Preserving Value

Effective Measurement
SERVICE STRUCTURE IN THE IN THE VALUE
NETWORK:
Understand Market space
A set of business outcomes
which can be facilitated by a
service.
Customers normally prefer
those with lower costs and
risks
HOWTO
DEFINE
SERVICES
Step 1 : Define the
market and identify
customers.
Step3 : Quantify the
outcomes.
Step5 : Understand
the opportunities
Step 6 : Define service
based on outcomes.
Step 7 : service
models.
Step 8 : Define service
units and packages.
Analyzing how to most effectively source and deploy the resources and
capabilities required to deliver outcomes to customers.
Deciding what to source - Substitution/change, Disruption/interference & Distinctiveness.
Sourcing structures - Choosing a sourcing structure i.e. outsourcing, insourcing etc.
Multi-vendor sourcing Multiple providers to spread the risk and reducing the cost.
Service provider interfaces used to ensure multiple parties in a business relationship
have the same point of reference for defining, delivering and reporting services.
Sourcing governance refers to the rules, policies and processes by which businesses operate.
Critical success factors cost, best location, moving/change disruption.
Value chains to value networks creating and maintaining value chains. Strategies include:
o Marshal external talent.
o Reduce costs
o Change focal point of distinctiveness.
o Increase demand for complementary services.
o Collaborate
Using value networks serve to communicate the model in a clear and simple way
Example to the left
applied inputs for the required outputs such as:
Vision
Mission
Strategies
Strategic plans
Service portfolio
Change proposals
Financial information
Strategy tools and procedures
Outcomes and restraints
Service models
Patterns and business activity
Busi ness impact analysis
Busi ness relationship management
IMPACT OF SERVICE
STRATEGY
Service Transition
When a servi ce moves from design
and buil d into operation
Effects of service on Transition
Moulding the strategy
Defining the changes needed
Test and validate service
Service Operation
Understand the outcomes
Give support with
effectiveness and effi ciency
Measure the success
Meets the objecti ves

Dynamics The activities,
flowof resources,
coordination and
interactions.
SERVICE STRATEGIES FOR
CUSTOMER SATISFACTION
Service attributes
Are the characteristics that provide form
and function to the service.
Linear factor The degree to which the
customer needs are met determines their
satisfaction.
Non-linear factor If only a fraction of
customer needs are met there is still a
high level of customer satisfaction.
The Kano Model
This figure shows a relationship between
the level of fulfilment of customer needs
and the level of satisfaction the customer
feels.
3 factors involved in customer
satisfaction
Basic Factors - must-have utility.
Performance factors - One-
dimensional utilities.
Excitement factors - nice-to-have
utility.
Should only be offered
under 3 circumstances:
Attraction
Marketing campaign and
offered at a limited time.
Customer dissatisfaction
with service
Outcomes for review:
Service Catalogue
Services should be
clearly linked to
defined and quantified
outcomes
Service pipeline
Used for the success of service
design and validation
Service level agreement
Specifying the service and
outcomes it is designed to support.
SERVICE
ECONOMICS
BUSINESS
RELATIONSHIP
MANAGEMENT
Purpose
establish and maintain a business
relationship
understanding the customer and their
business needs
Policies/Principles/Basic concepts
Customer Portfolio is a database or structural document used to
record all customers of the IT service provider.
Customer agreement portfolio database or structured document
used to manage service contracts or agreements between an IT service
provider and i ts customers.
Customer Satisfaction - Customer satisfaction is measured against
service provider performance taking into account, targets and previous
scores
Service Requirements - This involves investigati ng the business need
or opportunity, vali dating it, defining a business case and evaluating
both the warranty and utility needed.
Objective
Ensures high level of customer
satisfaction making sure that
the customers needs are met
to the requirement
Scope
ali gning objectives of the
business with the activity
of the service provider
Risks
Poor integration between service
provider and customer facing
processes will resul t in bad business
relationship management
Business Value
abil ity of the service
provider to articulate
and meet the
business needs of its
customers
Activities/Methods/Techniques
Represent the service provider to its customers
through coordinated marketing, selling and
delivering activities.
Work with service portfolio management and
design coordinati on to ensure that the service
providers response to customers
requirements is appropriate.
Information Management
customer portfolio and customer agreement
are updated and validated
customer surveys are also put into action and
the service catalogue is an important reference
in communicating consistently
Critical Success Factors and Key
Perfomance Indicators
CSF Ability to document and understand
customer requirements of service, Ability to
measure customer satisfaction and to knowwhat
acti on to take with the results.
KPI Customer satisfactory levels are consistentl y
high and are used as feedback into portfolio
management.
Challenges
History of poor service may
make it diffi cult for business
relationship management to
function effectively
Using theory to support strategy
Strategy must enable service providers to deliver value
A basic approach to deciding a strategy
Service management as a strategic asset
Strategy synthesis opposing dynamics
Strategy as a means to outperform competitors
Government and non-profit organizations
Perspective Describes vision and direction of organization
Positions Describes how the service provider intends to
compete in the market
Plans Describes how the service provider will transition
from their current situation to their desired situation
Patterns Describes ongoing actions a service provider will have to
perform to continue meeting its strategic objectives
Customers
Those who buy
goods or services,
customer of an IT
service provider is
the person or
group who
defines and
agrees the service
level targets.
Internal Customers
people or departments
who work in the same
organization as the
service provider
External Customers
people who are not
employed by the
organization
Services Means of
delivering value to
customers by facilitating
outcomes customers want
to achieve without
ownership of specific risks
and costs.
Value Value of a
service can be
considered to be the
level at which service
meets a customers
expectations.
Value Chain A sequence of
processes that creates a product or service
that is value to a customer.
CUSTOMER &
SERVICES
Types of IT Services
Supporting Service Not directly used by the business, is required by the IT Service Provider to provide other IT Services
Internal Customer Facing Service IT Service that supports a business process managed by another business unit
External Customer Facing Service IT Service that is provided by IT to an external customer
Step 4 : Classify and
visualize theservice
Service conditions should have
clarity and have context on how
resources are useful to justify the
expense of a service.
Service packages
A collection of two or more
services combined to offer a
solution to a specific kind of
customer meet specific
business outcomes.
It can be a combination of core,
enabling and enhancing
services
IT organizations are complex systems needing
to interact with other components
They are interdependent
This complexity explains why some service
organizations resist change
Should be achieved through:
Eliminating or reducing deviations in performance
Maintaining operational effectiveness and
effici ency
Reducing hidden costs
Publicizing and substantiating hidden benefits
Use of automation, web-based functi onality,
support tools
Measurement Principles:
Begin on the outside of the service organization
Responsiveness to customer
Think of process and service as equal
Numbers matter
Compete as an organization
Definition of Risk A possible event that could cause harmor loss
Two distinct phases in dealing with Risk:
Risk Assessment - Concerned with gathering information about
exposure to risk so organization can make appropriate decisions
and manage risk properly
Risk Management Involves having processes in pl ace to monitor
risks, access to reliable and up-to-date information about ri sks
Design Risks
Customers expect services to have a beneficial impact on
performance of assets [Utility from their perspective]
Always a risk that services designed fail to deliver the expected
benefits in utility
Major cause of poor performance is poor design
5 Operational Risks
Two levels of Risk must be considered froma Service
Management perspective:
Risks faced by the business, and the business services it uses
Risks to the IT services that underpin the busi ness and its processes
Critical Success Factors
All challenges and risks already mentioned can be inverted to become
critical success factors (CSFs)
Other factors critical to success of a Service
Management organization:
Experienced, skilled and trained staff
Adequate support from business (Funding)
Appropriate and effective support tools
DEMAND
MANAGEMENT
Objective
Identify and analyse
patterns of business
activity to understand the
level of demand that will
be placed on a service
Scope
Identify and analyse how
different types of user
influence the demand for
service
Risks
Lack of, or inaccurate
configuration management
information, which results on
the impact of changing demand
on the service providers
infrastructure and applications.
Purpose
To understand, anticipate and
influence customer demand for
services and to work with
capacity management to ensure
the service provider has
capacity to meet this demand
Activities/Methods/
Techniques
Business Plans
Marketing Plans
Sales Forecast
New Product launch
plans
Challenges
The customer might
find it difficult to break
down individual
activities that make
sense to the service
provider.
Business Value
Main value of demand
management is to achieve a
balance between the cost
of a service and the value of
the business outcomes it
supports
Policies/Principles/Basic
Concepts
To be fully active demand
needs to be active
throughout the whole
lifecycle.
Critical Success Factors and
Key Performance Indicators
CSF A process exist whereby
services are designed to meet the
patterns of the business activity
and meet business outcomes
KPI Capacity plans include
details of patterns of business
activity corresponding to
workloads.
Information Management
The service Portfolio and
Customer Portfolio
Minutes of meetings between
business relationship
managers and customers
Roles
Service Owner Ensuring that the on-going service delivery and
support meet the agreed customer requirements
Process owner ensuring that a process is fit for purpose
Process Manager accountable for operational management of a
process
Process Practitioner responsible for carrying out one or more
process activities.
Text
Service Economics
The cost of providing services and the
value of outcomes achieved
Relies on 4 main
areas
Continual Service
Improvement
Evaluate
Check changes in outcomes
The relevance of servi ces
Improvements
Type I (Internal Service Provider)
Type I Service Providers are dedicated to,
and often embedded within, an indi vidual
business unit.
Type II (Shared Services Unit)
Functions as Finance, IT, Human Resources
and Logistics are not always at the core of
a n organizations competitive advantage.
Type III (External Service Provider)
Type III Service Provider is a service
provider that provides IT services to
external customers
FINANCIAL MANAGEMENT FOR
IT SERVICES
Benefits
Conduct business in a financially responsible manner
*Understand IT services costs and maintain profitability
*Ability to make sound business decisions
Process
*Budgeting -> Predicting and controlling cash flow
*Accounti ng -> Enables IT organization to account for money spent
*Charging -> Billing customers for service
CRITICAL SUCCESS FACTORS
*There is an enterprise framework to identi fy, manage and
communicate information
*Funding i s available to support provision of services
*Service provi der is able to charge for service
FINANCIAL MANAGEMENT FUNDING
*IT service management refers to means an IT service obtains
financial resources
*Types of funding models
Rolling plan -> is for a fixed period (monthly)
Trigger based -> Is initiated by an event
Zero based -> Is allocated according to financial peri ods
FINANCIAL MANAGEMENT COSTS
*Accounti ng is responsible for identifying costs and managing variance frombudget
*An accounting cost model is a framework that determines the cost of a service and ensure
adequate allocation
COSTS CLASSIFICATION
*Capital costs the cost of purchasing
something that will be a financial asset
*Operational costs costs resulting in
running the IT service
TYPES OF COST MODELS
*Cost by it - accounts for cost and reports to management
*Cost by service cost is reported according to servi ce
*Cosy by customer service is paid for by service provider and
all ocated to customers
*Cost by locati on - service is paid for by service provider and
all ocated to location
*Hybrid cost model a combination of different models
Governance is the single
overarching area that ties IT and
business together. Services are
on way of ensuring that the
organisati on is able to execute
governance
GOVERNANCE
What is governance?
The rules, policies and processes
by which a business are
operated, regulated +
controlled.
Defined by board of directors,
stakeholders or constitution.
Who Governs?
A person or group of people
who are responsible for the
governance of the organisation.
Appointed by shareholders or
members of organisation.
What is the difference between
governance and management?
Governance performed by
governors. Insures organi sation
adheres to rules and policies.
Management performed by
executives and people whp
report to them. Job is to execute
rules, processes and operations.
Governance Framework:
Establish responsibilities
Strategy to set and meet
organisati ons objectives
Acquire for valid reasons
Ensure performance when
required
Ensure conformance with rules
Ensure respect for human factors
What is IT governance?
It does not exist as separate are.
Governed by same rules as
organisati on. CIO enforces
corporate governance through
set of applied strategies, policies
and plans
How is Corporate governance of IT
defined, fulfilled and enforced?
CIO ensures that corporate
strategies, policies, rules and plans
include a high-level overview of how
IT wil l be governed.
Management consultants provide
assistance to governors.
Final decision stays with governor as
the are accountable for governance
How does service strategy relate
to governance?
Governors are responsible for the
strategy of the organisation, and
ensuring all parts of organisation
are aligned to strategy.
CIO and IT steering committee will
oversee strategy management.
Used to direct and control the service
management activities.
Should be a strategic decision for a
business.
Relationships between processes are
implemented in different way by
different service providers.
Due to common elements between
managements systems, organisati ons
manage these systems in integrated
way.
Management needs to analyse
requirements of relevant management
standard in details.
Compare to others already
incorporated
STRATEGY
MANAGEMENT
FOR IT
SERVICES
A service strategy is a subset of the
overall strategy for the organisation.
In the case of an IT org, the IT
strategy will encompass the IT
service strategy
ITIL Service Strategy Processes
Benedito, Christian, Kara, Abrahams, Peters, Smith, Nombewu
Markets can be
defined by one or
more criteria
Industry,
Geographical,
Demographic,
Corporate relations
(group of companies)
STRATEGY
Structure - Particular service
assets needed and the
patterns in which they are
configured
CHALLENGES
RISKS
CRITICAL SUCCESS
FACTORS
Service portfolio management
Return on investment
Business impact analysis
Financial management
for IT services
Demand
management
Also
SERVICE
PROVIDERS
SOURCING
STRATEGY:
SERVICE STRATEGY
INPUTS & OUTPUTS
ORGANISING FOR SERVICE STRATEGY - ROLES
SERVICE PORTFOLIO
MANAGEMENT
Application Portfolio
Project portfolio
Critical success factors
Key performance indicators
Configuration management system
Service catelouge
Retired services
Value to business
Purpose & Objectives
Policies, principles &
basic concepts