Tag Archives: ITIL

What is SSAE-16: 2 Report Types & Critics


Logo of the United States Government Accountab...
Logo of the United States Government Accountability Office. (Photo credit: Wikipedia)

Hosting Company Auditing and Certification — Part 2 of 3

Along with Superb Internet’s staff certification for ITIL (covered in Part 1 of this series) and our ISO 9001:2008 certification and registration (Part 3), we are also SSAE-16 Audited.

“Oh, fiddlesticks, that’s a government-infiltration agenda if I ever saw one.”

Man – you again? OK, well, let me explain it. Just, give me a chance here. SSAE-16 (Statement on Standards of Attestation Engagements, #16) was created by the American Institute of Certified Public Accountants (AICPA) as a system of cut-and-dry standards which a business must follow with its finances.

“Must follow. Must follow the lemmings down to Mongoose Hollow.”

Mongoose Hollow … huh, that must be your euphemism for the IRS? Anywho, attestation engagements are worth a quick look. Let’s turn to the U.S. Government Accountability Office (GAO), a governmental agency run by the Comptroller General that “works for congress” (though with its own independent sets of controls) and “investigates how the federal government spends taxpayer dollars.”  According to its Auditing Standard 2.07, attestation engagements “concern examining, reviewing, or performing agreed-upon procedures on a subject matter or an assertion about a subject matter and reporting on the results.”

“Yeah boy!”

Um … I’ll move on. SSAE is extraordinarily difficult to understand – not because its parameters are difficult but because the only explanation of SSAE-16 on the website for the AICPA is at this URL: http://www.aicpa.org/Research/Standards/AuditAttest/Pages/SSAE.aspx.

“You and your capital letters and your big ideas, typing it all in, like the Central Insanity Agency ain’t watching ya.”

Sir, I’m just explaining an accounting method. So … the information from the organization that created the document itself has all information about it BURIED within its website. Additionally, the extent of the information is a massive PDF which includes the language for the standard itself and this explanation describing it: “Reporting on Controls at a Service Organization / This section addresses examination engagements undertaken by a service auditor to report on controls at organizations that provide services to user entities when those controls are likely to be relevant to user entities’ internal control over financial reporting.”

“Read that fourteen times, and it will finally make sense. Once it makes sense, that’s when you know they’ve got ya.”

Well, all right they have me. You win, buddy. Actually it’s much simpler than it sounds. Let’s look below on how to understand SSAE-16 so you know why it means we’re credible alongside our other certifications. We will look at the two types of certifications/reports you can receive. Finally, we will look at critiques to get a broader perspective on the topic – and how it differs from other financial audits.

SSAE-16 in Action

When you get SSAE-16 audited, a third party accounting company makes an assessment of the financial controls your business has in place. It then creates a report and opinion stating the findings of its investigation. The results of the audit make it clear whether or not the business has appropriate, baseline checks and balances in place within its service model so that users can breathe easy.

“I will never allow any man to investigate my machines. It’s unwholesome. Bunch of fellas looking at each other’s numbers.”

All right, that’s uncalled for. And who said it was a man, anyway? Please stop making assumptions. There are two kinds of audit reports. One, also referred to as a Type I audit, is entitled “Report on Controls Placed in Operation.” The other, the Type II version, is called “Report on Controls Placed in Operation and Tests of Operating Effectiveness.” Essentially the first report focuses on the types of controls that are likely operating during a certain window, aka “period of review” – but it does not completely verify that the controls were in placement at that time. The second provides that additional verification that the controls were in place.

“No one will ever either view or review me. That’s why I stay in my cellar with the squirrel artillery, waiting for everyone to leave town.”

Hm. Thanks for the input.

Do You Need SSAE-16 or Not?

The good news: this type of auditing is not legally required for any company that distributes a service. However, it’s possible it will be requested by an outside party – or may even be demanded by their own requirements – or by someone auditing a company that is using your service. Plus, it means it’s less likely that an outside auditor will need to audit your system in order to gauge risk because they will have a standardized assessment of your controls based on the SSAE Type II report.

“Type I, Type II – sounds like they’ve found yet another way to get diabetes into us: through our accountants.”

I don’t think this has anything to do with diabetes, sir. Like many organizations, the reason we choose to have this type of auditing performed is threefold:

  1. It gives us a chance to prove that, alongside our other certifications, we meet standards of legitimacy established by independent third parties.
  2. It gives us access to clients who require this type of auditing and otherwise may not be able to work with us.
  3. It provides another professional perspective on the accounting principles we have established internally.

“That sounds wonderful. Give the government all your business’s numbers, the keys to your house, and your eldest daughter.”\

Sir, that’s out of line. I’m just trying to go over some standards here. Please. A data center that is only used for internal business purposes will not necessarily need to have this type of auditing performed. However, those such as ours that provide a service can benefit from SSAE certification.

As Jeff Clark points out, SSAE-16, rather than being about your core business of the service itself – delivery of services to users –is centrally concerned with the financial needs of your clients. Keep that in mind. It’s why something such as ITIL, which has to do with the quality of service, is so important.

SSAE-16 Case Study: Acquia

Josette Rigsby looked specifically at one company, Acquia, a provider of products and services for use with Drupal (the open-source CMS), to get a sense of whether SSAE auditing can be helpful. She asked how the certification might be useful to vendors seeking to establish credibility.

“I sold cotton candy once at the state fair: no certification, no problem. Cash only. No receipts.”

Sir, we are talking about business services here, not cotton candy. A company such as Acquia, which has a cloud-based model, is able to quell fears among clients related to “security, lack of open standards to prevent platform/vendor lock-in and loosely defined service level agreements.” SSAE-16, however, does not cover all the bases to ensure business legitimacy. Additionally to SSAE, Acquia and other cloud service providers (CSPs) adopt the standards of organization such as OpenStack or CloudStack so that their system has been reviewed by external independent parties coming from numerous angles. Our business, similarly, has the ITIL and ISO certifications as well.

“My show pig Julie once won a certification at the Clarksburg Leaf & Stick Festival. She keeps it on her end table. She’s very proud of it.”

Excellent, tell her I’m rooting for her, and I hope she’ll root for me too.

Beyond SSAE: Why Multiple Certifications Matter

The controls reviewed by SSAE relate to a broad spectrum of business practices, including data backup and security, network maintenance and security, and customer support. However, it is not enough. Let’s see what two critics of the auditing procedure have to say about why the certification is only one piece of establishing legitimacy.

  1. Baseline Standards – As Jeff Clark notes, SSAE-16 auditing does not grade on a scale. It’s a “yes or no” set of parameters. Passing the auditing inspection simply means that a company has a reasonable set of baseline standards as established by the AICPA.
  2. Fuzzy Terminology – Josette Rigsby points out that a business can state during a review that its controls are fine regardless of the auditing process’s findings. If this occurs, the business can state that it has been SSAE audited even though it did not actually pass.

“I just passed gas, does that count? Where’s my certificate, buckaroo?”

Ah come on. We’re in a small room – have some respect. A loophole like that described by Ms. Rigsby means that additional certifications are essential to give clients and partners a better sense of your professional legitimacy. As far as Superb goes, our staff is ITIL Certified (a certification established initially by the United Kingdom government to provide IT standards so that they weren’t only developing independently, in some cases haphazardly, within businesses) as well as ISO 9001:2008 certified and registered.

“Wow, that last one has eight numbers. It must be important. Seven numbers, I would have said, ‘How about one more? Then you’ll have me impressed.’”

I think we’ve covered the fact that you don’t like or appreciate our certifications, sir. Here, have some chamomile tea.

How SSAE-16 Differs from Other Financial Auditing

If you get an audit, you’re typically just looking at your financial figures. SSAE focuses explicitly on how those figures relate to your services – how the services themselves are controlled and guided, and how the services interact with your financial system. An audit can give a sense that your financial system and finances themselves are efficient and sound, but that’s not your clients’ concern. The client cares that you have assurance specifically to your services, so they know that their information and processes are safe within your set of controls.

“I feel very safe. Hm. This tea is delicious. Do you have any honey? I don’t want to have to shake it out of the beehive again, that’s painful.”

Here you go. Drink up.

Summary & Conclusion

Though there are of course critics of SSAE-16, and though some of their concerns are valid, these types of certifications are incredibly important to letting our users know we are transparent about our internal policies. The standards we have adopted, and the analyses and examinations we undergo, allow us to simply and concisely express to our customers that

  1. we meet major industry standards; and
  2. we have undergone the scrutiny of multiple outside organizations to prove it.

by Kent Roberts and Richard Norwood

What is ITIL – 5 Goals & 6 Reasons


English: An ITIL Foundation Certificate pin us...
English: An ITIL Foundation Certificate pin used to attatch on a shirt. The diamond is the ITIL logo, there are three levels: Green: Foundation certificate Blue: Practitioner’s certificate Red: Manager’s certificate (Photo credit: Wikipedia)

Hosting Company Auditing and Certification — Part 1 of 3

At Superb, we have a staff that is certified in ITIL.

“So, what? What is it? Tell me what it is!”

Just hold on, hold on, whoever you are. Let me get through the introduction. ITIL stands for Information Technology Infrastructure Library http://www.itil-officialsite.com/WhatisITIL.aspx. It’s used by organizations as large and different as NASA and Disney. Providers who help implement accreditation and consulting for ITIL include IBM and Hewlett Packard.

“Whoop-de-do.”

Sir, please, no heckling. All right, let’s get to it. The man we’ve all been waiting for – well, not really a man, or a woman, but a thing – the Information Technology Infrastructure Library in all its glory. This is gonna be fun.

History of ITIL

“Hey, hey you, with the book-smarts and the highfalutin ideas. You ain’t from around here, are ya? I can tell by all the words and pages and … dag-nabbit, that’s a Europe accent ain’t it? Ooh-ee, I was wondering what was smellin’ so bad around here.”

Calm down sir, and behave yourself. Yes, it’s true: ITIL originated in the United Kingdom. The Central Computer Telecommunications Agency (CCTA), a department of the UK government, came up with a set of standards in the 1980s. These standards were not considered a set of rules but recommendations.

The original reasoning behind ITIL, then, was to offer companies a way to be held accountable and to help improvement IT management for the benefit of businesses, partners, and clients. It offered a freely given set of best management practices for IT so that those practices weren’t just growing independently within private businesses – a central knowledge base and certification process seemed desirable. The end goal was that service was improved as the IT management system was improved.

“Ohhh … I get it. Some kind of government takeover of our minds. I knew it! I knew it! Anytime I see a bunch of capital letters in a row, I go get ready for a shotgun wedding, because I know there are some squirrely men in town.”

Now that’s just not fair, sir. The IT Infrastructure Library was initially issued as a series of books. Each one focused on a different “best practice” area. The basis of the books may have been W. Edwards Deming (no, not the inventor of the modern toilet brush – that’s William C. Schopp … completely different names really), whose plan-do-check-act cycle is a version of organizational modeling for businesses – or any organization or person, really – to use to optimize their systems (discussed below).

ITIL Version 3, released in 2011, is now the standard for any type of ITIL accreditation. ITIL covers a broad range of IT topics, but generally speaking, the service-oriented knowledge is what’s of most interest to businesses, as opposed to application and management focused materials that have also been developed within the ITIL model.

It’s also important to note that ITIL itself does not give out accreditations. All it is is a government-developed system of recommendations that you can either follow or not – up to you. You can, however, become ITIL certified by any of a number of examination organizations that ARE vetted by the HM government via its partner the APM Group.

“HM, as in ‘Her Majesty’?? What, now I’m bowing down to the queen? Can I at least be knighted while I’m on my knees, like Dubya’s dad was?”

Well, uh … you might want to read this article. Also, I don’t think you’re qualified to be knighted, sir, unfortunately, but I’ll see what I can do.

Plan-Do-Check-Act (aka PDCA) Cycle

Let’s look briefly at Plan-Do-Check-Act, so we get a sense of the basic philosophy behind ITIL or at least something with a lot of similarities to its theoretical basis, so we know why it’s so damn awesome.

OK, so the Plan-Do-Check-Act (PDCA) cycle is also called the Deming cycle (after Deming, above) or the Shewhart cycle (after Walter Shewhart). It’s a way to model an organization or a piece of an organization that allows for continuous improvement. It consists of course of four steps, but those steps keep continuing, cycling through repeatedly. There’s nothing mandatory about it, it’s just a system you can potentially use if you like.

“Oh, like Driver’s Licenses, I get it. They want my numbers.”

No, it’s nothing like Driver’s Licenses. Come on buddy. With the PDCA cycle model, you do the following:

  1. Plan – The plan is, simply put, the activity of getting ready for a change in the organization. Note: The change is by trial, so it won’t have to be correct.
  2. Do – Do involves taking a small sampling and seeing if the planned change improves things. Think of test-marketing or beta-testing – but this system also applies internally.
  3. Check – This step is essentially analysis. Does it work, or not? The analysis is very important – if the analysis is rigorous and refined, you’re golden. This step is the easiest place for corruption, so Checking must be performed carefully.
  4. Act – Go for it. Didn’t work? Start over with planning again.

Note how similar this system is to the scientific method – testing hypotheses (Do) and reviewing outcomes (Check) to determine if your objective (Plan) is correct. It essentially is the scientific method put into different words. Again, the Checking is crucial – it’s easy to think something works or trick oneself into thinking something works that doesn’t.

“Trickery from the state of Mississippi! They all want to build highways to the moon!”

Again sir, you’re making less sense all the time. Remember, this process we’re focusing on is ITIL, which comes out of the UK, not Missisippi. We don’t need your input. I’m not quite sure why you’re a part of the article.

“So it ain’t one-sided, you 1s and 0s bookworm!”

Right, gotcha. Hm, you understand binary … uh, let’s move on.

5 Goals of ITIL

ITIL today – vs. its past broad approach toward service, applications, and management as discussed above – is focused squarely on service and the management of service. ITIL calls itself “practical” and “no-nonsense” – so it’s an organizational IT cycle you can use that has a lot in common with wrinkle-free slacks. ITIL is intended to encompass the way that IT departments and IT professionals go about business.

“Encompass. Sounds like the Eye of Providence on the one-dollar bill to me, staring at me like a cackling witch.”

Uh … no comment. For us at Superb, having an IT staff who knows ITIL parameters means we can know that both our management and support teams are part of a structure that allows our IT services to be truly “Superb.”

Where’d the guy go with his snappy comments?

“I’m fishing.”

Oh, well … all right. ITIL is not one-size-fits-all: it’s an adaptable set of principles. You can customize it to your business. So the theory and principles are what’s important within the ITIL perspective. Application of ITIL will always be a little different depending who’s using it and the setting in which it’s used. The core of ITIL, though, is adaptation and improvement as a continuous cycle, as described above.

ITIL addresses the following through its five modules that comprise the ITIL v3 Service Management framework:

  1. Needs/Requirements – This helps a business identify the “demand” for certain IT specifications. (Analogous to Plan of PDCA)
  2. Design & Implementation – This is of course where design, development, and similarly active problem-solving come into play. (Analogous to Do of PDCA)
  3. Operation – Next you’re putting all the pieces into play. This is the second part of actual systemic testing. (Analogous to Plan of PDCA – Part 2)
  4. Monitoring – Here’s where the analysis comes in. A lens is focused on whatever aspect of the organization is attempting change: “Is it working?” (Analogous to Check of PDCA)
  5. Improvement – Well, this is the goal. Based on monitoring, either the organization has improved or it’s back to square 1. That’s not a bad thing. It’s crossing out something that didn’t work. Sometimes service management, like anything, is about process of elimination. (Analogous to Act of PDCA)

 

“Shhh. You’re scaring away the … whatever kind of fish these are.”

That’s a very algae-infested pond you’re fishing in, sir.

“You and your ‘sanitation.’ I bathe when it rains, as does this pond.”

Why ITIL? 5 Reasons

Here are a few of the positive results that can arise from implementation of ITIL certification:

  1. Efficiency: Better, streamlined, more efficient IT service.
  2. Cost: Lowering the expenses of IT departments and the overall business.
  3. Customer Experience: Customers have a better experience – because the system “works” coherently so that everything makes sense to all parties involved.
  4. Productivity: The business becomes more productive before there are fewer snags preventing evolution to changes in the business and the market.
  5. Employee Optimization: Positive employee attributes – skills and experience – are put to better use. This process allows individuals to flow into the most appropriate positions and tasks.
  6. Partner Servicing: Better delivery of any services that are issued by a company outside the organization. This improvement is felt both by the business itself and by its partners. It’s especially applicable in the case of hosting, since that’s a service so integrally connected to its clients’ own businesses.

 

“In case you’re wondering, I’m taking a nap now. That’s why I’m … you know, it’s sunny out here. So I’m asleep in the hot sun.”

OK … thanks. Goodnight.

Summary & Conclusion

ITIL is part of a general picture for us at Superb Internet. We have a few other auditing and certification standards that help our business have the kind of credibility we want but that also help us see where we can do a better job. We take these standards very seriously.

ITIL itself has adapted considerably since the 80s (which is a good thing!), but it’s still fundamentally concerned with Planning, Doing, Checking, and Acting. In its own terms, ITIL allows a business to Identify needs; Design, Implement, and Operate potential solutions; Monitor the results; and Improve. All of this is a perpetual cycle, allowing the business to grow stronger for itself and its clients over the long haul.

by Kent Roberts and Richard Norwood