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Service Strategy in ITIL v3 – Service Strategy Part 2 of 6

March 14, 2008

Service Strategy (SS)

  • what services should be offered
  • who the services should be offered to

Goals

  • how the internal and external market places for their services should be developed
  • the existing and potential competition in these marketplaces, and the objectives that will differentiate the value of what you do or how you do it
  • how the customer(s) and stakeholders will perceive and measure value, and how this value will be created
  • how customers will make service sourcing decisions with respect to use of different types of service providers
  • how visibility and control over value creation will be achieved through financial management
  • how robust business cases will be created to secure strategic investment in service assets and service management capabilities
  • 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

  1. The four Ps of Strategy
  2. Competition and Market Space
  3. Service Value
  4. Service Provider Types
  5. Service Management as a Strategic Asset
  6. Service Oriented Accounting
  7. Service Provisioning Models
  8. Organization Design and Development
 The four Ps of Strategy:
  • perspective: the distinctive vision and direction
  • position: the basis on which the provider will compete
  • plan: how the provider will achieve their vision
  • pattern: the fundamental way of doing things – distinctive patterns in decisions and actions over time.
SS: Competition and Market Space
every service provider is subject to competitive forces
all service providers and customers operate in one or more internal or external market spaces. The service provider must strive to achieve a better understanding than its competitors of the dynamics of the market space,
its customers within it, and the combination of critical success factors that are unique to that market space.

SS: Service Value

Service Value: defined in terms of the customer’s perceived business outcomes, and described in terms of the combination of two components: 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.

SS: Service Provider Types
Type I — internal service provider
Type II — shared services unit
Type Ill – external service provider

Service Management as a Strategic Asset:

the use of ITIL 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 increase the service provider’s potential from their:
capabilities: the provider’s ability (in terms of management, organization, processes, knowledge and people) to coordinate, control and deploy resources
resources: the direct inputs for the production of services, e.g. financial, capital, infrastructure, applications, information and people.

Service Oriented Accounting:

using financial management to understand services in terms of consumption and provisioning, and achieve translation between corporate financial systems and service management

Service Provisioning Models:

categorization and analysis of the various models that may be selected by customers and used by service providers to source and deliver services, and the financial management impacts of on-shore, off-shore or near-shore variants:

  1. Managed Service: where a business unit requiring a service fully funds the provision of that service for itself
  2. Shared Service: the provisioning of multiple services to one or more business units through shared infrastructure and resources
  3. Utility: services are provided on the basis of how much is required by each customer, how often, and at what times the customer needs them.

Organization Design and Development: achieving an ongoing shape and structure to the service provider’s organization 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.

Key Processes and Activities
Financial Management
Service Portfolio Management (SPM)
Demand Management

Financial Management

covers the function and processes responsible for managing an IT service provider’s budgeting, accounting and charging requirements. It provides the business and IT with the quantification, in financial terms, of the value of IT services, the value of the assets underlying the provisioning of those services, and the qualification of operational forecasting.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; aggregating, sharing and maintaining the financial data they need, enabling the dissemination of information to feed critical decisions and activities.

SPM

involves proactive management of the investment across the service lifecycle, including those services in the concept, design and transition pipeline, as well as live services defined in the various service catalogues and retired services.
SPM is an ongoing process, which includes the following:
  • Define: inventory services, ensure business cases and validate portfolio data
  • Analyze: maximize portfolio value, align and prioritize and balance supply and demand
  • Approve: finalize proposed portfolio, authorize services and resources
  • Charter: communicate decisions, allocate resources and charter services.
SS: Key Roles and Responsibilities
Business Relationship Manager (BRM): BRMs establish a strong business relationship with the customer by understanding the customer’s business and their customer outcomes. BRMs work closely with the Product Managers to negotiate productive capacity on behalf of customers.
Product Manager (PM): PMs take responsibility for developing and managing services across the life-cycle, and have responsibilities for productive capacity, service pipeline, and the services, solutions and packages that are presented in the service catalogues.
Chief Sourcing Officer (CSO): the CSO is the champion of the sourcing strategy within the organization, responsible for leading and directing the sourcing office and development of the sourcing strategy in close conjunction with the CIO.
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