Preserving Value

Effective Measurement

SERVICE STRUCTURE IN THE IN THE VALUE

NETWORK:

Understand Market space A set of business outcomes

which can be facilitated by a service.

Customers normally prefer those with lower costs and

risks

HOW TO

DEFINE

SERVICES

Step 1 : Define the market and identify

customers.

Step3 : Quantify the outcomes.

Step5 : Understand the opportunities

Step 6 : Define service based on outcomes.

Step 7 : service models.

Step 8 : Define service units and packages.

Analyzing how to most effectively source and deploy the resources and capabilities required to deliver outcomes to customers.

Deciding what to source - Substitution/change, Disruption/interference & Distinctiveness.

Sourcing structures - Choosing a sourcing structure i.e. outsourcing, insourcing etc.

Multi-vendor sourcing Multiple providers to spread the risk and reducing the cost.

Service provider interfaces used to ensure multiple parties in a business relationship have the same point of reference for defining, delivering and reporting services.

Sourcing governance refers to the rules, policies and processes by which businesses operate.

Critical success factors cost, best location, moving/change disruption.

Value chains to value networks creating and maintaining value chains. Strategies include:o Marshal external talent.o Reduce costso Change focal point of distinctiveness.o Increase demand for complementary services.o Collaborate

Using value networks serve to communicate the model in a clear and simple wayExample to the left

applied inputs for the required outputs such as:Vision Mission Strategies Strategic plans Service portfolio Change proposals Financial information

Strategy tools and procedures

Outcomes and restraints

Service models

Patterns and business activity

Business impact analysis

Business relationship management

IMPACT OF SERVICE

STRATEGY

Service TransitionWhen a service moves from design

and build into operation

Effects of service on Transition

Moulding the strategy

Defining the changes needed

Test and validate service

Service OperationUnderstand the outcomes

Give support with effectiveness and efficiency

Measure the success

Meets the objectives

Dynamics The activities, flow of resources, coordination and interactions.

SERVICE STRATEGIES FOR

CUSTOMER SATISFACTION

Service attributesAre the characteristics that provide form

and function to the service.Linear factor The degree to which the

customer needs are met determines their satisfaction.

Non-linear factor If only a fraction of customer needs are met there is still a

high level of customer satisfaction.

The Kano Model

This figure shows a relationship between the level of fulfilment of customer needs

and the level of satisfaction the customer feels.

3 factors involved in customer satisfactionBasic Factors - must-have utility. Performance factors - One-dimensional utilities. Excitement factors - nice-to-have utility.

Should only be offered under 3 circumstances:AttractionMarketing campaign and offered at a limited time.Customer dissatisfaction with service

Outcomes for review:Service Catalogue Services should be clearly linked to defined and quantified outcomesService pipeline Used for the success of service design and validationService level agreement Specifying the service and outcomes it is designed to support.

SERVICE

ECONOMICS

BUSINESS

RELATIONSHIP

MANAGEMENT

Purpose establish and maintain a business

relationship understanding the customer and their

business needs

Policies/Principles/Basic concepts

Customer Portfolio is a database or structural document used to record all customers of the IT service provider.

Customer agreement portfolio database or structured document used to manage service contracts or agreements between an IT service provider and its customers.

Customer Satisfaction - Customer satisfaction is measured against service provider performance taking into account, targets and previous scores

Service Requirements - This involves investigating the business need or opportunity, validating it, defining a business case and evaluating both the warranty and utility needed.

Objective Ensures high level of customer

satisfaction making sure that the customers needs are met to the requirement

Scope aligning objectives of the

business with the activity of the service provider

Risks Poor integration between service

provider and customer facing processes will result in bad business relationship management

Business Value ability of the service

provider to articulate and meet the business needs of its customers

Activities/Methods/Techniques Represent the service provider to its customers

through coordinated marketing, selling and delivering activities.

Work with service portfolio management and design coordination to ensure that the service providers response to customers requirements is appropriate.

Information Management customer portfolio and customer agreement

are updated and validated customer surveys are also put into action and

the service catalogue is an important reference in communicating consistently

Critical Success Factors and Key Perfomance Indicators

CSF Ability to document and understand customer requirements of service, Ability to measure customer satisfaction and to know what action to take with the results.

KPI Customer satisfactory levels are consistently high and are used as feedback into portfolio management.

Challenges History of poor service may

make it difficult for business relationship management to function effectively

Using theory to support strategy

Strategy must enable service providers to deliver value

A basic approach to deciding a strategy

Service management as a strategic asset

Strategy synthesis opposing dynamics

Strategy as a means to outperform competitors

Government and non-profit organizations Perspective Describes vision and direction of organization Positions Describes how the service provider intends to

compete in the market

Plans Describes how the service provider will transition from their current situation to their desired situation

Patterns Describes ongoing actions a service provider will have to perform to continue meeting its strategic objectives

Customers Those who buy goods or services, customer of an IT service provider is the person or group who defines and agrees the service level targets.

Internal Customers people or departments who work in the same organization as the service provider

External Customers people who are not employed by the organization

Services Means of delivering value to customers by facilitating outcomes customers want to achieve without ownership of specific risks and costs.

Value Value of a service can be considered to be the level at which service meets a customers expectations.

Value Chain A sequence of processes that creates a product or service that is value to a customer.

CUSTOMER &

SERVICES

Types of IT Services

Supporting Service Not directly used by the business, is required by the IT Service Provider to provide other IT ServicesInternal Customer Facing Service IT Service that supports a business process managed by another business unitExternal Customer Facing Service IT Service that is provided by IT to an external customer

Step 4 : Classify and visualize the service

Service conditions should have clarity and have context on how

resources are useful to justify the expense of a service.

Service packagesA collection of two or more services combined to offer a solution to a specific kind of

customer meet specific business outcomes.

It can be a combination of core, enabling and enhancing

services

IT organizations are complex systems needing to interact with other components

They are interdependent This complexity explains why some service

organizations resist change

Should be achieved through:

Eliminating or reducing deviations in performance

Maintaining operational effectiveness and efficiency

Reducing hidden costs

Publicizing and substantiating hidden benefits Use of automation, web-based functionality,

support tools

Measurement Principles:

Begin on the outside of the service organization

Responsiveness to customer

Think of process and service as equal

Numbers matter

Compete as an organization

Definition of Risk A possible event that could cause harm or loss

Two distinct phases in dealing with Risk:

Risk Assessment - Concerned with gathering information about exposure to risk so organization can make appropriate decisions and manage risk properly

Risk Management Involves having processes in place to monitor risks, access to reliable and up-to-date information about risks

Design Risks

Customers expect services to have a beneficial impact on performance of assets [Utility from their perspective]

Always a risk that services designed fail to deliver the expected benefits in utility

Major cause of poor performance is poor design

5 Operational Risks

Two levels of Risk must be considered from a Service Management perspective:

Risks faced by the business, and the business services it uses

Risks to the IT services that underpin the business and its processes

Critical Success Factors

All challenges and risks already mentioned can be inverted to become critical success factors (CSFs)

Other factors critical to success of a Service Management organization:

Experienced, skilled and trained staff

Adequate support from business (Funding)

Appropriate and effective support tools

DEMAND

MANAGEMENT

Objective Identify and analyse

patterns of business activity to understand the level of demand that will be placed on a service

Scope Identify and analyse how

different types of user influence the demand for service

Risks Lack of, or inaccurate

configuration management information, which results on the impact of changing demand on the service providers infrastructure and applications.

Purpose

To understand, anticipate and influence customer demand for services and to work with capacity management to ensure the service provider has capacity to meet this demand

Activities/Methods/Techniques

Business Plans

Marketing Plans

Sales Forecast

New Product launch plans

Challenges The customer might

find it difficult to break down individual activities that make sense to the service provider.

Business Value Main value of demand

management is to achieve a balance between the cost of a service and the value of the business outcomes it supports

Policies/Principles/Basic Concepts

To be fully active demand needs to be active throughout the whole lifecycle.

Critical Success Factors and Key Performance Indicators

CSF A process exist whereby services are designed to meet the patterns of the business activity and meet business outcomes

KPI Capacity plans include details of patterns of business activity corresponding to workloads.

Information Management The service Portfolio and

Customer Portfolio

Minutes of meetings between business relationship managers and customers

RolesService Owner Ensuring that the on-going service delivery and support meet the agreed customer requirements

Process owner ensuring that a process is fit for purpose

Process Manager accountable for operational management of a process

Process Practitioner responsible for carrying out one or more process activities.

Text

Service EconomicsThe cost of providing services and the

value of outcomes achieved

Relies on 4 main areas

Continual Service Improvement

Evaluate

Check changes in outcomes

The relevance of services

Improvements

Type I (Internal Service Provider)Type I Service Providers are dedicated to, and often embedded within, an individual business unit.

Type II (Shared Services Unit)Functions as Finance, IT, Human Resources and Logistics are not always at the core of

a n organizations competitive advantage.

Type III (External Service Provider)Type III Service Provider is a service provider that provides IT services to external customers

FINANCIAL MANAGEMENT FOR IT SERVICES

BenefitsConduct business in a financially responsible manner

*Understand IT services costs and maintain profitability*Ability to make sound business decisions

Process*Budgeting -> Predicting and controlling cash flow

*Accounting -> Enables IT organization to account for money spent*Charging -> Billing customers for service

CRITICAL SUCCESS FACTORS*There is an enterprise framework to identify, manage and

communicate information*Funding is available to support provision of services

*Service provider is able to charge for service

FINANCIAL MANAGEMENT FUNDING*IT service management refers to means an IT service obtains

financial resources*Types of funding models

Rolling plan -> is for a fixed period (monthly)Trigger based -> Is initiated by an event

Zero based -> Is allocated according to financial periods

FINANCIAL MANAGEMENT COSTS*Accounting is responsible for identifying costs and managing variance from budget

*An accounting cost model is a framework that determines the cost of a service and ensure adequate allocation

COSTS CLASSIFICATION*Capital costs the cost of purchasing something that will be a financial asset*Operational costs costs resulting in

running the IT service

TYPES OF COST MODELS*Cost by it - accounts for cost and reports to management

*Cost by service cost is reported according to service*Cosy by customer service is paid for by service provider and

allocated to customers*Cost by location - service is paid for by service provider and

allocated to location*Hybrid cost model a combination of different models

Governance is the single overarching area that ties IT and business together. Services are

on way of ensuring that the organisation is able to execute

governance

GOVERNANCE

What is governance?The rules, policies and processes

by which a business are operated, regulated +

controlled.Defined by board of directors, stakeholders or constitution.

Who Governs?A person or group of people who are responsible for the

governance of the organisation.Appointed by shareholders or

members of organisation.

What is the difference between governance and management?

Governance performed by governors. Insures organisation

adheres to rules and policies.Management performed by executives and people whp

report to them. Job is to execute rules, processes and operations.

Governance Framework:Establish responsibilitiesStrategy to set and meet organisations objectivesAcquire for valid reasons

Ensure performance when required

Ensure conformance with rulesEnsure respect for human factors

What is IT governance?It does not exist as separate are.

Governed by same rules as organisation. CIO enforces

corporate governance through set of applied strategies, policies

and plans

How is Corporate governance of IT defined, fulfilled and enforced?

CIO ensures that corporate strategies, policies, rules and plans

include a high-level overview of how IT will be governed.

Management consultants provide assistance to governors.

Final decision stays with governor as the are accountable for governance

How does service strategy relate to governance?

Governors are responsible for the strategy of the organisation, and ensuring all parts of organisation

are aligned to strategy.CIO and IT steering committee will

oversee strategy management.

Used to direct and control the service management activities.

Should be a strategic decision for a business.

Relationships between processes are implemented in different way by different service providers.

Due to common elements between managements systems, organisations manage these systems in integrated way.

Management needs to analyse requirements of relevant management standard in details.

Compare to others already incorporated

STRATEGY

MANAGEMENT

FOR IT

SERVICES

A service strategy is a subset of the overall strategy for the organisation.

In the case of an IT org, the IT strategy will encompass the IT

service strategy

ITIL Service Strategy Processes

Benedito, Christian, Kara, Abrahams, Peters, Smith, Nombewu

Markets can be defined by one or

more criteriaIndustry,

Geographical,Demographic,

Corporate relations (group of companies)

STRATEGY

Structure - Particular service assets needed and the

patterns in which they are configured

CHALLENGES

RISKS

CRITICAL SUCCESS

FACTORS

Service portfolio management

Return on investment

Business impact analysis

Financial management for IT services

Demand management

Also

SERVICE

PROVIDERS

SOURCING

STRATEGY:

SERVICE STRATEGY

INPUTS & OUTPUTS

ORGANISING FOR SERVICE STRATEGY - ROLES

SERVICE PORTFOLIO

MANAGEMENT

Application Portfolio

Project portfolioCritical success factors

Key performance indicators

Configuration management system

Service catelouge

Retired services

Value to business

Purpose & Objectives

Policies, principles & basic concepts

ITIL Service Strategy Poster.vsdxPage-1