Service Strategy Martin Sarnovský Department of Cybernetics and Artificial Intelligence Faculty of Electrical Engineering and Informatics Technical University of Košice

Contents Introduction / ITIL v.3 Fundamentals of service strategy Basic concepts of service strategy Processes and roles established by service strategy Example of a workflow during design of a service strategy Conclusion

Service Strategy Not products, but services!!! Publication Service Strategy – targeted towards higher level management Key differences from ITIL v.2 Main content - description of the processes, roles, but also ideas, methods... Basic objectives What services? To whom? ...

Service Strategy Helps make IT organizations/departments a part of the entire business The idea of functioning of business based on service management is kept here as a guiding principle, part of the strategy Helps clarify the relationships between different services, used systems, processes, business model, strategies and objectives

Basic objectives of Service Strategy Objectives that the service provider sets for himself What services would be provided by a business? (Portfolio/Catalogue) To whom should they be provided? (Request management) How is the business going to distinguish itself from the competition? How do we really create “value” for the customer with the help of services? (Value creation) How do we define the quality of service? (Evaluation) How do we effectively and efficiently assign resources to services in the portfolio? (Assets/Resources/Capabilities) How do we resolve resource sharing conflicts?

Key Concepts

Basics Publication describes: Planning, service strategy – tying business plans with IT strategy, service portfolio and catalog service, or various forms of sourcing Categorizes service providers Categorizes alternatives of service delivery models It is based on The concept of service management and planning according to the “added value“ of the service This type of planning uses an oriented pair Functionality - Warranty

Most important concepts Assets/Resources/Capabilities Utility/Warranty Value Creation Type of service provision Service Portfolio Sourcing

4P Concept Service Strategy defines key concept 4P Perspective – characteristic vision, direction Position – platform on which the provider will build upon and compete Plan – how provider will achieve his visions Profile – fundamental way of implementing things – characteristics, e.g. in decision-making

Packages Service Level Package – SLP Measure of value of a certain Service Package Designed to meet the needs of a particular Pattern of Business Activity Always linked with... Core Service Package – CSP Service packages providing a platform for 2 or more SLPs Supporting Services Service that enables or enhances a CSP Service Package Detailed description of an IT Service that is available to be delivered to Customers. A Service Package includes a Service Level Package and one or more Core Services and Supporting Services.

Example

Evaluation of Services Value – defined in business terms Service Utility / Functionality What customer receives (outputs) Service Warranty How service is delivered/suitability for use (availability, capacity, continuity, security) Service Service Utility Functionality “Meets a particular need“ Increases performance Defined by 1. Supported outputs 2. Avoiding costs and risks Service Warranty Quality “suitable for use“ Reduces variation in performance 1. Availability 2. Capacity 3. Continuity 4. Security

Value Creation Value – depends also on customer’s own assets Value creation – transformation of service management offer into strategic assets => practical use (of capabilities and assets)

Assets, Resources and Capabilities Any resource or capability Anything that could contribute to the delivery of a Service Resources A generic term that includes IT Infrastructure, people, money or anything else that might help to deliver an IT Service. Capability The ability of an Organization, person, Process, Application, Configuration Item or IT Service to carry out an Activity Service Management – strategic asset (service value)

Service Provider Type I Internal Embedded within a Business Unit within an Organization Type II Shared Provides shared IT Services to more than one Business Unit Type III External Provides services to multiple (external) customers

Sourcing – Structure for Resource Allocation Internal (Type I) Delivery of and payment for the service by internal employees Does not take into account the standardization of services across departments Greatest control / limited scalability Shared Services (Type II) Set mechanism for payment for services, lower costs than Type I Similar level of control, less limited scalability Full Service Outsourcing Single contract with single service provider Higher risks of delivery of services, difficult to change provider Prime Provider controls only service delivery, involves a number of providers Risk decreases / Complexity of supply increases Consortium A set of service providers (recipient selects) Providers – required to meet a single interface for managing services Fulfills more requirements (than sourcing using single provider) Risks are increasing (providers = competitors must cooperate) Selective Outsourcing Selection based on experience (1989, Kodak) Co - sourcing

Sourcing and Service Provision Models Categorization and analysis of models that providers will use to secure resources and service delivery Managed Service Business unit requesting the service funds the use of this service for itself Shared Service More services for one or more business units Shared infrastructure and resources Utility Services provided based on how much and how often each customer needs them

Service Portfolio and Service Catalogue Portfolio contains all the resources that are used / created at different stages of service life cycle Service Catalogue Subset of Service Portfolio The only part of portfolio visible to the customer Part of the portfolio, which provides for the payment of costs or profit generation Services in catalogue – set and tuned to the needs of the customer Catalogue – important outward indicator -> represents provider’s capabilities

Processes

Strategy Generation Market Definition Evaluations, analyses What services can the organization offer Offer Development A more detailed description of services that are worth moving further Development of Strategic Assets Examination of the possibility of reusing existing services Our capabilities of reusing them Implementation Preparation Objective – to ensure that we are ready to deliver, what we decided to pursue

Financial Management Purpose – To provide business and IT departments financial statement of provided IT services, value of assets and qualification Includes – management of budget, accounting and charging Process is highly interconnected with entire organization => financial information is created / used by many parts of the business – aggregate, share financial data FM process includes Quantifying the value of services Quantifying the value of components of services Determination of costs (various types), assignment of costs to services Classification of costs Capital/Operational Fixed/Variable Direct/Indirect Dynamics of variable costs understanding that some factors can affect a service and therefore also its costs

Demand Management Purpose Understanding customer’s service requirements Influence and ensure capacity to fulfill these requirements Strategic level Analysis of character of business activity Analysis of user profiles Tactical level How can we motivate customers to use our IT services? E.g. differential charging for use of IT service in less important periods

Service Portfolio Management Continuous process - From Cradle to the Grave Describes all services that are/will be/were Definition – of catalogue services, Ensuring of business cases, Data in portfolio Analysis – maximizing portfolio value, prioritization, balance between demand and supply Approval – finalization of portfolio, Confirmation of services/resources Determination – allocation of resources and services

Roles and responsibilities Business Relationship Manager BRM (sometimes referred to as Account Manager) Understands the business of the organization, creates a relationship with the customer Product manager Responsibility for the development and management of services during the life cycle Responsibility for capacity management and service/solutions/ packages that are in the service catalogue Chief Sourcing Officer Resource strategy in business Management and direction of departments, resources, and development of resource strategy

Conclusions Service Strategy – difficult to read for IT workers, often incomprehensible Overlap with other ITIL publications, notably Service Design (Continuity, Capacity management) Uses different terminology Requires background in finance Vaguely defines processes / functions / concepts

Questions? More info – Subject Wiki page: https://chimera.fei.tuke.sk/rip Info also at http://www.itsmf.sk

Applications of ITIL in SR Knowledge of the ITIL approach in SR (207 respondents) 12,1 % - Organizations with more than 250 employees, mostly from the vicinity of BA - those organizations that know of ITIL but do not use it

Applications of ITIL