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IT Service Management 2011 -IBM

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Presentation on theme: "IT Service Management 2011 -IBM"— Presentation transcript:

1 IT Service Management IBM

2 Chapter 2 Service Strategy

3 Tivoli Software CIO Service Management Life Cycle Service Strategy Processes Strategy Generation IT Financial Management Service Portfolio Management Demand Management Organizational Development & Design Implementing Service Strategy Service Strategy ITIL

4 2.1 Introduction

5 Service Strategy The Service Strategy volume provides guidance on how to design, develop, and implement service management not only as an organizational capability but also as a strategic asset. 5

6 Goals of Service Stratege What services should we offer and to whom? How do we differentiate ourselves from competing alternatives? How do we truly create value for our customers? How do we capture value for our stakeholders? How can we make a case for strategic investments? How can Financial Management provide visibility and control over value creation? How should we define service quality? How do we choose between different paths for improving service quality? How do we efficiently allocate resources across a portfolio of services? How do we resolve conflicting demands for shared resources? 6

7 Service Strategy Goals To understand what services should be offered to support the organisation. To begin setting policies and objectives for the provision of services in support of the business areas. To understand how to create value for an organisation. To offer advice on strategic investments, and To understand how to define service quality. 7

8 Value to business Organizations already practicing ITIL may use this publication to guide a strategic review of their ITIL- based service management capabilities and to improve the alignment between those capabilities and their business strategies. This volume of ITIL encourages readers to stop and think about why something is to be done before thinking of how. Answers to the first type of questions are closer to the customers business. Service Strategy expands the scope of the ITIL framework beyond the traditional audience of IT Service Management professionals. 8

9 Outcome 9

10 Constraint 10

11 Service value: --Defined by customers business outcomes --Dependent on customers perceptions Customer perceptions are influenced by: --Attributes of a service that are indications of value --Present or prior experiences with similar attributes --Relative endowment of competitors and other peers --Customers self-image or actual market position (e.g. being an innovator, market leader, and risk-taker) Definition and differentiation of service value is in the customers mind Service Value 11

12 Four points of service strategy Perspective Position Plan Pattern 12

13 Logic of value creation through services Utility Warranty Utility is what the customer gets, and warranty is how it is delivered. Customers cannot benefit from something that is fit for purpose but not fit for use, and vice versa. It is useful to separate the logic of utility from the logic of warranty for the purpose of design, development and improvement. 13

14 2.2 Service strategy principles

15 Utility and Warranty Utility and Warranty define services and work together to create value for the customer Utility= – What does the service do? – Functional requirements – Features, inputs, outputs… – fit for purpose Warranty= – How well does the service do it? – Non-functional requirements – Capacity, performance, availability… – fit for use 15

16 Utility, Warranty, Market Space A service is a means of delivering value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks. Market Space – A market space is defined by a set of business outcomes, which can be facilitated by a service. – Market spaces defined in terms of outcomes desired by customers. Utility: What the Customer gets Utility is measured on the basis of the number of key outcomes supported and constraints removed Warranty: How is it delivered Warranty is measured in terms of the levels of Availability, Capacity, Continuity and Security Value Creation The basis of differentiation in the Market Space + = 16

17 Combined effect of utility and warranty 17

18 Service Owner The Service Owner is responsible to the Customer for a particular service – Initiation and transition – Ongoing maintenance and support – Monitoring and reporting – Identifying improvement opportunities – Prime customer contact 18

19 Service Provider An organization supplying services to one or more internal customers or external customers Type 1 – Internal – Embedded in the business unit it serves Type 2 – Shared – Provide services to multiple business units Type 3 – External – Provide services to many customers 19

20 Suppliers and Contracts Supplier – A third party responsible for supplying goods or services – These are required by the service provider to enable them to deliver services Contract – A legally binding agreement between two or more parties to supply goods or services 20

21 RACI Model A RACI model can be used to help define roles and responsibilities It identifies the activities that must be performed alongside the various individuals and roles involved RACI is an acronym for the four main roles of: – R = Responsible The person or people responsible for getting the job done – A = Accountable Only one person can be accountable for each task – C = Consulted The people who are consulted and whose opinions are sought – I = Informed The people who are kept up-to-date on progress 21

22 Director Service Management Service Level Manager Problem Manager Security Manager Procurement Manager Activity 1ARCIIC Activity 2ARCCC Activity 3IARIC Activity 4IARI Activity 5IIACI Example RACI Model 22

23 Expansion of RACI Model A RACI model can be expand to RASCI model: S = Supportive – The people who can support for a task. 23

24 2.3 Service strategy

25 ITIL V3 Foundation Course Ver.1.1 Strategy Generation Process Define the market – Understand the customer and opportunities, classify and visualize services –how they create value and in what context – Evaluate the services you could potentially offer, and who you may be able to offer them to! Develop the offerings – define the market space and define the services based on what is valuable to the customer – Continue to formulate the services you think it will be worthwhile pursuing – Utility and Warranty are considered at this stage 25

26 ITIL V3 Foundation Course Ver.1.1 Strategy Generation Process (Cont.) Develop strategic assets – increase the service and performance potential of the organization, treat IT service management as a strategic asset – Look for opportunities to exploit your services and capabilities (to allow more services to more customers) – Develop Service Management so that it becomes a strategic asset Prepare for execution – do a strategic assessment to find what core differentiations already exist – Take all the necessary steps to ensure that we are ready to go ahead and it is worthwhile doing so 26

27 Define the market Services and Strategy The Customer The Opportunities Classification and Visualisation 27

28 Service and strategy 28

29 Customer and Opportunity Customer: Understand customers capability and resources Opportunity: – Understand business process – break outcomes into objective, metrics and desired outcome 29

30 Classification and visualization 30

31 Classification and visualization 31

32 Develop the offerings Market Space – a set of business outcomes that customers desire, and which can be facilitated by a service Outcome-based Definition of Services – involves managers planning and executing all aspects of Service Management entirely from the perspective of what is of value to the customer. – Utility and warranty Service Portfolio – Why should a customer buy these services? – Why should they buy these services from us? – What are the pricing or chargeback models? – What are our strengths and weaknesses, priorities and risk? – How should our resources and capabilities be allocated? 32

33 Develop strategic assets Closed loop control system Service potential and performance potential Demand management 33

34 Closed loop control system 34

35 Prepare for Execution What are our most distinctive services and why? Which are the most profitable services and why? Which of our stakeholders are the most satisfied and why? Which stakeholders are the most profitable and why? 35

36 2.4 Service economics

37 ITIL V3 Foundation Course Ver.1.1 Financial Management Objectives Basic concepts Roles 37

38 ITIL V3 Foundation Course Ver.1.1 Financial Management Objectives and business value Financial visibility and accountability Financial compliance and control Enhanced decision making Operational control Value capture and creation Understand the value of IT Services 38

39 Financial Management Basic concepts ( 1 of 2 ) Service valuation – Cost of providing the service – Value to the customers receiving the service Service investment analysis – Understand the total lifecycle value and costs of proposed new services or projects 39

40 Financial Management Basic concepts ( 2 of 2 ) Business Case – A decision support and planning tool that predicts outcomes of a proposed action – Used to justify investments Business Impact Analysis – Understanding the financial cost of service outages 40

41 Cost Model Example 41

42 Financial Management Roles All managers have some financial responsibility Senior IT Management own budgets and are ultimately responsible for decisions Many organizations appoint a financial controller to oversee day-to-day finances Accounting department provides governance framework and support 42

43 Budgeting, Accounting, Charging 43

44 FINANCIAL MANAGEMENT Financial Management implementation checklist Plan Analyse Design Implement Measure 44

45 RETURN ON INVESTMENT ROI Return on Investment is a concept for quantifying the value of an investment. In service management, ROI is used as a measure of the ability to use assets to generate additional value. In the simplest sense, it is the net profit of an investment divided by the net worth of the assets invested. Business case – a means to identify business imperatives that depend on service management Pre-Programme ROI – techniques for quantitatively analysing an investment in service management Post-Programme ROI – techniques for retroactively analysing an investment in service management 45

46 Risk Management and Analysis Define a framework Embed and review Gain assurances about effectiveness Implement responses Risk management Identify the risks Identify probable risk owners Evaluate the risks Set acceptable levels of risk Define a framework Risk analysis 46

47 Service Portfolio Management Objectives Basic Concepts Activities Roles 47

48 SERVICE PORTFOLIO MANAGEMENT Service Portfolio Management Service Portfolio Management is a dynamic method for governing investments in service management across the enterprise and managing them for value. By acting as the basis of a decision framework, a Service Portfolio either clarifies or helps to clarify the following strategic questions: Why should a customer buy these services? Why should they buy these services from us? What are the pricing or chargeback models? What are our strengths and weaknesses, priorities and risk? How should our resources and capabilities be allocated? 48

49 Service Portfolio Management Objectives Decide what services to offer Understand – Why should a customer buy these services? – Why should they buy these services from us? Provide direction to Service Design – So they can manage and fully exploit the services into the future 49

50 Service Portfolio 50

51 Service Portfolio Management Basic concepts Business Service – A service that directly supports a business process IT Service – A service that the business does not think of in business context or semantics Business Service Management – Considering service management in terms of business processes and business value 51

52 Service Portfolio Management Activities Service Strategy Define Analyze Approve Charter Inventories Business Case Value proposition Prioritization Service Portfolio Authorization Communication Resource allocation ITIL V3 Foundation Course Ver

53 Service Portfolio Management Roles Product Manager – Own and manage a set of related services – Evaluate market opportunities and customer needs – Create business cases – Plan new service development programs Business Relationship Manager – Identify and document customer needs 53

54 SERVICE PORTFOLIO MANAGEMENT METHODS Define: inventory services, ensure business cases and validate portfolio data Analyse: maximize portfolio value, align and prioritize and balance supply and demand Approve: finalize proposed portfolio, authorize services and resources Charter: communicate decisions, allocate resources and charter services 54

55 Demand Management Objectives Basic concepts Roles 55

56 Demand Management Objectives and business value Understand customer requirements for services and how these vary over the business cycle Ensure the provision of appropriate levels of service – By varying provision or influencing customer demand Ensure that the Warranty and Utility we offer matches the customer needs 56

57 Demand Management Basic concepts ( 1 of 3 ) Core Service – An IT Service that delivers outcomes desired by one or more customers Supporting Service – A service that enables or enhances a core service. For example A directory service or a backup service 57

58 Demand ManagementBasic concepts (2 of 3) Pattern of Business Activity (PBA) – Workload profile of one or more business activities – Varies over time – Represents changing business demands User Profile – Pattern of user demand for IT Services – Each user profile includes one or more PBAs 58

59 Demand ManagementBasic concepts (3 of 3) Service Package – Detailed description of a service – Includes a service level package and one or more core services and supporting services. Service Level Package – Defined level of utility and warranty for a particular service package – Designed to meet the needs of a PBA. For example Gold, Silver or Bronze service 59

60 Demand Management Roles Business Relationship Manager – Document PBAs and user profiles – Identify correct service level packages for their customers – Identify unmet customer need – Negotiate with Product Managers for creation of new services 60

61 DEMAND MANAGEMENT Challenges in managing demand for services Activity-based Demand Management Service packages 61

62 2.5 Strategy and organization

63 Service Model Graphical representation of the components that make up a service Documents workflow and dependencies Used to support design, analysis and communication 63

64 Service Model Service models codify the service strategy for a market space. They are blueprints for service management processes and functions to communicate and collaborate on value creation. Service Models describe how service assets interact with customer assets and create value for a given portfolio of contracts 64

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