Service Strategy
Martin Sarnovský
Department of Cybernetics and Artificial Intelligence
Faculty of Electrical Engineering and Informatics
Technical University of Košice
Contents
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Introduction / ITIL v.3
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Fundamentals of service strategy
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Basic concepts of service strategy
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Processes and roles established by service strategy
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Example of a workflow during design of a service strategy
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Conclusion
Service Strategy
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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
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Helps make IT organizations/departments a part of the entire business
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The idea of functioning of business based on service management is
kept here as a guiding principle, part of the strategy
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Helps clarify the relationships between different services, used
systems, processes, business model, strategies and objectives
Basic objectives of Service Strategy
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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
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Publication describes:
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Planning, service strategy – tying business plans with IT strategy, service
portfolio and catalog service, or various forms of sourcing
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Categorizes service providers
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Categorizes alternatives of service delivery models
It is based on
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The concept of service management and planning according to the “added
value“ of the service
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This type of planning uses an oriented pair Functionality - Warranty
Most important concepts
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Assets/Resources/Capabilities
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Utility/Warranty
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Value Creation
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Type of service provision
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Service Portfolio
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Sourcing
4P Concept
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Service Strategy defines key concept 4P
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Perspective – characteristic vision, direction
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Position – platform on which the provider will build upon and compete
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Plan – how provider will achieve his visions
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Profile – fundamental way of implementing things – characteristics, e.g. in
decision-making
Packages
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Service Level Package – SLP
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Measure of value of a certain Service Package
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Designed to meet the needs of a particular Pattern of Business Activity
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Always linked with...
Core Service Package – CSP
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Supporting Services
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Service packages providing a platform for 2 or more SLPs
Service that enables or enhances a CSP
Service Package
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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
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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 Utility
Functionality
Defined by
“Meets a
particular need“
1. Supported outputs
Increases
performance
Service
Quality
Service
Warranty
“suitable for use“
Reduces variation
in performance
2. Avoiding costs and
risks
Defined by
1. Availability
2. Capacity
3. Continuity
4. Security
Value Creation
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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
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Assets
 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
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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
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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
 Single contract with single service provider
 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
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Categorization and analysis of models that providers will use to secure
resources and service delivery
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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
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Service Portfolio and Service Catalogue
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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
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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
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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
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Purpose
 Understanding customer’s service requirements
 Influence and ensure capacity to fulfill these requirements
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Strategic level
 Analysis of character of business activity
 Analysis of user profiles
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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
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Continuous process - From Cradle to the
Grave
Describes all services that are/will be/were
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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
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Business Relationship Manager
 BRM (sometimes referred to as Account Manager)
 Understands the business of the organization, creates a
relationship with the customer
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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
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Conclusions
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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
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Knowledge of the ITIL approach in SR (207 respondents)
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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