Zeynep Abdullahoğlu: ITIL Service Strategy

ITIL Service Strategy

The center and origin point of the ITIL Service Lifecycle, provides guidance on clarification and prioritization of service-provider investments in services. More generally, Service Strategy focuses on helping IT organizations improve and develop over the long term by building a clear service strategy, with a precise understanding of :

· What services should be offered.
· To whom the services should be offered.
· How the internal and external marketplaces for their services should be developed.
· The existing and potential competition in these marketplaces, and the objectives that will differentiate the value of what the service provider does or how it is provided.
· How the customer and stakeholders will perceive and measure value, and how this value will be created.
· How service sourcing decisions can be made with respect to use of different types of service providers.
· How visibility and control over value creation will be achieved through financial management.
· How the allocation of available resources will be tuned to optimal effect across the portfolio of services.
· How service performance will be measured.

Key Concepts of Service Strategy

1) The Four P’s of Strategy

· Perspective : Defines the distinct vision and direction.
· Position : The basis on which the provider will compete.
· Plan : How the provider will achieve its vision.
· Pattern : Defines distinct patterns and actions over time.

2) Defining Services

All service providers need to define the market that they will operate in, identifying and understanding their customers and explore the opportunities and constraints, quantify the outcomes and classify services. All service providers and customers operate in one or more internal or external market spaces and seek to align delivery within customer expectations.

3) Service Value

Service value is defined by customer’s perception of business outcome and it is described by combination of these two elements :

- Service Utility : What the customer gets in terms of outcomes supported and/or constraints removed.

- - Service Warranty : How the service is delivered and its fitness for use, in terms of availability, capacity, continuity and security.

Service value also includes the associated concepts of services as assets, value networks, value creation and value capture.

4) Service Provider Types

There are three types of service providers which are :

- - Type 1 : Exists within an organization exclusively to deliver service to one specific business unit.

- - Type 2 : Services multiple business units in the same organization.

- - Type 3 : Operates as an external service provider serving multiple external customers.

5) Service Management as Strategic Asset

ITIL is used to transform service management capabilities into strategic assets, by using service management to provide the basis for core competency, distinctive performance and durable advantage, and to increase the service provider’s potential from its:

- - Capabilities : The provider’s ability to coordinate, control and deploy resources.

- - Resources : The direct inputs for the production of services. For example, financial, capital, infrastructure, applications, information and people.

6) Critical Success Factors

Critical success factors (CSFs) are identified, measured and reviewed periodically in order to determine the service assets required to successfully implement the desired service strategy.

7) Service Economics

Financial management, demand management and the service portfolio are used to understand the balance between the cost of providing the service, the value of the outcome achieved and the return on investment.

8) Service Delivery Strategies

The various models that may be selected by customers or used by service providers to source and deliver services, and the financial management impacts of sourcing variants, are categorized and analysed:

- - Insource, Outsource or Co-Source : Delivery of some or all of the service lifecycle is provided by internal resources, external resources or a combination of both.

- - Business Process Outsource and Knowledge Process Outsource : Strategic provisioning of business services based on process or knowledge expertise.

- - On Demand or Cloud Based : Services are provided on the basis of how much is required by each customer, how often, and at the times the customer needs them.

9) Organization and Development

The service provider’s organization needs to achieve an ongoing shape and structure that enables the service strategy. Considerations include:

- - Organizational Development Stages : Delivering services through network direction, delegation, coordination or collaboration, depending on the evolutionary state of the organization.

- - Sourcing Strategy : Making informed decisions on service sourcing in terms of internal services, shared services, full service outsourcing, prime consortium or selective outsourcing.

- - Service Analytics : Using technology to help achieve an understanding of the performance of a service through analysis.

- - Service Interfaces : The mechanisms by which users and other processes interact with each service.

- - Risk Management : Mapping and managing the portfolio of risks underlying a service portfolio.

Processes of Service Strategy

1) Strategy Management

The purpose of a service strategy is to articulate how a service provider will enable an organization to achieve its business outcomes and the most effective and efficient way to manage these services. The purpose of the strategy management for IT services process is to ensure that the strategy is defined and achieves its purpose. Strategy management has three sub-processes which are :

- - Strategic Service Assessment : Its objective is to assess the present situation of the service provider within its current market spaces. This includes an assessment of current service offerings, customer needs and competing offers from other service providers.

- - Service Strategy Definition : Main goal is to define the overall goals the service provider should pursue in its development, and to identify what services will be offered to what customers or customer segments, based on the results of the Strategic Service Assessment.

- - Service Strategy Execution : Defining and planning strategic initiatives, and ensuring the implementation of those initiatives.

2) Service Portfolio Management

Before we mention managing of service portfolio, we will define what is service portfolio. Service portfolio is the complete set of services that is managed by a service provider. The service portfolio is used to manage the entire lifecycle of all services, and includes three categories: service pipeline (proposed or in development), service catalogue (live or available for deployment), and retired services. The purpose of service portfolio management is to ensure that the service provider has the right mix of services to balance the investment in IT with the ability to meet business outcomes.This process is consisted of the following sub-processes :

- - Define : Make an inventory of services, ensure business cases exist, and validate portfolio data.

- - Analyse : Maximize portfolio value, align and prioritize, and balance supply and demand.

- - Approve : Finalize proposed portfolio, and authorize services and resources.

- - Charter : Communicate decisions, allocate resources and charter services.

3) Financial Management

The purpose of financial management for IT services is to secure the appropriate level of funding to design, develop and deliver services that meet the strategy of the organization. IT financial management responsibilities and activities do not exist solely within the IT finance and accounting domain.

Many parts of the organization interact to generate and use IT financial information, by aggregating, sharing and maintaining the financial data they need, and by enabling the dissemination of information to feed critical decisions and activities.Financial management is composed of four sub-processes which are :

- - Financial Management Support : Defines the necessary structures for the management of financial planning data and costs, as well as for the allocation of costs to services.

- - Financial Planning : Determines the required financial resources over the next planning period ("IT Budget"), and to allocate those resources for optimum benefits.

- - Service Invoicing : Issues invoices for the provision of services and transmission of the invoice to the customer.

- - Financial Analysis and Reporting : Analyzes the structure of service provisioning cost and the profitability of services. The resulting financial analysis allows service portfolio management to make informed decisions when deciding about changes to the service portfolio.

4) Demand Management

Demand management is a critical aspect of service management. The purpose of demand management is to understand and influence customer demand for services and the provision of capacity to meet those demands. At a strategic level this can involve analysis of patterns of business activity and user profiles. At a tactical level it can involve use of differential charging to encourage customers to use IT services at less busy times.

5) Business Relationship Management

The purpose of the business relationship management is to establish and maintain a business relationship between the service provider and the customer based on understanding the customer and its business needs and identify customer needs and ensuring that the service provider is able to meet those needs as business needs change. Business relationship management enables effective links between service providers and customers at both strategic and tactical levels. Working closely with the demand management and service portfolio management processes, it ensures the service provider understands the business requirements and keeps a focus on customer satisfaction. This process is consisted of six sub-processes which are :

- - Identify Service Requirements : Understand and document the desired outcome of a service, and decide if the customer's need can be fulfilled using an existing service offering or if a new or changed service must be created.

- - Maintain Customer Relationships : Ensures that the service provider continues to understand the needs of existing customers and establishes relationships with potential new customers. This process is also responsible for maintaining the customer portfolio.

- Signing up Customers to Standard Services : Capturing customer requirements and agree service level targets with customers who request the provision of existing standard services. (No changes should be made to supporting services in order to fulfill the customer’s needs)

- - Customer Satisfaction Survey : Planning, carrying out and evaluating regular customer satisfaction surveys. The principal aim of this process is to learn about areas where customer expectations are not being met before customers are lost to alternative service providers.

- - Handle Customer Complaints : Recording customer complaints and compliments, to assess the complaints and to instigate corrective action if required.

- - Monitor Customer Complaints : Continuously monitoring the processing status of outstanding customer complaints and to take corrective action if required.

We saw how this Service Strategy operates, let’s look at who operate this element.

Roles of Service Strategy

· IT Strategy Manager : Formulates and communicates the IT strategy and ensures elements are in place for successful execution.
· IT Steering Group : Responsible for corporate governance of IT and the overall direction of the IT strategy.
· IT Director : Responsible for all IT service management processes and for setting up the service management Office.
· Service Portfolio Manager : Defines services and service packages; manages and maintains the service portfolio including communication to all parties.
· Business Relationship Manager : Maintains the relationship with one or more customers, understanding the customer’s business and its customer outcomes; this role may be combined with the role of service level manager.
· Customer : Articulates needs and ensures business outcomes are supported.
· Financial Manager : Defines and maintains financial models with information to track the cost and value of IT services.
· Demand Manager : Identifies and documents patterns of business activity and user profiles; ensures IT capabilities are geared to meet fluctuating demand.
· Chief Sourcing Officer : Owns the sourcing strategy within the organization; responsible for leading and directing the sourcing office; develops the sourcing strategy in close conjunction with the Chief Information Officer (CIO).