Service Strategy Overview

Service Strategy helps to design, develop and implement service management as organizational capabilities and strategic assets as well. It enables a service provider to consistently outperform competitive alternatives over time, across business cycles, industry disruptions and changes in leadership.

Service strategy comprises of the following key concepts:

● Value creation

● Service Assets

● Service Provider types

● Service structures

● Defining the service market

● Developing service offerings

● Financial management

● Service portfolios

● Demand management

● Return on investment

Strategic Assessment

Before crafting service strategy, a provider should first take a careful look at what it does already. The following questions can help expose a service provider’s distinctive capabilities:

● Which or our services or service verities are the most distinctive?

● Which or our services or service verities are the most profitable?

● Which of our activities in our value chain or value network are the most different and effective?

Factors in Strategic Assessment

Here are the key factors that play important role in strategic assessment:

S.N.	Description
1	Strengths and weaknesses The attributes of the organization. For example resources and capabilities, service quality, skills, cost structures, product knowledge, customer relationship etc.
2	Business Strategy The perspective, position, plans and patterns are received from a business strategy.
3	Critical Success factors How will the service provider know when it is successful?
4	Threats and opportunities Includes competitive thinking. For example, is the service provider vulnerable to substitution?, or Is there a means to outperform competing alternatives?

Value Creation

Service strategy defines a unique approach for delivering better value. According to customers service consist of two elements:

● Utility

● Warranty

Utility

Utility is perceived by the customer from the attributes of the service that have positive effect on the performance of task associated with the desired business outcomes. This is fir for purpose.

Utility is generally stated in terms of:
● Outcomes supported
● Ownership costs and risks avoided

Warranty

Warranty ensures the utility of the service is available as needed with sufficient capacity, continuity, and security. Value of warranty is communicated in terms of level of certainty.

Warranty is usually defined in terms of availability, capacity, continuity, and security of the utilization of the services.

AVAILABILITY

It assures the customer that the services will be available for use under agreed terms and conditions.

CAPACITY

It assures that the service will support a specified level of business activity or demand at a specified level.

CONTINUITY

It assures that the service will continue to support the business through major failures.

SECURITY

It assures that the service provided by the service provider will be secure.

Service Assets

There are two types of service assets as listed below:

● Resources

● Capabilities

Resources

Resources are the inputs for production. The resources are transformed by management, organization, people and knowledge.

Capabilities

Capabilities refer to skills to develop and control the resources for production. The skills are based on knowledge, experience and information.

Service Provider Types

Service Provider can be broadly classified into three types as listed below:

1. Type I – Internal Service Provider

2. Type II – Shared Service Provider

3. Type III – External Service Provider

Type I Internal Service Provider

Internal Service provider refers to the business functions within an organization. Administration, finance, human resources, and IT service providers all comes under internal service providers.

Type II Shared Service Provider

In this, business functions such as IT, human resources, and logistics are consolidated into an autonomous special unit called a Shared Service Unit (SSU).

Type III External Service Provider

External service provider refers to the third party service providers. It can offer competitive prices and drive down unit cost by consolidating demand.

The Four Ps of strategy

The below mentioned Four Ps identify the different forms of a service strategy and are considered as entry points to service strategy.

Perspective

It describes a vision & direction and articulates the business philosophy of interacting with customer.

Positions

It describes the decision to adopt a well defined stance. It is expressed as distinctiveness in minds of customers. This means competing in the same space as others but with differentiated value proposition that is attractive to the customer. Whether it is about offering a wide range of services to a particular type of customer or being the lowest cost option, it is a strategic position.

Plan

A plan describes “How do we offer high value or low cost services? “ or “How do we achieve and offer our specialized services? “

Pattern

It describes the organization’s fundamental way of doing things.

Services strategy processes

The following diagram expresses the different processes and their relationship in service strategy:

Strategy Management

This process involves four activities: definition of market, development of offering, development of strategic assets, and preparation for the implementation of the strategy.

Service Portfolio Management

Service portfolio defines all services that a service provider can provide. It helps to control service management investments throughout an enterprise and actively managing their value.

Business Relationship Management

This process deals with establishing good relationship between service provider and customers by ensuring that appropriate services are developed to meet customer’s needs.

Demand Management

This process maintains balance between consumption of services and their delivery.

Financial Management

Financial management helps to determine all the costs of IT organization. It can serve as a strategic tool for all three kinds on service provider types: internal, external and shared service provider.

Service Lifecycle

The complete framework of ITIL is based on service lifecycle. Each lifecycle defines certain processes for effective service management.

Service lifecycle helps to amplify the service management approach and to achieve better understanding of its structure. In the coming chapters, we will be discussing all lifecycle individually with their processes and functions.

Processes and Functions

There are 26 processes and 4 functions in ITIL V3. These processes and functions are discussed in detail with each service lifecycle in further chapters.

Process

A process defines policies, standards, guidelines, activities, and work instructions. It takes some defined inputs to produce desired results.

Functions

A function is defined as group of people or tools required to carry out one or more processes and activities.

Service Basics

Overview

Service

Service is a means of delivering value to customers by achieving customer's desired results while working within given constraints.

Services vs. Products

Services	Products
Services are not tangible.	Products are tangible.
Services are produced and consumed at same time.	Products are not produced and consumed at same time.
Services are inconsistent.	Products are consistent.
The user participates in the production of services.	The user doesn’t participate in the production of products.

Service Management

Service Management refers to all aspects of the management of IT service provision. According to ITIL, Service management contains all organizational capabilities for generation of added value to the customers as service.

Goals of Service Management

Here are the main goals of Service management:

◉ Make IT services adaptable towards the present and future requirements of an organization and its customers.

◉ Develop and maintain good & responsive relationship with the business.

◉ Make effective and efficient use of all IT resources.

◉ Optimizing the quality of delivered services.

◉ Reduction of long term cost of service delivery.

Achieving Service Management

Here are the key activities needed to be performed in order to achieve business and customer’s satisfaction:

◉ Documenting, negotiating and agreeing customer and business quality targets and responsibilities in Service Level Agreements (SLAs)

◉ Regular assessment of customer opinion in customer feedback and customer satisfaction surveys.

◉ IT personnel taking the customer and business perspective and always trying to keep customer interactions as simple as possible.

◉ Understanding the ICT infrastructure.

◉ IT personnel regularly taking the customer journey and sampling the customer experience.

ITIL Terminologies

Here in this chapter, we will discuss some basic terminologies of ITIL that will help to understand the tutorial easily and quickly. The following table comprises of all basic terminologies required to learn ITIL:

S.No.	ITIL Terminologies
1	ITIL Information Technology Infrastructure Library is a set of best practices being practiced by most of the infrastructure service providers to deliver services to the customers to meet their business needs within predicted cost and quality.
2	Service Service is a means of delivering value to customers by achieving customer's desired results while working within given constraints.
3	Service Level It is measured and reported achievement against one or more Service Level Targets.
4	Service Level Agreement It is agreement between service provider and customer. The SLA describes the IT Service, documents Service Level Targets and specifies the responsibilities of provider and customer.
5	Service Strategy Service Strategy helps to design, develop and implement service management as organizational capabilities and strategic assets as well. It enables a service provider to consistently outperform competitive alternatives over time, across business cycles, industry disruptions and changes in leadership.
6	Service Model Service Model is the high level description of the service and components required to deliver that service.
7	Service Portfolio Service Portfolio is the set of services provided by the service provider.
8	Service Catalogue Service Catalogue is the set of specific services being provided by service provider to a specific customer.
9	Customer Portfolio Customer Portfolio is used to record all customers of IT service provider.
10	Demand Management Demand Management is very important and critical process in service strategy. It helps to understand customer demand for services so that appropriate capacity can be provisioned to meet those demands.
11	Pattern of Business Activity PBA is an extremely important activity achieved by knowing customer how they operate and future requirement they might need.
12	Service Design Service Design provides a blueprint for the services. It not only includes designing of new service but also devises changes and improvements to existing ones.
13	Operational Level Agreement (OLA) OLA is an agreement between IT service provider and another part of same organization.
14	Service Level Report It gives insight into a service provider’s ability to deliver the agreed service quality.
15	Service Level Requirements It is a document containing the requirements for a service from the client viewpoint, defining detailed service level targets.
16	Service Asset Service Assets are the resources and capabilities owned by the service provider enabling it to deliver service to the customer.
17	Configuration Item (CI) Configuration Item is subset of service assets and have direct impact on delivering services. All servers, networks, applications that have impact on production are known as configuration item.
18	SACM Service Assets and Configuration Management (SACM) deals with maintaining up-to-date and verified database of all assets and CIs which are also made available to other service management processes.
19	Change Change refers to modifying existing services.
20	Event Event is defined as detectable occurrence that has significance for the delivery of IT service. Events are created by Configuration Item (CI) or the monitoring tools.
22	Incident Incident is defined as any disruption in IT service. Incident can be reported either through the Service Desk or through an interface from event management to incident management tools.
22	Service Request Service Request refers to demand by the users. These requests can be regarding small changes, changing the password, installing additional software application, requesting information etc.
23	Problem In ITIL, Problem is defined as unknown cause of one or more incident.
24	Known Error Known Error is well identified problem with its cause and resolution. It is stored in Known Error Database (KEDB).

ITIL Overview

ITIL is a framework providing best practice guidelines on all aspects of end to end service management. It covers complete spectrum of people, processes, products and use of partners.

Now a day’s ITIL is being practiced by almost every company providing IT services to the customers.

The processes, tasks and checklists described in ITIL are not organization-specific, but can be implemented by any organization. It gives organization a framework to plan, implement and measure IT services.
ITIL was published in 1989 by Her Majesty's Stationery Office (HMSO) in UK on behalf of the Central Communications and Telecommunications Agency (CCTA), now subsumed within the Office of Government Commerce (OGC).

Why ITIL is required?

ITIL helps business managers and IT managers to deliver services to the customers in effective manner and hence gaining the customer’s confidence and satisfaction. Here are the areas where ITIL plays an effective role:

◉ IT and business strategic planning

◉ Integrating and aligning IT and business goals

◉ Implementing continuous improvement

◉ Acquiring and retaining the right resources and skill sets

◉ Reducing costs and the Total Cost of Ownership

◉ Demonstrating the business value to IT

◉ Achieving and demonstrating Value for Money and Return on Investment.

◉ Measuring IT organization effectiveness and efficiency

◉ Developing business and IT partnerships and relationships

◉ Improving project delivery success

◉ Managing constant business and IT change

ITIL Versions

ITIL was originated as collection of books. These books of ITIL cover all aspects of IT service management. Since its origin, it has undergone many changes which lead to the following versions of ITIL:

◉ ITIL V1 was the initial version of ITIL consisting of 31 books

◉ From 2000 to 2004, ITIL V1 was revised and replaced by 7 books (ITIL V2). This version became globally accepted and is now used in many countries by thousands of organizations

◉ In 2007, ITIL v2 was modified and consolidated with 3rd version of ITIL, consisting of five core books covering the service lifecycle. ITIL V3 included 26 processes and 4 functions

◉ In 2011, the 2011 edition of V3 was published. It was an updated version released in 2007.

ITIL Publications

ITIL core publications include a set of five manuals: Service Strategy, Service Design, Service Transition, Service Operation and Continual Service Management.

Benefits of ITIL

Following diagram shows several benefits of ITIL:

ITIL V2 vs. ITIL V3

ITIL V2	ITIL V3
Focused on product, process and people.	Focused on product, process, people and partner.
Process oriented approach	Lifecycle based approach.
Security management is part of evaluation	Security management is a separate process
Emphasizes on service design and service strategy	Equal attention to all processes
Have 10 processes and 2 functions	Have 26 processes and 4 functions.