuing theory. Typically, a model is built using a software package on a PC, by specifying within the package the components and structure of the configuration that needs to be modelled, and the utilization of the components Simulation modelling Simulation involves the modelling of discrete events, e.g. transaction arrival rates, against a given hardware configuration. This type of modelling can be very accurate in sizing new applications or predicting the effects of changes on existing applications, but can also be very time-consuming and therefore costly. Let us now proceed to learn about application sizing in the next slide.

2.14 Capacity Management - Application Sizing

Application sizing has a finite lifespan. It is initiated at the design stage for a new service, or when there is a major change to an existing service, and is completed when the application is accepted into the live operational environment. Sizing activities should include all areas of technology related to the applications, and not just the applications themselves. This should include the infrastructure, environment and data, and will often use modelling and trending techniques. The primary objective of application sizing is to estimate the resource requirements to support a proposed change to an existing service or the implementation of a new service, to ensure that it meets its required service levels. To achieve this, application sizing has to be an integral part of the Service Lifecycle. During the initial requirements and design, the required service levels must be specified in an SLR. This enables the Service Design and development to employ the pertinent technologies and products to achieve a design that meets the desired levels of service. It is much easier and less expensive to achieve the required service levels if Service Design considers the required service levels at the very beginning of the Service Lifecycle, rather than at some later stage. Other considerations in application sizing are the resilience aspects that it may be necessary to build into the design of new services. Capacity Management is able to provide advice and guidance to the Availability Management process on the resources required to provide the required level of performance and resilience. The sizing of the application should be refined as the design and development process progresses. The use of modelling can be used within the application sizing process. Let us look at the triggers of capacity management in the next slide.

2.15 Exercise - 1

Here is a scenario: The IT Head of XYZ Corporation has recently returned from ITSM conference in London. A speaker in the conference gave a presentation on Capacity Management. The IT Head believes that this is exactly what the IT department needs to support business. However, he is concerned about selling the idea to the rest of the board, due to the potential cost. The IT Head has tasked you to do a presentation for the XYZ Board of Directors covering the following: 1. Explain the concept of Capacity Management to the board. 2. Justify why XYZ needs to adopt Capacity Management. Refer to XYZ’s vision in the case study and work on the above questions.

2.16 Capacity Management - Triggers

To initiate a process you need a trigger. Unless and until a process is being triggered it won’t carry the activities defined. There are many triggers that will initiate Capacity Management activities. These include: • Service breaches, capacity or performance events and alerts, including threshold events • Exception reports • Periodic revision of current capacity and performance and the review of forecasts, reports and plans • New and changed services requiring additional capacity • Periodic trending and modelling • Review and revision of business and IT plans and strategies • Review and revision of designs and strategies • Review and revision of SLAs, OLAs, contracts or any other agreements. Let us now proceed to learn about the inputs and outputs of this process in the next slide.

2.17 Capacity Management - Inputs and Outputs

In the last slide we have understood the triggers for the capacity management process.As a characteristic every process has inputs as well as outputs. Here in this slide we will discuss about the inputs and outputs for capacity management process Inputs for capacity management can be Business Information, Service and IT Information, Component performance and capacity performance, Service Performance issues, Service Information, Financial Information, Change Information, Performance Information, CMS and Workload Information Whereas the outputs would be Capacity Management Information System(CMIS), Capacity Plan, Service Performance Information and Reports, Workload Analysis and Reports, Adhoc capacity and performance reports, Forecasts and predictive reports , Thresholds, alerts and events, Events that indicate an incident has occurred and Event that indicated breaching of SLAs Let us now look at the interfaces.

2.18 Capacity Management - Interfaces

Interfaces show how the process interacts with other processes. • To start with let’s understand how it interacts with availability management. Availability management process works with capacity management to determine the resources needed to ensure the required availability of services and components. • Next would be Service level management process which provides assistance with the determining capacity targets and the investigation and resolution of service and component capacity-related breaches. • ITSCM Capacity management assists with the assessment of business impact and risk and determining the capacity needed to support risk reduction measures and recovery options. • Capacity management provides assistance with the resolution and subsequent justification and correction of capacity-related incidents and problems and that how it interfaces with both incident and problem management. • The most important interface for capacity management would be Demand management. Demand Management anticipates the demand for services based on user profiles and patterns of business activity, and identifying the means to influence that demand, this process provides strategic decision-making and critical related data on which capacity management can act. In the next slide we will talk about Information management system.

2.19 Capacity Management - Information Management

Often capacity data is stored in technology-specific tools and databases, and full value of the data, the information and its analysis is not obtained. The true value of the data can only be obtained when the data is combined into a single set of integrated, information repositories or set of databases. The Capacity Management Information System (CMIS) is the cornerstone of a successful Capacity Management process. Information contained within the CMIS is stored and analysed by all the sub-processes of Capacity Management because it is a repository that holds a number of different types of data, including business, service, resource or utilization and financial data, from all areas of technology. The aim of the CMIS is to provide the relevant capacity and performance information to produce reports and support the Capacity Management process. These reports provide valuable information to many IT and Service Management processes. These reports should include the following. Component-based reports For each component there should be a team of technical staff responsible for its control and management. Reports must be produced to illustrate how components are performing and how much of their maximum capacity is being used. Service-based reports Reports and information must also be produced to illustrate how the service and its constituent components are performing with respect to their overall service targets and constraints. These reports will provide the basis of SLM and customer service reports. Exception reports Reports that show management and technical staff when the capacity and performance of a particular component or service becomes unacceptable are also a required from analysis of capacity data. Thresholds can be set for any component, service or measurement within the CMIS. Predictive and forecast reports To ensure the IT service provider continues to provide the required service levels, the Capacity Management process must predict future workloads and growth. To do this, future component and service capacity and performance must be forecast. This can be done in a variety of ways, depending on the techniques and the technology used. Changes to workloads by the development and implementation of new functionality and services must be considered alongside growth in the current functionality and services driven by business growth. Let us now look at the challenges and risks faced by Capacity Management.

2.20 Capacity Management - Challenges and Risks

One of the major challenges facing Capacity Management is persuading the business to provide information on its strategic business plans, to enable the IT service provider organization to provide effective Business Continuity Management (BCM). This is particularly true in outsourced situations where there may be commercial or confidential reasons why this data cannot be shared. Even if the data on the strategic business plan is available, there may be issues with regard to the quality or accuracy of the data contained within the business plans with regard to BCM. Another challenge is the combination of all of the CCM data into an integrated set of information that can be analysed in a consistent manner to provide details of the usage of all components of the services. This is particularly challenging when the information from the different technologies is provided by different tools in differing formats. Often the quality of component information on the performance of the technology is variable in both its quality and accuracy. Some of the major risks associated with capacity management include: • A lack of commitment from the business to the capacity management process • A lack of appropriate information from the business on future plans and strategies • A lack of senior management commitment or a lack of resources and/or budget for the capacity management process • Service capacity management and component capacity management performed in isolation because business capacity management is difficult, or there is a lack of appropriate and accurate business information • The processes become too bureaucratic or manually intensive • The processes focus too much on the technology (component capacity management) and not enough on the services (service capacity management) and the business (business capacity management) • The reports and information provided are too bulky or too technical and do not give the information required or appropriate to the customers and the business. In the next slide we will discuss about the CSFs and KPI’s of capacity management.

2.21 Capacity Management - CSFs and KPIs

Each organization should identify appropriate CSFs based on its objectives for the process. Each sample CSF is followed by a small number of typical KPIs that support the CSF. These KPIs should not be adopted without careful consideration. Each organization should develop KPIs that are appropriate for its level of maturity, its CSFs and its particular circumstances. Achievement against KPIs should be monitored and used to identify opportunities for improvement, which should be logged in the CSI register for evaluation and possible implementation. Lets take the first CSF which has been identified as Accurate Business Forecasts. Corresponding KPIs would be Production of workload forecasts on time, Percentage accuracy of forecasts of business trends, Timely incorporation of business plans into the Capacity Plan and Reduction in the number of variances from the business plans and Capacity Plans. Next CSF is Knowledge of current and future technologies. Corresponding KPIs would be Increased ability to monitor performance and throughput of all services and components, Timely justification and implementation of new technology in line with business requirements and Reduction in the use of old technology, causing breached SLAs due to problems with support or performance. Lets take one more CSF. CSF has been identified as Ability to plan and implement the appropriate IT capacity to match business needs. Corresponding KPIs would be Percentage reduction in the number of incidents due to poor performance, Percentage reduction in lost business due to inadequate capacity, All new services implemented match Service Level Requirements (SLRs) and Increased percentage of recommendations made by Capacity Management are acted upon. With this we have come to the end of Capacity Management, let’s us summarize in the next slide.

2.22 Capacity Management - Summary

In this learning unit we discussed about the purpose, objectives, scope and value to business of Capacity management. We also looked at capacity management’s interfaces with different processes and its risks and challenges. Lastly we discussed about the Critical success factors and its relevant KPIs. Next is the quiz section where you need to attempt all questions before moving to the next learning unit.

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  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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