Martin Sarnovský Department of Cybernetics and Artificial Intelligence

1. Service Strategy Martin Sarnovský Department of Cybernetics and Artificial Intelligence Faculty of Electrical Engineering and Informatics Technical University of Košice

2. Contents • Introduction / ITIL v.3 • Fundamentals of service strategy • Basic concepts of service strategy • Processes and roles established by service strategy • Example of a workflow during design of a service strategy • Conclusion

4. Service Strategy • 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? • ...

5. Service Strategy • Helps make IT organizations/departments a part of the entire business • The idea of functioning of business based on service management is kept here as a guiding principle, part of the strategy • Helps clarify the relationships between different services, used systems, processes, business model, strategies and objectives

6. Basic objectives of Service Strategy • 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?

7. Key Concepts

8. Basics • Publication describes: • Planning, service strategy – tying business plans with IT strategy, service portfolio and catalog service, or various forms of sourcing • Categorizes service providers • Categorizes alternatives of service delivery models • It is based on • The concept of service management and planning according to the “added value“ of the service • This type of planning uses an oriented pair Functionality - Warranty

9. Most important concepts • Assets/Resources/Capabilities • Utility/Warranty • Value Creation • Type of service provision • Service Portfolio • Sourcing

10. 4P Concept • Service Strategy defineskey concept 4P • Perspective – characteristic vision, direction • Position – platform on which the provider will build upon and compete • Plan – how provider will achieve his visions • Profile – fundamental way of implementing things – characteristics, e.g. in decision-making

11. Packages • Service Level Package – SLP • Measure of value of a certain Service Package • Designed to meet the needs of a particular Pattern of Business Activity • Always linked with... • Core Service Package– CSP • Service packages providing a platform for 2 or more SLPs • Supporting Services • Service that enables or enhances a CSP • Service Package • 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.

12. Example

13. Evaluation of Services • 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)

14. Value Creation • Value – depends also on customer’s own assets • Value creation – transformation of service management offer into strategic assets=> practical use (of capabilities and assets)

15. Assets, Resourcesand Capabilities • 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)

16. Service Provider • 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

17. Sourcing – Structure for Resource Allocation • 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

18. Sourcing and Service Provision Models • Categorization and analysis of models that providers will use to secure resources and service delivery • 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

19. Service Portfolio and Service Catalogue • 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

20. Processes

21. Strategy Generation • 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

22. Financial Management • 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

23. Demand Management • Purpose • Understanding customer’s service requirements • Influence and ensure capacity to fulfill these requirements • Strategic level • Analysis of character of business activity • Analysis of user profiles • 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

24. Service Portfolio Management • Continuous process - From Cradle to the Grave • Describes all services that are/will be/were • 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

25. Roles and responsibilities • Business Relationship Manager • BRM (sometimes referred to as Account Manager) • Understands the business of the organization, creates a relationship with the customer • 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

27. Conclusions • 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

28. Questions? More info – Subject Wiki page: https://chimera.fei.tuke.sk/rip Info also at http://www.itsmf.sk

29. Applications of ITIL in SR • Knowledge of the ITIL approach in SR (207 respondents) • 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

30. Applications of ITIL