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Service Strategy Processes

Sourcing Structures (Delivery Strategies)

Here are some sourcing structures we have in ITIL

  1. In In-Sourcing Strategy all the resources utilized are internal.

  2. In Outsourcing Strategy all the resources utilized are external organizational resources.

  3. Co-sourcing is a combination of in-sourcing & out-sourcing.

  4. Partnership or Multi-Sourcing is a Strategic Partnership.

  5. Business Process Outsourcing (BPO) where entire business process or function is outsourced.

  6. Knowledge Process Outsourcing (KPO) where domain based process or business expertise are outsourced.

  7. Multi-Vendor sourcing is where we source resources from different vendors.

  8. Cloud sourcing are specific pre-defined services, usually On Demand and Pay As You Go.

Once the resource and organizational discussion begins, the organization must be sure to account for the introduction of new critical skills. These competencies generally fall into three categories:

  1. Business

  2. Technical 

  3. Behavioral

For example, the greater the level of outsourcing, the greater the need for business and behavioral skills. The greater the level of in-sourcing, the greater the need for technical skills.

Risk & Investment Decision

A possible event that could cause harm or loss or affect the ability to achieve objectives.
Risk Management requires the identification and control of the exposure to risk, which may have an impact on the achievement of an organization’s business objectives.
So the concept is simple. More you move further and think to transform your business, more you should have budget allocated and more risk is involved.

Service Strategy Processes

Let’s understand all the five processes under Service Strategy:

  1. Strategy Management for IT Services: To assess the service provider's offerings, capabilities, competitors as well as current and potential market spaces in order to develop a strategy to serve customers. Once the strategy has been defined, Strategy Management for IT Services is also responsible for  ensuring the implementation of the strategy.

  2. Service Portfolio Management: Service portfolio management will ensure that every proposed new service or any strategic change to an existing service is analyzed to determine the level of investment required and the proposed return on that investment.

  3. Financial Management for IT Services: Financial management for IT services indicates that a service costs significantly more or less than anticipated, thus impacting the potential return on investment for that service.

  4. Demand Management: To understand, anticipate and influence customer demand for services. Demand Management works with Capacity Management to ensure that the service provider has     sufficient capacity to meet the required demand.

  5. Business Relationship Management: To maintain a positive relationship with customers, Business Relationship Management identifies the needs of existing and potential customers and ensures that appropriate services are developed to meet those needs.

Strategy Management for IT Services – Goal and Objectives

The Goal of Strategy Management for IT Services is defining and maintaining an organization’s perspective, position, plans and patterns with regard to its services and the management of those services.
Here are the few Objectives:

  1. Analyze the internal and external environments, to identify opportunities that will benefit the organization.

  2. Identify constraints that might prevent the achievement of business outcomes.

  3. Establish the position of the service provider relative to its customers and other service providers.

  4. Produce and maintain IT strategy.

  5. The Service Management Strategy and the Strategy Plans for each service where appropriate.

  6. You should always remember that IT Strategy must be aligned to Business Strategy.

  7. Strategy Management for IT Services

Strategy management for IT services is the process of defining and maintaining an organization’s perspective, position, plans and patterns with regard to its services and the management of those services.

Strategy Management for IT Services focuses on these four major activities

1. Define the Market:

  • Services and strategy

  • Understand the customer

  • Understand the opportunities

  • Classify and visualize

2. Develop the Offerings:

  • Understand market space (customer desired outcomes supported by services)

  • Out Come-based definition of services

  • Service Portfolio (Pipeline, Catalog & Retired services)

3. Develop Strategic Assets:

  • Service Management as a closed-loop control System

  • Service Management as a strategic asset

4. Prepare for Execution: 

  • Aligning Service Assets with Customer Outcomes

  • Prioritizing investments

Usually, strategy management is the responsibility of the executives of an organization.
It enables them to set the objectives of the organization, to specify how the organization will meet those objectives and to prioritize investments required to meet them.

Service Portfolio Management – Goals & Objectives

Service Portfolio Management is a dynamic method for governing investments in service management across the enterprise & managing them for value.

The Goal of Service Portfolio Management is to manage Service Portfolio by considering services in terms of the business value they provide.

The Objective is to apply comparable practices to manage Service Portfolios maximize value while managing risks and costs.

Service Portfolio

A service portfolio describes a provider’s services in terms of business value. It articulates business needs and the provider’s response to those needs. By definition, business value terms correspond to marketing terms, providing a means for comparing service competitiveness across alternative providers. The Role of Service Portfolio Management is Service Portfolio Manager who manages the entire Service Portfolio.

Service Portfolio includes: Service Pipeline, Live Services and Retired Services.

  • Service Pipeline is a database or structured document listing all services that are under consideration or development but are not yet available to customers. 

  • Service Catalog is a database or structured document with information about all live IT services, including those available for deployment. The service catalog is the only part of the service portfolio published to customers and is used to support the sale and delivery of IT services.

  • Some services in the service portfolio are phased out or retired (called Retired Services). There is a decision to be made by each organization, following a service review on when to move a service from catalog to retired.

Another important part in Service Portfolio Management is utilizing and allocating the resources.
The service portfolio represents all the resources presently engaged or being released in various stages of the service life-cycle. Each stage requires resources for completion of projects, initiatives and contracts.

Service Catalog

Service Catalog is the only part which is visible to customers. The service portfolio represents all the resources presently engaged or being released in various stages of the service life-cycle.  Service pipeline is related to all services that are under consideration or development, but are not yet available to customers. It includes major investment opportunities that have to be traced to the delivery of services, and the value that will be realized. The service pipeline provides a business view of possible future services and is part of the service portfolio that is not normally published to customers. Service catalog is related to all live IT services, including those available for deployment.

t is the only part of the service portfolio published to customers and is used to support the sale and delivery of IT services. It includes a customer- facing view (or views) of the IT services in use, how they are intended to be used, the business processes they enable, and the levels and quality of service the customer can expect for each service. The service catalog also includes information about supporting services required by the service provider to deliver customer- facing services. Information about services can only enter the service catalog after due diligence has been performed on related costs and risks.

Retired services

Retired services are related to all services that have been phased out or retired. Retired services are not available to new customers or contracts unless a special business case is made. Service providers often find it useful to distinguish customer-facing services from supporting services. Customer-facing services are IT services that are visible to the customer. These are normally services that support the customer’s business processes and facilitate one or more outcomes desired by the customer. Supporting services are IT services that support or ‘underpin’ the customer-facing services. These are typically invisible to the customer but are essential to the delivery of customer-facing IT services.

Demand Management – Goals & Objectives

The Goal of Demand Management is to understand and influence Customer demand for Services & Provide capacity to meet these demands.

  • Objectives of Demand Management are:

  • Reduce risk of unavailability because of poorly managed demand 

  • Manage cost & create value through reducing excess capacity

  • Balance supply & demand of resources 

  • Ensure quality of service is maintained with sufficient capacity

Key points to remember about Demand Management are:

  • At a Strategic level Demand Management can involve analysis of Patterns of Business Activity and User Profiles.

  • At a Tactical level it can involve use of Differential Charging to encourage Customers to use IT Services at less busy times.

Also, Demand Management is very closely linked to Capacity Management.

Understanding Demand Management

From a strategic perspective demand management is about matching supplied to demand. Consumption produces demand and production consumes demand in a highly synchronized pattern. Unlike goods, services cannot be manufactured in advance and stocked in a finished goods inventory in anticipation of demand. Demand and Capacity are very tightly coupled with each other. A right capacity planning is necessary to maintain a good balance in demand and supply. Sometimes, giving incentives or making penalties to influence demand is required. For example, night calling packs given by network providers.

Demand and capacity are far more tightly coupled in service systems even when compared with just- in-time (JIT) manufacturing. Customer assets present a pattern of demand to the service provider. Each time a user consumes a service; demand is presented to the service provider and this consumes capacity of the service assets. This, in turn, results in the service being supplied to meet the consumer’s demand.
The greater the consumption of the service, the higher the demand and the higher the consumption of capacity, the more of the service is supplied. This cycle of demand and supply will only function effectively while the service assets have available capacity. As soon as capacity is no longer available, the service provider will not be able to supply enough of the services to satisfy customer demand.
For this reason, a major part of demand management is to understand the potential demand and the impact of the demand on the service assets. This allows capacity management to manage service assets (and investments) towards optimal performance and cost.
The productive capacity of resources available to a service is adjusted according to demand forecasts and patterns. Some types of capacity can be quickly increased as required and released when not in use.

The arrival of demand can be influenced using pricing incentives. However, it is not possible to produce and stock service output before demand actually materializes. Where a service or service package needs to be differentiated for different types of customer, one or more components of the package can be changed or offered at different levels of utility and warranty to create service options.

These different service options can then be offered to customers and sometimes called Service Level Packages (or SLP). Core Service Package remains the same for all Customer Segments.



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