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

2. 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

4. 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?
...

5. 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

6. 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?

7. Key Concepts

8. 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

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

10. 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

11. 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.

12. Example

13. 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

14. 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)

15. 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)

16. 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

17. 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

18. 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

19. 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

20. Processes

21. 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

22. 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

23. 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

24. 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

25. 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

27. 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

28. Questions?
More info – Subject Wiki page:
Info also at

29. 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

30. Applications of ITIL