Service Strategy

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Service Strategy

  1. 1. The Service Strategy book focuses on how to design, develop, and implementService Management as a strategic asset. 1 Demand Management 2 Service Portfolio Management (SPM) 3 Financial Management for IT Services A Business Relationship Management B Strategy Management for IT Services Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 2
  2. 2. To stop and think about WHY something has to be done, before thinking HOW. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 3
  3. 3. Minzberg’s four P’s1) Perspective – Have a clear vision and focus2) Position – Take a clearly defined stance3) Plan – Form a precise notion of how the organization should develop itself4) Pattern – Maintain consistency in decisions and actions.(Minzberg, 1994) Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 4
  4. 4. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 5
  5. 5. Asset: (ITIL Service Strategy, SS)Any resource or capability. The assets of a service provider include anything that couldcontribute to the delivery of a service. Assets can be one of the following types: • Management • Applications • Organization • Infrastructure • Process • Financial Capital • Knowledge • People • Information 6 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  6. 6. Resource: (ITIL Service Strategy, SS)A generic term that includes IT infrastructure, people, money or anything else that mighthelp to deliver an IT service. Resources are considered to be assets of an organization. © Crown copyright 2011. Reproduced under license from OGC. - Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 7
  7. 7. Service Portfolio Management (SPM): (ITIL Service Strategy, SS)The process responsible for managing the service portfolio. Service portfoliomanagement ensures that the service provider has the right mix of services to meetrequired business outcomes at an appropriate level of investment. Service portfoliomanagement considers services in terms of the business value that they provide. 8 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  8. 8. Governance:Ensures that policies and strategy are actually implemented, and that requiredprocesses are correctly followed. Governance includes defining roles and responsibilities,measuring and reporting, and taking actions to resolve any issues identified. 9 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  9. 9. Cost Benefit Analysis:An activity that analyzes and compares the costs and the benefits involved in one ormore alternative courses of action. See also Business case; Internal rate of return; Netpresent value; Return on investment and value on investment. 10 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  10. 10. Internal Rate of Return (IRR): (ITIL Service Strategy, SS)A technique used to help make decisions about capital expenditures. It calculates afigure that allows two or more alternative investments to be compared. A largerinternal rate of return indicates a better investment. See also Net present value orReturn on investment. 11 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  11. 11. Net Present Value: (ITIL Service Strategy, SS)A technique used to help make decisions about capital expenditures. It compares cashinflows with cash outflows. Positive net present value indicates that an investment isworthwhile. See also Internal rate of return and Return on investment. 12 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  12. 12. Return on Investment: (ITIL Service Strategy, SS & Continual Service Improvement, CSI)A measurement of the expected benefit of an investment. In the simplest sense, it is thenet profile of an investment divided by the net worth of the assets invested. See alsoNet present value or Value of investment. 13 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  13. 13. Value on Investment (VOI): (ITIL Continual Service Improvement, CSI)A measurement of the expected benefit of an investment. Value on investmentconsiders both financial and intangible benefits. See also Return on Investment. 14 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  14. 14. Supplier: (ITIL Service Strategy, SS & Service Design, SD)A third party responsible for supplying goods and services that are required to deliver ITservices. Examples of suppliers include commodity hardware and softwarevendors, network and telecom prodders, and outsourcing organizations. See also supplychain and underpinning contracts. 15 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  15. 15. Pattern of Business Activity (PBA): (ITIL Service Strategy)A workload profile of one or more business activities. Patterns of business activity areused to help the IT service provider understand and plan for different levels of businessactivity. See also user profile 16 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  16. 16. User Profile (UP) (ITIL Service Strategy)A pattern of user demand for IT services. Each user profile includes one or more patternsof business activity (PBA’s). 17 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  17. 17. Strategic (ITIL Service Strategy):The highest of the three levels of planning and delivery(strategic, tactical, operational). Strategic activities include objective setting and long-term planning to achieve the overall vision. 18 © Crown copyright 2011. Reproduced under license from OGC. - Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  18. 18. Tactical (ITIL Service Strategy):The middle of the three levels of planning and delivery (strategic, tactical, operational).Tactical activities include medium-term plans required to achieve specificobjectives, typically over a period of weeks to months. 19 © Crown copyright 2011. Reproduced under license from OGC. - Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  19. 19. Operational (ITIL Service Strategy):The lowest of the three levels of planning and delivery (strategic, tactical, operational).Operational activities include day-to-day or short-term planning or delivery of abusiness process or IT service management process. The term is also a synonym for live. 20 © Crown copyright 2011. Reproduced under license from OGC. - Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  20. 20. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 21
  21. 21. The customer does not buy the drill… …they buy the hole it can make for them. 22 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  22. 22. Thus the value is derived by what the service allows the customer to do. Because they (Customer) decide what they will do with the service. 23 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  23. 23. There are two factors for value.Fit for PURPOSE orFitness for PURPOSEFit for USE orFitness for USE 24 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  24. 24. Is the functionality offered by the product or service to meet a particular need. What the service does! Because it can meet certain requirements it is: FIT FOR PURPOSE Example: A service which improves the ability of the performance of processing sales orders would be considered a utility.Any attribute of a service that removes or reduces the effect of constraints on the performance of a task. 25 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  25. 25. Is the assurance that a product or service will meet the agreed requirements. How the service is delivered! Because it can meet availability, capacity, reliability, continuity and security it is: FIT FOR USEExample: A service which increases the speed or availability of a service may be considered a warranty. Any attribute of a service that increases the potential of the business to perform a task. 26 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  26. 26. Warranty refers to any means by which utility is made available to users. Utility is the service does & Warranty is it is delivered. UtilityPerformance Supported? ORConstraints Removed? Fit for Purpose? T/F AND WarrantyAvailable Enough? Fit for Use?Capacity Enough?Continuous Enough? AND T/FSecure Enough? T = True F = False 27 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  27. 27. Warranty and utilityshould be designed atthe same time to save time and money. 28 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  28. 28. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 29
  29. 29. A Service Package ContainsCorse Service Package Supporting Service Package (Basic Critical Services) (Provides differentiation or more effective use of Core Services) Service Level Package (Defines level of Utility and Warranty provided by Service Package) Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 30
  30. 30. Broadband Super User ($120.00 per month) Corse Service Package Supporting Service Package • Internet connection • Static IP Address • E-Mail Address • Spam Filtering • Web Site • 1 GB Web space • VOIP Service Level Package • Download Speed: 30 mbs • Download Quota: 1 TB • Automatic Cloud back-up (500 MB) • 98% Uptime Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 31
  31. 31. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 32
  32. 32. Service Portfolio Management Questions?Why should a customer buy these services?Why should they buy these services from us?What are the pricing and chargeback models?What are our strengths and weaknessespriorities and risks?How should our resources and capabilities beallocated? 33 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  33. 33. The service portfolio represents the commitments and investments made by a service provider across all customer and market spaces. Service Portfolio Service Retired Service Catalog Pipeline Services Configuration Management SystemCustomer Application Supplier & Contract Customer ProjectPortfolio Portfolio Management Information Agreement CMDB Portfolio System Portfolio 34 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  34. 34. Service Knowledge Management System (SKMS)(Requirements to Retirement) Service Portfolio (Complete set of services managed by the service provider)Service Lifecycle Service Pipeline (Proposed or services in development) Business Service Catalog Technical Service Catalog Visible to Customer Visible to IT Service Catalog (Live IT services including those available for deployment) Retired Services (Services and components that are no longer in use) 35 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  35. 35. • Articulate business needs…service providers response to those needs.• …multiple service portfolios may exist depending on customers. Service Portfolio Service Retired Service Catalog Pipeline ServicesWhat do you find in the Service Portfolio? Requirements Business Case Offerings & Packages Descriptions Priorities Value Risks Cost & Pricing Proposition Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 36
  36. 36. Steps of Service Portfolio Management 4 Major StepsDefine AnalyzeCharter Approve 37 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  37. 37. DefineUsed to validate portfolio data in terms of:• Potential Benefits• Recourses and Capabilities Required• Enables service provider to define what it can do• Enables service provider to define what it cannot do (due to maturity levels, capabilities, risks, etc.) 38 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  38. 38. AnalyzeMaximize portfolio value, align, prioritize and balance supply anddemand. Questions asked are:• What are the long term goals of the service organization?• What services are required to meet these goals?• What capabilities and resources are required to deliver and support those services?• How will we get there? 39 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  39. 39. ApproveFinalize proposed portfolio; authorize services and resources needed todeliver services. 40 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  40. 40. CharterPlans and tracks the progress of service investments across the portfolioand allocates required resources. Used to schedule and manage:• Design of Services• Transition of Services• Change of Services• Retirement of Services 41 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  41. 41. Service Portfolio Review of Existing Services Renew Theses services meet functional fitness criteria, but fail technical fitness. Replace These services have unclear and overlapping business functionality. Retain Largely self contained, with well defined asset, process and system boundaries. These services are well aligned and relevant to the organizational strategy. Refactor Often services that meet technical and functional criteria of the organization display fuzzy processes or system boundaries. In these cases, the service can be refactored to include only the core functionality , with common services used to provide the remainder. Retire Retired services do not meet minimum levels of technical and functional fitness.Rationalize Used to address portfolios that offer services which in fact are composed of multiple releases of the same operating system, service or application etc. 42 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  42. 42. Transform Transform the Business (TTB) Venture the TTB investments are focused on Business indicatives to enter new market spaces (TTB) with new capabilities being created. Grow the Business (GTB) Growth Grow theRisk GTB are investments intended to grow Business the organizations scope of services. Discretionary (GTB) Run the Business (RTB) Core Run the RTB are investments centered on Business Service Operations or maintaining the Non-Discretionary (RTB) Status-Quo. 43 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  43. 43. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 44
  44. 44. Account fully for the financial resources consumed by IT service provider and attributethose costs to the services delivered to the organizations customers. Business Business Opportunities Financial Management IT Opportunities IT Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 45
  45. 45. Activities1. Funding – Predicting the expected future requirements for funds to deliver agreed upon services and monitoring and adhering to the defined budgets.2. IT Accounting – Enables the IT organization to account fully for the way its money is spent. The definition of Cost Models can be used to identify costs by customer, by service, by activity or other logical grouping.3. Chargeback (Optional) – Charging customers for their use of IT Services. Charging can be implemented in a number of ways in order to encourage more efficient use of IT resources. Notional charging is one particular option, in which the cost of providing services to customers is communicated but no actual payment is required. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 46
  46. 46. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 47
  47. 47. Goal: Understand and influence customer demand forservices and the provision of capacity to meet thesedemands.• Identification and analysis of Patterns of Business Activity (PBA)• Utilizing techniques to influence and manage demand in such a way that excess capacity is reduced but business and customer requirements are still met.• When and why does the business need the capacity?• Does the benefit of providing the required capacity outweigh the cost? Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 48
  48. 48. Capacity / Demand Management: Capacity management is supported initially in SS where the decisions and analysis of business requirements and customer outcomes influence the development of patterns of business activity, lines of service (LOS) and service options. Demand Pattern Business Service Process Process Capacity ManagementPattern of Service Belt Plan Business Activity Delivery Schedule Incentives and penalties to influence consumption Demand Management 49 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  49. 49. Capacity and Availability Management can optimize designs to Service Design meet demand patterns Change and Service Validation and Testing can ensureService Transition appropriate level of warranty are provided. Can optimize the availability of staff based on patterns ofService Operation demand. Can identify opportunities to consolidate demand or introduceContinual Service improved incentives or techniques to be utilized in influencing Improvement demand. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 50
  50. 50. There are two ways to influence demand:1. Physical/Technical Constraints (Restrict number of connections, users, running times, etc.)2. Financial Chargeback (using expensive charging of services near full capacity or capacity quotas.) 51 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  51. 51. Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 52
  52. 52. Service Strategy Activities Define the MarketUnderstand the relationship between services and strategies, understand the customers, understand theopportunities and classify and visualize the services. The development of the offeringCreate a service portfolio that represents the opportunities and readiness of a service provider to serve thecustomer and the market. The development of strategic assetsDefine the value network and improve capabilities and resources (service assets) to increase the serviceperformance and potential. Preparation for executionStrategic assessment, setting objectives, defining Critical Success Factors (CSF), prioritizing investments, etc. 53 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  53. 53. 3 Main Types of Service ProvidersType 1: Internal Service Provider…embedded within a business unit. There may be several type 1 serviceproviders within an organization.Type 2: Shared Services UnitAn internal service provider what provides shared IT services to more thenone business unit.Type 3: External Services ProviderA service provider that provides IT services to external customers. 54 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  54. 54. Every business should focus on both thefinancial and non-financial impacts of the proposed project or service. 55 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  55. 55. Value is defined by the customer 56 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  56. 56. Business Outcomes ValuePreferences Perceptions 57 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  57. 57. Perceptions are also influenced by thecustomers self image or actual position in themarket such as those of being an innovation; Market leader and or risk-taker. 58 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  58. 58. Positive Negative Difference Difference - Net Difference Losses from utilizing the service + Based on DIY strategy or existing arrangementsReference Value Economic value of service 59 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  59. 59. Resources (Easy)Capabilities (Difficult) 60 Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved
  60. 60. • IT BudgetsService Strategy • Patterns of Business Activity (PBA) • Service Portfolio Information • New and changed service assets Service Design • Service Catalogue, SLA’s, OLS’s, UC’s • Testing and Validation Criteria • Known Errors fromService Transition Development • Testing and Validation Results • Change Authorization • Incidents, Problems, Events, Service RequestsService Operation • Request for Change (RFC) • Information collected for infrastructure monitoringContinual Service • Service and Process Improvements Improvement Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved 61
  61. 61. 62Created by PelegIT, Ltd. – www.pelegit.com, - All Rights Reserved

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