IT Service Management Module 3: Service Strategy Phase

Course roadmap Module Study duration Module 1: Introduction to service and business process management 2 weeks Module 2: IT service management lifecycle, frameworks and standards Module 3: Service strategy phase 1 week Module 4: Service design phase Module 5: Service transition phase Module 6: Service operation phase Module 7: Service operation functions Module 8: Continual service improvement phase Module 9: IT service acceleration and optimisation Module 10: IT Governance

Module 3 objectives explain the basic concepts of Service Strategy in the Service Lifecycle describe the processes and activities of Service Strategy Understand the roles & responsibilities of service strategy in an organisation apply your understanding of Service Strategy and Service Design in analysing real life cases.

Video Watch the following video clip. In this video the concept of ‘IT service catalogue’ has been introduced by comparing it to a restaurant menu. Title: Service Catalogue Explained Simply (3:05) https://www.youtube.com/watch?v=ieB8YYuPOiY

ITIL Service Lifecycle Office of Government Commerce, The ITIL Service Lifecycle used under https://creativecommons.org/licenses/by/4.0/

Service strategy goals to operate and grow successfully in the long term to think and act in a strategic manner to transform their Service Management capabilities into a strategic asset to see and act on the relationships between the IT services, processes and systems, and the business objectives that they support to handle the costs and risks associated with their Service Portfolios

Service strategy objectives The objectives address the concepts: delivering customer “outcomes” understanding the market place serving the stakeholders acknowledging competition and choice

Building blocks for service providers Performance anatomy Distinguishing capabilities Market focus View service as a strategic asset Distinctive and profitable assets Knowing where and how to compete

The four Ps of Strategy Strategy Perspective Position Pattern Plan Perspective – the values and goals that govern the behaviour of the entire organisation Position – the distinguishing characteristics of the service provider in the eyes of the customer Plan – organisations action plan in a competitive market Pattern – organisations procedures resulting from the perspective, position and plan.

Utility and warranty creates value Utility is what the customer wants – The Service is “Fit for Purpose” Performance supported? Constraints removed? Utility Warranty Value Warranty is how what the customer wants is delivered – The Service is “Fit for Use” Available when needed? In sufficient capacity or magnitude? Dependable in terms of continuity and security?

Key terms Business case Availability Capacity Continuity Security the justification for a significant item of expenditure. Availability offers the customer the guarantee that the services are available according to the agreed conditions Capacity Impacts on utility of services Continuity ensures that the services supports the business even during times of great difficulty or other disasters Security guarantees to customers that they can make use of the service safely and securely.

Service assets Services Customer Capabilities Resources Management Capital Organisation Infrastructure Processes Applications Knowledge information People Service assets Services Value Customer

Types of service providers I – internal service provider II – shared services unit III – external service provider Type I – USQ ICT services Type II – government centralised IT unit for all or a number of government departments Type III – external / managed service provider

Service strategy processes Strategy management for IT services Demand Management Service Portfolio Management Business relationship management Financial management for IT services Adapted Office of Government Commerce, The ITIL Service Lifecycle used under https://creativecommons.org/licenses/by/4.0/ 14 © 2001 Pink Elephant Inc. All rights reserved. 14

Service strategy activities Define the market Develop the offer Develop strategic assets Prepare for execution

Experiences of an ITIL Implementation WinMedia.usq.edu.au/FoB/CIS3008/session8.wmv

#1 Financial Management Financial Management provides vital information that management needs to guarantee efficient and cost-effective service delivery. Efficient financial management enables the organisation to provide a full justification of expenditures and allocate them directly to services. In ISO/IEC 20000, financial management is covered under budgeting and accounting for IT services.

Basic concepts Service valuation Demand modelling Return on investment Provisioning value The cost to the IT service provider to deliver the service Service value potential Perceived added value Demand modelling Total cost to customer and forecast of cost of future demands Return on investment

Fundamental decisions Cost Recovery, Value Centre or Accounting Centre? Chargeback: to charge or not to charge?

#2 Service portfolio management (SPM) a dynamic method to govern investments in Service Management across the enterprise, in terms of financial values. A service portfolio describes the services of a provider in terms of business value. SPM starts with documenting the standardised services of the organisation and then those of the Service Catalogue. In essence SPM is a Governance method.

Video Watch the following video clip. Title: Introducing Service Portfolio Management (5:38) https://www.youtube.com/watch?v=y4ZzrFFLTwE

SPM key activities Define Analyse collection of a validated inventory of all existing and proposed services including their business cases Analyse identification of what services are required to enable the organisation to achieve its service goals, how well the existing Service Portfolio meets these needs, what service assets are required to enable the Service Strategy and how to align and prioritise to meet demand

SPM key activities Approve Charter finalisation of the desired future state of the Service Portfolio and authorisation of retention of appropriate existing services, and required investment in the replacement, rationalisation, refactoring, renewal or retirement of existing services Charter Communicate approved decisions about desired changes to the Service Portfolio and execute actions to promote newly chartered services into Service Design; refresh selected existing services in the Service Catalogue; initiate Service Transition activities.

#3 Demand management used by service providers to achieve the most effective utilisation of their service assets by aligning supply capacity and supply demand. Services cannot be produced in advance of when they are consumed and service management must deal with the problem of synchronous production and consumption.

Basic concepts Activity-based Demand Management Core services service provider studies a customer’s business to identify, analyse and codify the Patterns of Business Activity (PBAs) which generate demand for service. Core services deliver the basic results to the customer - the value that customers require and for which they are willing to pay. Supporting services Enable the value proposition from core services. Developing a differentiated offering Bundling core services and supporting services are a vital aspect of a market strategy.

Basic concepts Service packages A Service Level Package (SLP) a detailed description of an IT service that can be delivered to customers. A service package consists of a Service Level Package (SLP) and one more core services and supporting services. A Service Level Package (SLP) is a defined level of utility and warranty for a particular Service Package. Each SLP is designed to meet the needs of a particular PBA. SLPs are associated with a set of services levels, a pricing policy, and a Core Service Package (CSP).

Basic concepts A Core Service Package (CSP) A Line of Service (LOS) a detailed description of a core service that may be shared by two or more SLPs. A Line of Service (LOS) a core service or supporting service that has multiple Service Level Packages. A LOS is managed by a Product Manager and each SLP is designed to support a particular market segment.

#4 Business relationship management is concerned with the various interactions between provider and customer. The objective of BRM is to establish and maintain a good relationship between the service provider and the customer based on understanding the customer and their business drivers. BRM is not explained in ITIL but is included in the ISO/IEC 20000 Standard.

Interview Watch the following interview available on the Study Desk. Then answer the review questions and post your answers to the module discussion forum. Interview with Principal Manager - Performance Measurement & Investment Management - Michael Thompson (26:51 minutes) Q 3.1 Budgeting is a planning activity in ICT Financial Management. How is this activity conducted at USQ? Q 3.2 How does the concept of chargeback (charging) apply in providing ICT services at USQ? Q 3.3 List some of the major financial management issues at USQ discussed during this interview.

BRM in practice at USQ Go to USQ website and find examples of USQ service strategy, e.g. Service catalogue. Why does USQ have more than one service catalogue? Acceptable use of ICT Resources Policy: link Service Catalogue to staff: link Service catalogue to students: link Service Desk: link