ITIL Service Strategy (SS) - ITIL V3 2011 Service... · ITIL® Service Strategy ITIL ® Service...

ITIL® Service Strategy

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ITIL® Service Strateg

y

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A sound service strategy is essential in the creation of high-quality IT services. It provides a base upon which to build a successful service management function and ensures that the best value is delivered to business customers.

ITIL Service Strategy introduces the concept of the service lifecycle, gives guidance on how to develop and manage a sound IT service strategy, and encourages the development of a business perspective. Whether you are a service provider or a business customer, this book guides you through the choices that you need to make to achieve service excellence.

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List of figures v

List of tables viii

Foreword ix

Preface x

Acknowledgements xi

1 Introduction 1

1.1 Overview 3

1.2 Context 5

1.3 ITIL in relation to other publications in the Best Management Practice portfolio 7

1.4 Why is ITIL so successful? 8

1.5 Chapter summary 9

2 Service management as a practice 11

2.1 Services and service management 13

2.2 Basic concepts 20

2.3 Governance and management systems 25

2.4 The service lifecycle 27

3 Service strategy principles 33

3.1 Strategy 35

3.2 Customers and services 41

3.3 Service providers 80

3.4 How to define services 87

3.5 Strategies for customer satisfaction 102

3.6 Service economics 106

3.7 Sourcing strategy 117

3.8 Service structures in the value network 125

3.9 Service strategy inputs and outputs 128

4 Service strategy processes 131

4.1 Strategy management for IT services 133

4.2 Service portfolio management 170

4.3 Financial management for IT services 200

4.4 Demand management 244

4.5 Business relationship management 256

5 Service strategy, governance, architecture and ITSM implementation strategies 283

5.1 Governance 285

5.2 Establishing and maintaining a service management system 290

5.3 IT service strategy and the business 290

5.4 IT service strategy and enterprise architecture 292

5.5 IT service strategy and application development 294

5.6 Creating a strategy for implementing service management processes 294

6 Organizing for service strategy 315

6.1 Organizational development 318

6.2 Organizational change 323

6.3 Organizational departmentalization 323

6.4 Organizational design 324

6.5 Organizational culture 324

6.6 Functions 326

6.7 A logical organization structure for an IT service provider 326

6.8 Roles 329

6.9 Responsibility model – RACI 337

6.10 Competence and training 338

7 Technology considerations 341

7.1 Service automation 344

7.2 Service interfaces 347

7.3 Tools for service strategy 350

Contents


iv | Contents

8 Implementing service strategy 353

8.1 Implementation through the lifecycle 355

8.2 Service strategy implementation activities following a lifecycle approach 356

8.3 The impact of service strategy on other lifecycle stages 358

9 Challenges, risks and critical success factors 363

9.1 Challenges 365

9.2 Risks 367

9.3 Critical success factors 369

Afterword 371

Appendix A: Present value of an annuity 375

Appendix B: Description of asset types 379

B.1 Management 381

B.2 Organization 381

B.3 Process 381

B.4 Knowledge 381

B.5 People 382

B.6 Information 382

B.7 Applications 382

B.8 Infrastructure 382

B.9 Financial capital 383

Appendix C: Service strategy and the cloud 385

C.1 Characteristics of cloud services 387

C.2 Types of cloud service 388

C.3 Types of cloud 388

C.4 Components of a cloud architecture 389

Appendix D: Related guidance 391

D.1 ITIL guidance and web services 393

D.2 Quality management system 393

D.3 Risk management 394

D.4 Governance of IT 394

D.5 COBIT 394

D.6 ISO/IEC 20000 service management series 395

D.7 Environmental management and green/sustainable IT 395

D.8 ISO standards and publications for IT 396

D.9 ITIL and the OSI framework 396

D.10 Programme and project management 397

D.11 Organizational change 397

D.12 Skills Framework for the Information Age 398

D.13 Carnegie Mellon: CMMI and eSCM framework 398

D.14 Balanced scorecard 398

D.15 Six Sigma 399

Appendix E: Risk assessment and management 401

E.1 Definition of risk and risk management 403

E.2 Management of Risk (M_o_R) 403

E.3 ISO 31000 404

E.4 ISO/IEC 27001 405

E.5 Risk IT 406

Appendix F: Examples of inputs and outputs across the service lifecycle 409

References and further reading 413

Abbreviations and glossary 419

Index 463


Figure 1.1 The ITIL service lifecycle 3

Figure 1.2 ITIL’s relationship with other Best Management Practice guides 7

Figure 2.1 Conversation about the definition and meaning of services 14

Figure 2.2 Services are designed, built and delivered with both utility and warranty 18

Figure 2.3 Sources of service management practice 19

Figure 2.4 Examples of capabilities and resources 21

Figure 2.5 Process model 21

Figure 2.6 The service portfolio and its contents 25

Figure 2.7 Architectural layers of an SKMS 26

Figure 2.8 Plan-Do-Check-Act cycle 27

Figure 2.9 Integration across the service lifecycle 30

Figure 2.10 Continual service improvement and the service lifecycle 31

Figure 3.1 Achieving a balance between opposing strategic dynamics 38

Figure 3.2 Perspective, positions, plans and patterns 39

Figure 3.3 Strategic plans result in patterns 41

Figure 3.4 The service triangle 50

Figure 3.5 Internal and external services 51

Figure 3.6 Components of value 56

Figure 3.7 How customers perceive value 57

Figure 3.8 Money spent, value added and value realized 58

Figure 3.9 IT services and value 60

Figure 3.10 Utility increases the performance average 63

Figure 3.11 Warranty reduces the performance variation 64

Figure 3.12 A service with improved utility and warranty 66

Figure 3.13 Combined effects of utility and warranty on customer assets 66

Figure 3.14 Value of a service in terms of return on assets for the customer 66

Figure 3.15 Utility described in terms of outcomes supported and constraints removed 68

Figure 3.16 Customer assets drive business outcomes 72

Figure 3.17 Service assets drive services to achieve business outcomes 73

Figure 3.18 Service management optimizes the performance of service assets 73

Figure 3.19 Simple view of an IT organization 74

Figure 3.20 Process as a means for managing the silos of the organization chart 75

Figure 3.21 Service management enables business outcomes 75

Figure 3.22 How a service provider enables a business unit’s outcomes 77

Figure 3.23 Growing service management into a trusted strategic asset 79

Figure 3.24 Type I providers 81

Figure 3.25 Common Type II providers 82

Figure 3.26 Type III providers 84

Figure 3.27 Analysing how a service will impact an outcome 89

Figure 3.28 Classifying services using service archetypes and customer assets 90

Figure 3.29 Asset-based and utility-based strategies 91

Figure 3.30 Visualization of services as value-creating patterns 92

Figure 3.31 Defining services with utility components 94

Figure 3.32 Defining services with warranty components 95

Figure 3.33 Dynamics of a service model 97

Figure 3.34 A service package 98

List of figures


vi | Listoffigures

Figure 3.35 Service packages can consist of multiple individual services of any type 98

Figure 3.36 Service packages can contain other service packages 99

Figure 3.37 Perceptions of utility and customer satisfaction 103

Figure 3.38 Service economic dynamics for external service providers 106

Figure 3.39 Service economic dynamics for internal service providers 107

Figure 3.40 Single business impact can affect multiple business objectives 110

Figure 3.41 Multiple business impacts can affect a single business objective 111

Figure 3.42 Post-programme ROI approach 115

Figure 3.43 Forecast analysis 116

Figure 3.44 The service sourcing staircase 121

Figure 3.45 Using service provider interfaces 122

Figure 3.46 Example of a value network 126

Figure 3.47 Existing flowchart of how the service desk was supposed to work 128

Figure 3.48 Value net exchanges showing how things really worked 129

Figure 4.1 Overall business strategy and the strategies of business units 134

Figure 4.2 The scope of strategy management 135

Figure 4.3 The strategy management process 138

Figure 4.4 Strategic industry factors and competitive positions in playing fields 143

Figure 4.5 Strategic analysis of customer portfolio 144

Figure 4.6 Strategic options for the service provider 145

Figure 4.7 Variety-based (left) and needs-based (right) positioning 150

Figure 4.8 Access-based positioning 151

Figure 4.9 Combining variety-based, needs-based and access-based positioning 151

Figure 4.10 Critical success factors leveraged across market spaces 155

Figure 4.11 Prioritizing strategic investments based on customer needs 160

Figure 4.12 Expansion into adjacent market spaces 162

Figure 4.13 Expansion within single customers and market spaces 163

Figure 4.14 The service portfolio 173

Figure 4.15 The service catalogue and linkages between services and outcomes 174

Figure 4.16 Service catalogue and demand management 175

Figure 4.17 Service portfolio and service catalogues 176

Figure 4.18 Phases of service portfolio management 180

Figure 4.19 The service portfolio management process 182

Figure 4.20 Option spaces (tomato garden example) 187

Figure 4.21 The option space tool for IT service management 188

Figure 4.22 How executives allocate budget to strategic categories of service 189

Figure 4.23 An internal service provider focused on maintaining services (RTB) 189

Figure 4.24 An external service provider focused on expanding the scope of services (TTB) 190

Figure 4.25 Major inputs, outputs and activities of financial management for IT services 207

Figure 4.26 Cost by IT organization 210

Figure 4.27 Cost by service 211

Figure 4.28 Cost by customer 213

Figure 4.29 Cost by location 214

Figure 4.30 Hybrid cost model (service, customer, location) 215

Figure 4.31 Example of cost centres and cost units 218

Figure 4.32 Cost types and cost elements 219

Figure 4.33 A cost can be classified as direct or indirect in different cost models 221


Listoffigures| vii

Figure 4.34 Example – fixed and variable costs in a printing service 225

Figure 4.35 Common depreciation methods 226

Figure 4.36 Translation of cost account data to service account information 228

Figure 4.37 Examples of budget deviation analysis 229

Figure 4.38 Cost units and chargeable items 237

Figure 4.39 Tight coupling between demand, capacity and supply 247

Figure 4.40 Examples of patterns of business activity 249

Figure 4.41 Business activity influences patterns of demand for services 251

Figure 4.42 Example of activity-based demand management 252

Figure 4.43 Business relationship management activities 267

Figure 5.1 Strategy, policy and plan 285

Figure 5.2 Governance activities 286

Figure 5.3 Governance and management activities 287

Figure 5.4 Governance bodies 289

Figure 5.5 Using strategy to achieve balance 291

Figure 5.6 Enterprise architecture, strategy and service management 293

Figure 5.7 Strategy for organizations in trouble 297

Figure 5.8 Dealing with repeated trouble 297

Figure 5.9 Strategy for organizations in growth mode 298

Figure 5.10 Strategy for organizations planning radical change 299

Figure 6.1 Organizational value creation cycle 317

Figure 6.2 The centralized-decentralized spectrum 318

Figure 6.3 Stages of organizational development 319

Figure 6.4 Services through network 320

Figure 6.5 Services through direction 320

Figure 6.6 Services through delegation 321

Figure 6.7 Services through coordination 321

Figure 6.8 Services through collaboration 322

Figure 6.9 Three-step change process 323

Figure 6.10 Matching strategic forces with organizational development 324

Figure 6.11 Organizational design steps 325

Figure 6.12 Strategic components of a logical organization structure for an IT service provider 326

Figure 6.13 Strategic, tactical and operational components of an IT service provider’s logical organization structure 327

Figure 6.14 Linkage between customers and the service provider’s logical organization structure 328

Figure 6.15 Chief sourcing officer – an example 336

Figure 7.1 Services as socio-technical systems with people and processes as pivots 343

Figure 7.2 Degrading effect of variation in service processes 345

Figure 7.3 The flow from data to wisdom 345

Figure 7.4 The critical role of service interfaces 347

Figure 7.5 Types of service technology encounters (Froehle and Roth, 2004) 348

Figure 7.6 Example of a simple analytical model for the service desk 351

Figure 7.7 Simple LP model 352

Figure 7.8 Simple network model 352

Figure 8.1 Strategic planning and control process (Simons, 1995) 355

Figure 8.2 Design constraints driven by strategy 359

Figure E.1 The M_o_R framework 404

Figure E.2 ISO 31000 risk management process flow 405

Figure E.3 ISACA Risk IT process framework 407


Table 2.1 The processes described in each core ITIL publication 28

Table 3.1 Differences between internal and external customers 43

Table 3.2 Differences between services and manufactured products 48

Table 3.3 Differences between outputs and outcomes 50

Table 3.4 Types of IT service 52

Table 3.5 Examples of core, enabling and enhancing services 53

Table 3.6 Examples of utility and warranty statements 63

Table 3.7 Investment strategies for utility and warranty 65

Table 3.8 Examples of how service potential is increased 77

Table 3.9 Customer decisions on service provider types 86

Table 3.10 Defining actionable service components 96

Table 3.11 User segmentation and user packages 102

Table 3.12 The Kano model and service attributes (after Kano et al., 1984) 103

Table 3.13 The Kano evaluation table (Kano et al., 1984) 105

Table 3.14 Sample business case structure 108

Table 3.15 Common business objectives 109

Table 3.16 NPV decisions 112

Table 3.17 Example of NPV of a proposed service management programme 113

Table 3.18 Types of cash flow 113

Table 3.19 Example of the IRR of a proposed service management programme 114

Table 3.20 Main sourcing structures (delivery strategies) 120

Table 3.21 Service strategy inputs and outputs by lifecycle stage 130

Table 4.1 Questions to assess existing services as differentiators 139

Table 4.2 Customer data inputs for creating objectives 146

Table 4.3 Examples of service management patterns 157

Table 4.4 Budgeting, IT accounting and charging cycles 202

Table 4.5 Examples of capital and operational costs 222

Table 4.6 Example of indirect cost rate calculation 223

Table 4.7 Examples of fixed and variable costs 224

Table 4.8 Comparison of demand management and capacity management 246

Table 4.9 User profiles matched with patterns of business activity (example) 250

Table 4.10 Differences between business relationship management and service level management 258

Table 4.11 Business relationship management process activities and other service management processes 258

Table 4.12 What satisfies customers and users? 264

Table 4.13 Customer tasks, outcomes and constraints 266

Table 5.1 Differences between compliance- and maturity-based assessments 309

Table 6.1 Basic organizational structures 325

Table 6.2 Examples of sourcing roles and responsibilities 337

Table 6.3 An example of a simple RACI matrix 338

Table 7.1 Instrumentation techniques 346

Table 7.2 Event management techniques 346

Table 9.1 Measurement principles 366

Table A.1 Present value of an annuity 377

List of tables


Back in the 1980s no one truly understood IT service management (ITSM), although it was clear that it was a concept that needed to be explored. Hence a UK government initiative was instigated and ITIL® was born. Over the years, ITIL has evolved and, arguably, is now the most widely adopted approach in ITSM. It is globally recognized as the best-practice framework. ITIL’s universal appeal is that it continues to provide a set of processes and procedures that are efficient, reliable and adaptable to organizations of all sizes, enabling them to improve their own service provision.

In the modern world the concept of having a strategy to drive the business forward with adequate planning and design transitioning into day-to-day operation is compelling. In this ever-changing world the provision of a clear and precise strategy that aligns the business requirements with IT, ensuring that IT becomes a strategic partner, has never been more important. This publication explores how to ensure synergy exists between the business and IT and explains the supporting processes and procedures.

The principles contained within ITIL Service Strategy have been proven countless times in the real world. We encourage feedback from business and the ITSM community, as well as other experts in the field, to ensure that ITIL remains relevant. This practice of continual service improvement is one of the cornerstones of the ITIL framework and the fruits of this labour are here before you in this updated edition.

There is an associated qualification scheme so that individuals can demonstrate their understanding and application of the ITIL practices. So whether you are starting out or continuing along the ITIL path, you are joining a legion of individuals and organizations who have recognized the benefits of good quality service and have a genuine resolve to improve their service level provision.

ITIL is not a panacea to all problems. It is, however, a tried and tested approach that has been proven to work.

I wish you every success in your service management journey.

Frances Scarff

Head of Best Management Practice Cabinet Office

Foreword


‘In strategy it is important to see distant things as if they were close and to take a distanced view of close things.’ Miyamoto Musashi

This is the first book in the series of five ITIL core publications containing advice and guidance around the activities and processes associated with the five stages of the service lifecycle. The primary purpose of the service strategy stage of the service lifecycle is to set and manage the correct overall strategy for IT, based upon the organization’s overall business strategy, so that appropriate IT services can be provided to meet the current and future needs of the business. Therefore strategic thinking must be applied to service management and service management must itself be regarded as a strategic asset of an IT organization.

Service strategy agrees and defines the service portfolio and any new additions to it, and provides the input to service design so that the appropriate IT services can be designed and delivered to meet required business outcomes. Establishing a viable strategy is the first step but it is also essential to successfully communicate, market and sell that strategy to all customers, internal staff and suppliers to ensure that the design, transition and operation of IT services consistently meet required business outcomes. This involves close collaboration with continual service improvement to set up the appropriate monitoring, measurement, analysis, reporting and implementation of corrective actions. In this way the IT services being provided; the processes, tools and suppliers that deliver and operate them; and the overall strategy itself will remain fit for purpose (or will be updated as required).

Strategy requires academic thinking, but should not remain as an academic exercise – it must be applied to the real business world in order to influence and drive successful business outcomes. ITIL Service Strategy provides practical guidance on how service strategy should be formulated and applied to provide business value.

Contact information

Full details of the range of material published under the ITIL banner can be found at:

www.best-management-practice.com/IT-Service-Management-ITIL/

If you would like to inform us of any changes that may be required to this publication, please log them at:

www.best-management-practice.com/changelog/

For further information on qualifications and training accreditation, please visit:

www.itil-officialsite.com

Alternatively, please contact:

APM Group – The Accreditor Service Desk Sword House Totteridge Road High Wycombe Buckinghamshire HP13 6DG UK

Tel: +44 (0) 1494 458948 Email: [email protected]

Preface


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2011 EDITIOn

Authors and mentorsDavid Cannon (HP) Author

David Wheeldon (David Wheeldon IT Service Management)

Mentor

Shirley Lacy (ConnectSphere)

Project mentor

Ashley Hanna (HP) Technical continuity editor

Other members of the ITIL authoring teamThanks are due to the authors and mentors who have worked on all the publications in the lifecycle suite and contributed to the content in this publication and consistency across the suite. They are:

Lou Hunnebeck (Third Sky), Vernon Lloyd (Fox IT), Anthony T. Orr (BMC Software), Stuart Rance (HP), Colin Rudd (IT Enterprise Management Services Ltd (ITEMS)) and Randy Steinberg (Migration Technologies Inc.).

Project governanceMembers of the project governance team included:

Jessica Barry, APM Group, project assurance (examinations); Marianna Billington, itSMFI, senior user; Emily Egle, TSO, team manager; Janine Eves, TSO, senior supplier; Phil Hearsum, Cabinet Office, project assurance (quality); Tony Jackson, TSO, project manager; Paul Martini, itSMFI, senior user; Richard Pharro, APM Group, senior supplier; Frances Scarff, Cabinet Office, project executive; Rob Stroud, itSMFI, senior user; Sharon Taylor, Aspect Group Inc., adviser to the project board (technical) and the ATO sub-group, and adviser to the project board (training).

For more information on the ATO sub-group see:

www.itil-officialsite.com/News/ATOSubGroupAppointed.aspx

For a full list of acknowledgements of the ATO sub-group at the time of publication, please visit:

www.itil-officialsite.com/Publications/PublicationAcknowledgements.aspx

Wider team

Change advisory boardThe change advisory board (CAB) spent considerable time and effort reviewing all the comments submitted through the change control log and their hard work was essential to this project. Members of the CAB involved in this review included:

David Cannon, Emily Egle, David Favelle, Ashley Hanna, Kevin Holland, Stuart Rance, Frances Scarff and Sharon Taylor.

Once authors and mentors were selected for the 2011 update, a revised CAB was appointed and now includes:

Emily Egle, David Favelle, Phil Hearsum, Kevin Holland and Frances Scarff.

Further contributionsThe author would specifically like to thank Greg Morrison of Progressive Insurance for his assistance, and Rob England for his presentation on governance at the 2010 itSMF New Zealand conference.

ReviewersClaire Agutter, IT Training Zone; Ernest R. Brewster, Independent; David M. Brink, Solutions3; Jeroen Bronkhorst, HP; Tony Brough, DHL Supply Chain; Janaki Chakravarthy, Independent; Collin Chan, Dell Inc.; Christiane Chung Ah Pong, NCS Pte Ltd, Singapore; Federico Corradi, Cogitek; Catalin Danila, ITAcademy; Michael Davies, ProActive Services Pty Ltd; James Doss, General Dynamics Information Technology; Jenny Dugmore, Service Matters; Frank Eggert, MATERNA GmbH; David Favelle, UXC Consulting/Lucid IT; Ryan Fraser, HP; Ian Head, Gartner Inc; Björn Hinrichs, SERVIEW GmbH; Kevin Holland, NHS Connecting for Health; Steve Ingall, iCore-ltd; Andreas Knaus, santix AG; Maggie Kneller; Brad Laatsch, HP; Chandrika Labru, Tata Consultancy Services; Reginald Lo, Third Sky; Hank Marquis, Lowe’s Companies Inc.;

Acknowledgements


http://www.itil-officialsite.com/News/ATOSubGroupAppointed.aspx

http://www.itil-officialsite.com/Publications/PublicationAcknowledgements.aspx

Jane McNamara, Lilliard Associates Ltd; Christian F. Nissen, CFN People; Dalibor Petrovic, Deloitte & Touche LLP, Canada; Judit Pongracz, ITeal Consulting; Noel Scott, Symantec; Joy Shewring, JS Project Services Ltd; Arun Simha, L-3 Communications STRATIS; John A. Sowerby, DP DHL IT Services; Thorsten Steiling, EJOT Holding GmbH & Co. KG; Helen Sussex, Logica; J.R. Tietsort, Micron Technology; Steve Tremblay, Excelsa Technologies Consulting Inc.; Ken Turbitt, Service Management Consultancy (SMCG) Ltd; John Windebank, Oracle Corporation.

2007 EDITION

Chief architect and authors Thanks are still due to those who contributed to the 2007 edition of Service Strategy, upon which this updated edition is based.

Sharon Taylor (Aspect Group Inc) Chief architect Majid Iqbal (Carnegie Mellon University)

Author

Michael Nieves (Accenture) Author

All names and organizations were correct at publication in 2007.

For a full list of all those who contributed to the 2007 and 2011 editions of Service Strategy, Service Design, Service Transition, Service Operation and Continual Service Improvement, please go to

www.itil-officialsite.com/Publications/ PublicationAcknowledgements.aspx

| 3

ITIL is part of a suite of best-practice publications for IT service management (ITSM).1 ITIL provides guidance to service providers on the provision of quality IT services, and on the processes, functions and other capabilities needed to support them. ITIL is used by many hundreds of organizations around the world and offers best-practice guidance to all types of organization that provide services. ITIL is not a standard that has to be followed; it is guidance that should be read and understood, and used to create value for the service provider and its customers. Organizations are encouraged to adopt ITIL best practices and to adapt them to work in their specific environments in ways that meet their needs.

ITIL is the most widely recognized framework for ITSM in the world. In the 20 years since it was created, ITIL has evolved and changed its breadth and depth as technologies and business practices have developed. ISO/IEC 20000 provides a formal and universal standard for organizations seeking to have their service management capabilities audited and certified. While ISO/IEC 20000 is a standard to be achieved and maintained, ITIL offers a body of knowledge useful for achieving the standard.

In 2007, the second major refresh of ITIL was published in response to significant advancements in technology and emerging challenges for IT service providers. New models and architectures such as outsourcing, shared services, utility computing, cloud computing, virtualization, web services and mobile commerce have become widespread within IT. The process-based approach of ITIL was augmented with the service lifecycle to address these additional service management challenges. In 2011, as part of its commitment to continual improvement, the Cabinet Office published this update to improve consistency across the core publications.

The ITIL framework is based on the five stages of the service lifecycle as shown in Figure 1.1, with a core publication providing best-practice guidance for each stage. This guidance includes key principles, required processes and activities,

1 ITSM and other concepts from this chapter are described in more detail in Chapter 2.

organization and roles, technology, associated challenges, critical success factors and risks. The service lifecycle uses a hub-and-spoke design, with service strategy at the hub, and service design, transition and operation as the revolving lifecycle stages or ‘spokes’. Continual service improvement surrounds and supports all stages of the service lifecycle. Each stage of the lifecycle exerts influence on the others and relies on them for inputs and feedback. In this way, a constant set of checks and balances throughout the service lifecycle ensures that as business demand changes with business need, the services can adapt and respond effectively.

In addition to the core publications, there is also a complementary set of ITIL publications providing guidance specific to industry sectors, organization types, operating models and technology architectures.

Servicetransition

Servicedesign Service

operation

Servicestrategy

Continualservice

improvement

Figure 1.1 The ITIL service lifecycle

1.1 OvERvIEW

ITIL Service Strategy provides best-practice guidance for the service strategy stage of the ITIL service lifecycle. Although this publication can be read in isolation, it is recommended that it is used in conjunction with the other core ITIL publications.

1 Introduction


4 | Introduction

1.1.1 Purpose and objectives of service strategy

The purpose of the service strategy stage of the service lifecycle is to define the perspective, position, plans and patterns that a service provider needs to be able to execute to meet an organization’s business outcomes.

The objectives of service strategy include providing:

■■ An understanding of what strategy is■■ A clear identification of the definition of

services and the customers who use them■■ The ability to define how value is created and

delivered■■ A means to identify opportunities to provide

services and how to exploit them■■ A clear service provision model, that articulates

how services will be delivered and funded, and to whom they will be delivered and for what purpose

■■ The means to understand the organizational capability required to deliver the strategy

■■ Documentation and coordination of how service assets are used to deliver services, and how to optimize their performance

■■ Processes that define the strategy of the organization, which services will achieve the strategy, what level of investment will be required, at what levels of demand, and the means to ensure a working relationship exists between the customer and service provider.

The reader should be able to understand the most important practices related to defining and executing a service strategy within a service provider organization.

1.1.2 ScopeITIL Service Strategy starts by defining and discussing the generic principles and processes of service management, and these generic principles are then applied consistently to the management of IT services.

This publication is intended for use by both internal and external service providers, and includes guidance for organizations which are required to offer IT services as a profitable business, as well as those which are required to offer IT services to other business units within the same organization – at no profit.

Two aspects of strategy are covered in ITIL Service Strategy:

■■ Defining a strategy whereby a service provider will deliver services to meet a customer’s business outcomes

■■ Defining a strategy for how to manage those services.

1.1.3 UsageITIL Service Strategy provides access to proven best practice based on the skill and knowledge of experienced industry practitioners in adopting a standardized and controlled approach to service management. Although this publication can be used and applied in isolation, it is recommended that it is used in conjunction with the other core ITIL publications. All of the core publications need to be read to fully appreciate and understand the overall lifecycle of services and IT service management.

1.1.4 value to businessSelecting and adopting the best practice as recommended in this publication will assist organizations in delivering significant benefits. Adopting and implementing standard and consistent approaches for service strategy will:

■■ Support the ability to link activities performed by the service provider to outcomes that are critical to internal or external customers. As a result, the service provider will be seen to be contributing to the value (and not just the costs) of the organization.

■■ Enable the service provider to have a clear understanding of what types and levels of service will make its customers successful and then organize itself optimally to deliver and support those services. The service provider will achieve this through a process of defining strategies and services, ensuring a consistent, repeatable approach to defining how value will be built and delivered that is accessible to all stakeholders.

■■ Enable the service provider to respond quickly and effectively to changes in the business environment, ensuring increased competitive advantage over time.

■■ Support the creation and maintenance of a portfolio of quantified services that will enable


Introduction| 5

the business to achieve positive return on its investment in services.

■■ Facilitate functional and transparent communication between the customer and the service provider, so that both have a consistent understanding of what is required and how it will be delivered.

■■ Provide the means for the service provider to organize itself so that it can provide services in an efficient and effective manner.

1.1.5 Target audienceITIL Service Strategy is aimed at executives and managers who are responsible for defining the strategy of a service provider.

Customers and business unit leaders who interact with service providers as part of their responsibilities will also find this publication helpful in providing a perspective about how service providers work, and how they can facilitate a more constructive interface with the service provider. The more a customer understands the context of service provision, the better they are able to articulate their needs in a way that the service provider is able to fulfil.

ITIL Service Strategy will also be valuable to owners of more strategic processes such as strategy management for IT services, service portfolio management, demand management, financial management and business relationship management. Indeed, service management professionals working in any part of the service lifecycle will find this publication helpful in identifying the context for the activities they are performing, which will help to improve their ability to define and deliver quality services, and to build appropriate structures to manage those services.

1.2 COnTExT

The context of this publication is the ITIL service lifecycle as shown in Figure 1.1.

The ITIL core consists of five lifecycle publications. Each provides part of the guidance necessary for an integrated approach as required by the ISO/IEC 20000 standard specification. The five publications are:

■■ ITIL Service Strategy■■ ITIL Service Design■■ ITIL Service Transition

■■ ITIL Service Operation■■ ITIL Continual Service Improvement

Each one addresses capabilities having direct impact on a service provider’s performance. The core is expected to provide structure, stability and strength to service management capabilities, with durable principles, methods and tools. This serves to protect investments and provide the necessary basis for measurement, learning and improvement. The introductory guide, Introduction to the ITIL Service Lifecycle, provides an overview of the lifecycle stages described in the ITIL core.

ITIL guidance can be adapted to support various business environments and organizational strategies. Complementary ITIL publications provide flexibility to implement the core in a diverse range of environments. Practitioners can select complementary publications as needed to provide traction for the ITIL core in a given context, in much the same way as tyres are selected based on the type of vehicle, purpose and road conditions. This is to increase the durability and portability of knowledge assets and to protect investments in service management capabilities.

1.2.1 Service strategyAt the centre of the service lifecycle is service strategy. Value creation begins here with understanding organizational objectives and customer needs. Every organizational asset including people, processes and products should support the strategy.

ITIL Service Strategy (this publication) provides guidance on how to view service management not only as an organizational capability but as a strategic asset. It describes the principles underpinning the practice of service management which are useful for developing service management policies, guidelines and processes across the ITIL service lifecycle.

Topics covered in ITIL Service Strategy include the development of market spaces, characteristics of internal and external provider types, service assets, the service portfolio and implementation of strategy through the service lifecycle. Business relationship management, demand management, financial management, organizational development and strategic risks are among the other major topics.


The preceding pages provide a preview of the information contained in ITIL

v3 2011 Service Strategy.

ITIL v3 2011 Service Strategy is ideal for both service provider executives

and their business customers. It provides a well-defined, best-practice

approach to creating and managing a sound IT service strategy that can

deliver significant business benefits.

To purchase ITIL v3 2011 Service Strategy, please visit:

http://itgsmshop.webs.com/itil

http://itgsmshop.webs.com/itil

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