ITIL: Service Strategy Course 02 Service Strategy · Slide 2 Principles Introduction to Service...

ITIL: Service Strategy

Course 02 – Service Strategy

Service Strategy

Topics Covered

Lessons Learned

Terms-to-Know

Introduction to Service Strategy

Service Provider Types

Service Structures

4-Ps of Strategy

Challenges, CSFs & Risks

Summary

Checkpoint

Course

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Introduction to Service Strategy

Topic

Topics Discussed

Service Strategy & the Lifecycle

Managing Across the Lifecycle

Purpose, Goals & Objectives

Scope

Value

Principles

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Service Strategy in the Service Lifecycle

• Service Strategy (SS)– Design, development & implementation

• Service Design– Design & development

• Service Transition– Development & improvement

• Service Operation– Delivery & support

• Service Improvement– Create & maintain value

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Managing Across the Lifecycle

Improve

Strategy Design

Operation Transition

• Strategy Management • Service Portfolio Management• Financial Management• Demand Management• Business Relationship Management

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Purpose, Goals & Objectives of Service Strategy

• Purpose– To transfer service management into a strategic asset

• Goals– Definition of services & recipient(s)

– Differentiation from competing alternatives

– Value creation for customers & value capture for stakeholders

– Case creation for strategic investments

– Financial visibility & control

– Definition of service quality & evaluation of options

– Efficient allocation of resources across portfolio of services

– Resolution of conflicting demands for shared resources

• Objectives– Provide consistent decision-making & minimize later conflicts

– Set priorities & standards

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Scope of Service Strategy

• Business services

– Defined by business

– Comprises business activities

• Service Portfolio across the lifecycle

– New services

– Changed services

– Continual Service Improvement

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Value of Service Strategy

• Value definitions

– Customer’s business outcomes

– Customer’s perceptions

• Expectations influence perceptions

• Shifting emphasis from efficient utilization of resources to

effective realization of outcomes

• Customers buy fulfillment of needs – not services

• Link Service Provider activities to business outcomes

• Enable rapid response to changing business

environment

Transition+ Operation

+ Improve

Operation+ ImproveImprove

Design+ Transition

+ Operation

+ Improve

Strategy+ Design

+ Transition

+ Operation

+ Improve

Value and the ITSM Lifecycle

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Service Strategy – Principles

• Strategy basics

• Fundamentals of Service Strategy

• Service

• Value creation

• Service assets

• Service Provider types

• Service structures

• Service Strategy fundamentals

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Strategy Basics

• Strategy 101

– Acknowledge that competition exists

– Decide on an objective that differentiates value

– Objectives defined in terms of business outcomes

• Strategy & opposing dynamics

– Future vs. present

– Operational effectiveness vs. improvements in functionality

– Value capture

• Launch vs. ongoing operations

• Outperform competitors

– Meet objectives for business outcomes

– Understand tradeoffs & constraints

– Provide superior performance vs. competing alternatives

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Service Strategy Fundamentals

• Deal with complexity, uncertainty & conflict

• Discern patterns & project trends

• Consider all factors & their relationships

• Understand underlying principles & basic theory

“Everything in strategy is very simple, but that does not mean that everything is very easy.”

- Carl von Clausewitz

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IT Service Management

• Organizational capabilities– Functions

– Processes

• With specialization in– Managing services over their lifecycle

• Strategy

• Design

• Transition

• Operations

• Improvement

def: Service Management – A set of specialized organizational capabilities for providing value to customers in the form of services.

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Service

• Facilitates desired outcomes

• Enhances performance of tasks

• Reduces effects of constraints

• Increases the probability of a desired outcome

def: Service – A means of delivering value to

customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks.

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Value Creation

• Mind gap

• Marketing mindset

• The value of services– Now

– Later

• Communicating utility– Supported outcomes

– Ownership costs & risks avoided

• Communicating warranty– Availability

– Reliability

– Capacity

– Continuity

– Security

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Mind Gap

Good

Fast

Cheap

BusinessOutcomes

Attributes

PreferencesPerceptions

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Marketing Mindset

• Outcomes matter!!

• Marketing mindset asks

– What is our business?

– Who is our customer?

– What does the customer value?

– Who depends on our service?

– How do they use our service?

– Why is the service of value?

• Engineering & operations mindset

– Inward focus on production of services

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Communicating Utility

• Outcomes supported

• Constraints removed

– Ownership costs

– Risks avoided

Service

Outcomes

Supported

Constraints

Removed

Utility– The functionality offered by a product or service to meet a particular need.

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Communicating Warranty

• Availability

• Reliability

• Capacity

• Continuity

• Security

Continuity Security

Capacity

Availability

Fit for Use

Warranty – A promise or guarantee that a product or Service will meet its agreed requirements.

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Utility & Warranty

Value is created through the effect of both utility & warranty. The “service provider” must understand what the right “value proposition” is for its customers, and then provide it.

Low Impact

w/Warranty

Low Value

w/o Warranty

Low Value

w/o Utility

High Impact

w/o Warranty

High Value

w/Warranty

High Value

w/Utility

Utility

War

ran

ty

High

HighLow

Utility & Warranty Combined

Copyright © AXELOS Limited 2014All rights reserved. Material is reproduced under license from AXELOS Limited.

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Service Assets

• Capabilities & resources

• Business units

• Service units

ServiceCustomer AssetsBusiness

Outcomes

Co

ns

tra

ints

Co

ns

tra

ints

ServiceService Assets

Co

ns

tra

ints

ServiceService Management

+

+

-

-

Service Assets are used to deliver services to the business. These services are designed to enhance the performance of the customer’s assets and/or to reduce the effect of constraints.


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Capabilities & Resources

• Capabilities

– Transform Resources

• Experience-Driven

• Knowledge-Intensive

• Information-Based

• Embedded in Organization’s

– People

– Systems

– Processes

– Technology

• Resources

– Direct Inputs for Production

• a.k.a. Factors of Production

• Relatively Easy to Acquire

Capability is the ability of an organization, person, process, application, configuration item or IT service to carry out an activity.

Resource is a generic term that includes IT infrastructure, people, money or anything else that might help to deliver an IT service.


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Business Units

Business Unit

Capabilities

Resources

• Management• Organization• Processes• Knowledge• People

• Capital• Information• Applications• Infrastructure• People

Goods & Services

ConsumeAssets

Create Value

Generate Returns

Customers

Influence• Prospects• Competitors• Regulators• Suppliers

Supply

Demand


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Service Units

ServiceAssets

CustomerAssets

ServicePotential

PerformancePotential

ValuePotential

Business UnitService Unit

Business Outcomes

Services


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Topic

Topics Discussed


Internal Service Provider

Shared Services Unit

External Services Unit

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• Type I

– Internal Service Provider

• Type II

– Shared Services Unit

• Type III

– External Service Provider

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Internal Service Provider

Corporate(Corporate

Business Functions)

BusinessUnit 1

BusinessUnit 2

BusinessUnit 3

Human ResourcesFin & Admin

Customer CareIT

Internal Service Providers


Customer CareIT


Customer CareIT


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Shared Services Unit


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External Services Unit


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Choosing a Service Provider Type

• Evaluate advantages & disadvantage of each type

• Answer key questions

– Require specialized assets?

– Frequency of activity?

– Require specific business Knowledge? … Etc.

• Determine the need to change types

– Evaluate the advantage of the incumbent

From/To Type I Type II Type III

Type I Functional reorganization

Aggregation Outsourcing

Type II Disaggregation Corporate reorganization

Outsourcing

Type III Insourcing Insourcing Value net reconfiguration

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Service Structures

Topic

Topics Discussed

Service Structures

Value Chain

Value Network

Service strategy Fundamentals

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Service Structures

• Value chain

– Simple vertical integration of dedicated assets

– Often inadequate for describing service management value

• Value network

– Relationships that generate value

• Dynamic exchange

• Two or more organizations

© Crown copyright 2007.Reproduced under license from OGC.

Copyright © AXELOS Limited 2014All rights reserved. Material is reproduced under license

from AXELOS Limited.

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Value Chain

• Value chain model

– Based on industrial age production

– Series of value-adding activities

• Vertical integration & coordination of assets

• Connects organization’s

– Supply side

– Demand side

SupplierService

ProviderBusiness

Value Chain

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Value Network

• Value network model

– Web of relationships

– Generates tangible & intangible value

– Exhibits complex dynamic exchanges

– Involves two or more organizations

Value Network

Supplier

Customer

SubsititutorBusinessComplementor

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The 4-Ps of Strategy

Topic

Topics Discussed

4-Ps of Strategy

Perspective

Position

Plan

Pattern

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The 4 Ps of Strategy

• Perspective

– Vision & mission

• Position

– Policies & differentiation

• Plan

– Methods & execution

• Pattern

– Operating actions & adjustments

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Perspective

• Defines the governing set of

– Beliefs

– Values

– Purpose

• Sets overall direction

• Not easily changed

• Once perspective is attained

– Does it capture the timeless essence of your organization?

– Is it clear and memorable?

– Does it have the ability to promote and guide action?

– Does it set boundaries with which people are free

To experiment?

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Position

• Variety-based

• Needs-based

• Access-based

• Demand-based

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Plan

• Course of action

– Within a competitive scenario

– Focuses on achieving well-defined outcomes

– Linked to obtaining a strategic objective

• Service management

– Coordinated set of plans

– Service providers

• Plan & execute service strategies

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Pattern

• Fundamental way of “doing things”

• Embedded in the way business is done

• Rise as direct actions taken by managers

• Consequences of

– Perspectives

– Positions

– Plans

• Useful in identifying opportunities

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Service Strategy Summary

Topic

Topics Discussed

Summary

Checkpoint

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Service Strategy Summary

•

• Value creation• Service assets• Marketing mindset• Service provider types• Service structures• Service strategy fundamentals• Service portfolio

•

• Business services–Defined by business–Comprises business activities

• Service Portfolio across the lifecycle–New services–Changed services–Continual Service

Improvement

• Service Strategy• Service Portfolio Management• Financial Management• Demand Management• Business Relationship

Management

Purpose – To transfer service management into a strategic asset.Goals – Definition of services & recipient(s), differentiation from competing alternatives, customer value creation & stakeholder value capture, strategic investment case creation, financial visibility & control, service quality definition & evaluation of options, efficient allocation of resources, resolution of conflicting demands for shared resources.Objectives – Provide consistent decision-making & minimization of later conflicts and set priorities & standards.

Service Strategy provides value to be business by recognizing how the business defines value in the context of the business’ desired outcomes and perceptions, with perceptions being influenced by the customer’s expectations. It shifts IT’s emphasis from efficient utilization of resources to effective realization of outcomes in recognition that customers buy fulfillment of needs – not services.

Principles Scope Processes

Value

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Checkpoint

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Review Questions:

1. What makes a good practice "good?"

A. It is the basis of ISO20000

B. It forces everyone to do things in the best possible way regardless of

industry

C. It has been widely adopted by industry, thus proving its usefulness

D. It is well documented within the IT Infrastructure Library

2. The difference between ITIL and ITSM is:

A. ITIL and ITSM are the same thing

B. ITSM is the subject of ITIL

C. ITSM is the North American version of ITIL

D. ITIL is the subject of ITSM

3. A process consists of three parts. Which part encompasses the process owner?

A. Trigger

B. Process

C. Enabler

D. Control

4. Which of the following are characteristics of a service?

1. Enhances the performance of tasks.

2. Ensures the lowest cost of delivery.

3. Facilitates desired outcomes.

4. Reduces the effects of constraints.

A. 1, 2, 3 & 4

B. 1, 3 & 4

C. 2 & 3

D. 2, 3 & 1

5. Which of the following statements can be said to be TRUE?

1. A function only has responsibility for a single process.

2. Activities of a process can only be performed by the process owner's function.

A. 1 and 2

B. Only 2

C. Neither

D. Only 1

6. How is each of the following wireless companies framing the value of their

service?

1. UTILITY 1 - Fewer dropped calls.

2. UTILITY 2 - Unlimited text messaging.

A. 1 is using utility & 2 is using warranty

B. Both are using warranty

C. Both are using utility

D. 1 is using warranty and 2 is using utility

7. IT Governance can be said to:

A. Exercise authority and control over all aspects of the IT Service Lifecycle

B. Ensure everyone does the right thing

C. Inform the business what it needs for resources

D. Force the business to conform to industry hardware and software

standards

8. What is the correct order in which the IT Service Lifecycle is to be implemented?

A. Service Strategy, Design, Transition, Operation & Continual Service

Improvement

B. Continual Service Improvement, Operation, Transition, Design & Strategy

C. Service Support then Service Delivery

D. Implementation should be based on organizational capability and need

9. A Service Model is described by the service's structure and its dynamics. Which

of the following statements is TRUE?

1. The configuration of service assets provides the dynamics of a service.

2. The delivery of the service is dependent on the structure of its activities,

events and interactions.

A. Only 1 is true

B. Both 1 and 2 are true

C. Neither 1 nor 2 are true

D. Only 2 is true

10. The current IT Infrastructure Library consists of which volumes?

A. Delivery, Support, Planning to Implement, ICT, Application Management,

Security Management and the Business Perspective

B. Operation, Design, Transition, Continual Service Improvement & Strategy

C. Design, Delivery, Implementation, Improvement & Strategy

D. Design, Delivery, Implementation, Support, Improvement & Strategy

Answer Key:

1. C

Widely adopted; proven most efficient & effective through practice.

2. B

The management of, and the delivery of, IT Services is the subject of the IT

Infrastructure Library.

3. D

The process owner exerts control (governance) over the process.

4. B

The three characteristics of a service.

5. C

A function can participate in many processes, and a process' activities may be

performed by one or more functions.

6. D

Fewer dropped calls indicates its fitness for use (Warranty), while unlimited text

messaging indicates its fitness for purpose (Utility).

7. A

IT Governance is a management system that exercises authority & control over

all aspects of IT Service strategy, design, transition, operation & improvement.

8. D

There is no specific order of implementation.

9. C

Structure is the configuration of service assets, while dynamics of a service are

the activities, events and interactions that are involved in its delivery.

10. B

The five volumes of ITIL v3.

ITIL: Service Strategy Course 02 Service Strategy · Slide 2 Principles Introduction to Service...

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