2/17/2016
BCIS 5520
IT Service Management
ITSM Functions & Processes
in Service Strategy
Class 5.01
Spring 2016
Dr. Becker
Announcements—Next Week
• Homework Class #6 –(2/24; click here)
• Chapter readings:
▫ Foundations of ITSM based on ITIL v3, Jan von Bon (JVB)
 Chapter 4: Service Design
▫ Foundations in ITSM (ITIL v3 Foundations Course in a
Book), Orand & Villarreal (O&V or Orand)
 Chapter 4: Service Design Overview
 Research Topics:
• Due: Feb 24: Project Idea -- Proposal (25 pts.)
▫ Due: Mar 2; #4A- ITSM Service Design Tools/Any one or more of
the 7 Service Design Processes (SLM, SCM, etc.)
▫ Due: Mar 9: BONUS (50-100 pts): ITSM 3 Case Studies
(Becker, et. al.); and/or Case Study Practitioner Article
& Midterm Exam
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Class 5: Readings for Tonight
• Homework Class 5 –(click here)
• Chapter readings:
▫ Foundations of ITSM based on ITIL v3, Jan von Bon
(JVB)
 Chapter 9: Functions & Processes in Service
Strategy
▫ Foundations in ITSM (ITIL v3 Foundations Course in a
Book), Orand & Villarreal (O&V)
 Chapter 3: Service Strategy Process
 Research Topics:
▫ #3A- Service Strategy Process (w/ ITIL)
• Project Ideas
▫ UNT ITSM Organization?
Project Ideas (See last week for
more complete list)
1. Policy, Process, and Documentation Templates –for
Key UNT IT forms (ITSM ITIL Library)
2. Tool Set (e.g., Remedy) Specification & Evaluation—
e.g., Change Management, etc.
3. Balance Scorecard and Metrics Project
Guidance on the use and implementation of BSC and its
value to decision makers
Becker Favorite:
4. Can ITIL Actually Improve Project Management
Success Rates? Becker Favorite
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ITIL ITSM Lifecycle: 5 Stages
1.
2.
3.
4.
5.
Service Strategy
Service Design
Service Transition
Service Operation
Continual Service
Improvement
Main Output of Service Strategy
• Service Level Package (SLP) includes:
▫ Strategic Business Requirements
▫ Feasibility & Guiding constraints
 IT exists to create services and value
 NOT to provide technology
 TESO – Technology, Economic/Financial, Staff,
Organization
▫ Process Requirements
▫ Serves as the input to the Service Design stage
▫ What are IT and Business Services (SkyHigh)?
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Service Strategy:
The Three Basic Processes
1. Service Portfolio Management (SPM)
▫ Maximize ROI while managing Risk
2. Demand Management
▫ Manage Expectations; Match Capacity with
demands (vs. Availability management)
3. Financial Management
▫ Provides information for efficient & cost-effective
delivery of services
Creating Value Through Service
• Value can be created
by Soft assets:





Management
Organization
Process
Knowledge
People
• Or Value can be created
by Hard assets:





Financial Capital
Infrastructure
Applications
Information
People
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9
Traditional Value Chain Analysis
Value Chain Analysis (Porter) is a process of analyzing an organization’s
activities to determine where value is added to products and/or services
and what costs are incurred in doing so.
ITSM Implications:
Service Value Chain (Value-add + ):
Provider-to-Customer (B2C?)
+
+
+
+
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RECALL: Virtual Organization [VO]:
Non-Traditional Modern Organization; B2C
“A Three-Legged Stool”
GUI
Customer
Interface
Alliances
BPR
Partnerships/
Outsourcing
Business Process
Reenginering
Courtesy: Henderson & Venkatramen, 2000
8-11
1. Service Portfolio Management
(SPM)
• Definition: a dynamic method for governing
investments in service management across the
enterprise including their value-adds.
• Components:
▫ Service Catalog
 Services that are operational
▫ Service Pipeline
 IT Services under consideration or development
▫ Retired Services
 Services no longer in use
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Figure – Service Portfolio
SPM Activities
A Lifecycle Process
• Define
▫ Catalog/inventory all services;
State the Business case for each
one.
• Analyze
▫ Maximize the set of services that
we offer through our portfolio
(Integer Programming?)
• Approve
▫ Service is authorized to be included
in the service portfolio
• Charter
▫ Communicate decisions, allocate
resources, deliver services
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Example Application Portfolio
Value for the Business (ITIL
Questions Raised (recall))
• Why should the customer buy this service?
• Why buy the service from US?
• What are the pricing and charge back models?
▫ How can we make a profit from this service!!
• What are our strengths, weaknesses, priorities
and risks (SWOT)?
• How should we allocate resources and
capabilities?
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Three (3) Types of Service
Investments
• Run the Business (RTB)
▫ Maintain existing services
• Grow the Business (GTB)
▫ Expand the size and scope of our operations
• Transform the Business (TTB)
▫ New products and markets
• What are IT and Business Services (SkyHigh)?
2. Demand Management
• Definition: Collection of activities that strive to
balance customer demand with supply capacity
▫ NOTE: Services cannot be stockpiled, like goods,
production capacity must be able to quickly adjust to
demand forecasts and patterns
• Consider: Just-in-time (JIT) Inventory Management
▫ Vs. e.g.: Dell Computers, Inc. (Zero raw materials
inventories)
• Patterns of Business Activity (PBAs):
▫ Understand the customers demand patterns in order to
manage your capacity to provide services (BI)
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Service Demand Supply Chain
Demand Management: A
Conveyor belt of Business Services
Use Incentives and
/or penalties to
influence
consumption of
services
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Differential Service Offerings
• Core vs. Supporting Services
▫ Bundled vs. 3rd party providers
▫ Understand the value-add proposition
• Differential charging to increase or decrease
demand for services at different times or places
• Seasonal demand
• Demand influenced by “mother nature”
• User Profiles (UPs) help group customers
into different patterns of demand
Service Packages
• Definition: A detailed description of an IT
service that is available to be delivered.
▫ Includes: 1) Service Level Package (SLP, similar
to SLA) and 2) one or more core services and
supporting services
• SLP: a defined level of utility and warranty
for a particular service. Each SLP designed to
meet a particular PBA.
• Core Service Package (CSP): a detailed
description of a core service that may be shared
by two or more SLP.
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What Economic Factors Disfavor
E-Commerce?
1. Channel conflict
 Occurs when a manufacturer competes with its traditional retail outlets
by selling directly to consumer
2. Price conflict
 Occurs when a manufacturer sells directly to consumers and undercuts
retailers’ prices
3. Increased logistics expenses
 Occurs when a manufacturer must process thousands of small-quantity
orders rather than a few large-quantity orders
4. Increased customer-service expenses
 Occurs when a manufacturer must begin dealing directly with customers
rather than relying on retailers’ direct relationships with customers
ITIL Toolkit -- ITIL Factsheets
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3. Financial Management
(process map)
ITIL Process Wiki
• Introduction to ITIL Process Maps (6 mins.)
• Financial Management (in ITSM Service Strategy)
▫ Definition: Provides vital information concerning
full costing of services packages to enable efficient
and cost-effective delivery of services.
▫ IT organizations are essentially becoming marketoriented organizations with their customers
being both internal and external consumers.
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Financial Mgt: Key Activities
1. Service Valuation
1) Provisioning value; and 2) Service value potential
2.
3.
4.
5.
6.
7.
8.
9.
Demand Modeling
Service Portfolio Management (SPM)
Service Provisioning Optimization (SPO)
Accounting
Service Investment Analysis (SIA)
Compliance
Variable Cost Dynamics (VCD)
Planning Confidence
Financial Mgt Activities Cont.
2. Demand Modeling
▫ Pro-forma spreadsheets; simulation analysis;
forecasting; etc.
3. Service Portfolio Management
▫ Identify the costs of each service component
4. Service Provisioning Optimization
▫
Optimizes return by understanding controlling
costs
5. Accounting
▫
Enhanced cost accounting systems
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Financial Mgt Activities Cont.
6. Service Investment Analysis
▫
Use financial modeling to compute ROIs
7. Compliance
▫ Improved adherence to General Accepted
Accounting Principles. SOX, etc.
8. Variable Cost Dynamics
▫
Sensitivity analysis to changes in each
component cost
9. Planning Confidence
▫
Results from all of the above.
Financial Value—The Universal
Business Language
• Service Valuation
▫ Provisioning value —the actual underlying
cost to IT provisioning a service; and
▫ Service Value potential – the value-adding
component based upon the customer’s perception
of the value of the service (expected marginal
utility & warranty), compared to the customer’s
own asset provisioning of the same service.
• Business Value/Benefits (next page)
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Funding Model Alternatives
• Zero based funding
▫ Funding only actual costs of an IT Service
• Rolling plan funding
▫ Initial costs remain constant for a service cycle
• Trigger based plans
▫ Incidents trigger the start of a new cycle; Change
request triggers a new cycle
Goal: Business Benefits / Value
• Improved:
▫
▫
▫
▫
▫
▫
Decision making;
Speed of change and decision;
Service portfolio management;
Financial compliance and control;
Operational control; and
Communication of value capture and creation;
 Value-chain
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Key Enterprise IT Risks
1.
2.
3.
4.
Continuity
Access Management
Integrity
Strategic Change
Westerman Presentation
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Summary
• Three Key Processes in Service Strategy
1. Service Portfolio Mgt (SPM)
 Maximize ROI while managing Risk
2. Demand Management
 Manage Expectations; Match capacity with demands
3. Financial Management
 Provides information for efficient & cost-effective
delivery of services
• Addendum: IT Cloud Services and Risk
End
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