SERVICE STRATEGY WEBINAR

V3 and Organisations?• V2 – provides core processes

• V3 – moves IT from a position of supplier to partner

• Levels of maturity – V2/V3– V2 – helps organisations move to a minimum

of level 3– V3 – increase maturity toward levels 4 and 5

Purpose and Principles of Service Strategy

• Purpose – Develop the ability to think and act strategically.– Use strategic assets to achieve goals– Define the dependencies between Strategy and

SM processes

• Principles– Outcome - Fulfilment of need/s– Create value

Objectives

To be able to answer questions such as:

• 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?

Goals

• Show how to transform service management into a strategic asset

• See the relationships between various services, systems or processes that are managed and the business models, strategies, or objectives they support

Basics

• A Strategy is not a Plan• Building blocks of high performance

– Market– Performance – Capabilities

• Value Capture – what the provider keeps• Market Space – desired customer outcomes

supported by one or more service/s– Opportunity to deliver value through one or more

services

Value = Utility and Warranty

From the customer’s perspective, the business value of a

service is created by the combination of two elements:

• Utility is the functionality offered by a product or service from the customer’s perspective (Fitness for Purpose)

• Warranty is a promise or guarantee that a product or service will meet its agreed requirements. This may be a formal agreement such as a Service Level Agreement or Contract, or may be a marketing message or brand image (Fitness for Use)

UTILITY

WARRANTY

T/F

T/F

T/F

Fit for purpose?

Fit for use?

OR

AND

Performance supported?

Constraints removed?

Available enough?

Capacity enough?

Continuous enough?

Secure enough?

T: TrueF: False

Value-createdAND

Value Creation

© Crown Copyright 2007. Reproduced with permission from OGC

Scope

• Service Strategy main activities- Define the market

- Develop the offerings

- Develop strategic assets

- Prepare for execution

• Financial Management

• Service Portfolio Management

• Demand Management

SM as a Strategic Asset• Capabilities to control and coordinate

resources to support a catalogue of services

• Virtuous cycle demonstrates– Value + Perceived benefits– On-going relationship/partnership– Return on investment/assets

• Improvements – closed-loop system

• Increase potential – Service/Performance

Forming Strategy

Needs fig 4-19!!!!

The four Ps

• Plans• Patterns• Perspective• Positions

Entry points to Service Lifecycle

Service Strategy forms

Perspective

Patterns Plans

Positions

Strategy

Service Assets

• Service assets are used to create value in the form of goods and services

• Resource is a generic term that includes IT Infrastructure, people, money or anything else that might help to deliver an IT service. – Resources

• Information/Applications/ Infrastructure/Finance

• Capability is the ability of a service organisation, person, process, application, configuration item or IT service to carry out an activity. Capabilities are intangible assets of an organisation.– Capabilities

• Management/Organisation/People/Knowledge

Service Packages

• A Service Package is a detailed description of an IT Service that is available to be delivered to customers. A Service Package includes one or more core services and supporting services as well as a Service Level Package

• Core services deliver the basic outcomes desired by the customer

• Supporting services either enable or enhance the value of a service

Service Providers

• Type I– Internal Service Provider (ISP)

• Type II– Shared Services Unit (SSU)

• Type III– External Service Provider (ESP)

Service Providers

Build lasting relationships based on -

Strategic planning and control

Common Objectives

Shared Knowledge

Experience influences planning

• How to decide…?

• Transaction costs – overall costs of conducting business with a provider. Purchase cost + + + + + + +?

• Internal (aggregate)/External (disaggregate)• “Incumbency”

Service Structures

• Value Chain or Value network (Value net)?

• Chain – linear/production line

• Net – collaborative exchanges

• Service Systems

Service Knowledge Management System

Service Portfolio

Service Lifecycle

Service Status:RequirementsDefinedAnalysedApprovedCharteredDesignedDevelopedBuiltTestReleasedOperationalRetired

Service Portfolio

Service Pipeline

Service Catalogue

Retired Services

Customer/support team viewable section of the Service Portfolio (the Service Catalogue, with selected fields viewable)

Services under development, build or test

Services no longer live

© Crown Copyright 2007. Reproduced with permission from OGC

Demand Management - Objectives

• To avoid excess capacity generating costs without creating value

• To prevent insufficient capacity impacting the quality of services provided

• Business Relationship Manager

• Product Manager/Service Owner

Demand Management - Roles

Concepts

• Activity-based demand management

• Patterns of business activity

• User profiles

• Differentiated offerings

• Differentiated service levels

FM - Objectives

• To provide operational visibility, insight and superior decision making

• To provide the business and IT with the quantification, in financial terms of the value of IT services, the value of the assets underlying the provisioning of those services, and the qualification of operational forecasting

FM - Concepts

• Service valuation- Provisioning value

- Service value potential

• Demand modelling

• Service portfolio management

• Service provisioning optimisation

Return on Investment (RoI)

• Quantify the value of an investment (cost/benefit)

• Measure ability to use assets to generate value

• Issues– Simplistic approach

• Net profit of investment divided by net worth of assets

– Hard to identify financial return for specific aspects of SM

– Understand the business imperative

– Short term

– What’s the cost of not doing it?