ITIL

Increasing the Service Potential

• The service assets of a service provider representthe service potential that is available tocustomers.

• Objective of service management is theimprovement of the service potential of thecapabilities and resources.

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Increasing the Performance Potential

• The services of a service provider represent thepotential for improving the performance potentialfor improving the performance of customerassets.

• Visualize and define the performance potential ofservices so that all decisions are focused on thecreation of value for the customer.

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ITIL poses a number of questions:

• What is our market?

• What does the market want?

• Do we have something unique to offer to the market?

• Do we have the right portfolio for a specific market?

• Do we have the right catalogue for a specificcustomer?

• Is every service designed so that it leads to thedesired result?

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ITIL poses a number of questions:

• Do we have the right catalogue for a specificcustomer?

• Is every service designed so that it leads to thedesired result?

• Is the implementation of every service such that itleads to the desired result?

• Do we have the right models and structures to bea service provider?

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Preparation for implementation

• STRATEGIC AUDIT

– Which of our services are the most distinctive?

– Which of our services are the most distinctive?

– Which of our services are the most lucrative?

– Which of our customers and stakeholders are the mostsatisfied?

– Which of our activities are the most effective?

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Preparation for implementation

• SETTING GOALS

ITIL defines 3 different types of information thatdetermine the objectives of a service:

• TASKS – What is the task of the service that is tobe provided?

• RESULTS – What kind of results does the customerhope to achieve?

• CONSTRAINTS – What are the limiting factors forthe customer in achieving these results?

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Defining the Critical Success Factors

• They are defined in terms of capabilities andresources.

• They seem to be the key to success for marketleaders.

• They are the basis for competition among rivals.

• They are dynamic.

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Defining the Critical Success Factors

• They usually require considerable investment anddevelopment time.

• Their value is calculated through a combinationwith other factors.

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Critical success factors changes or are influenced by these factors:

• Customers

• Competition

• Suppliers

• Regulations

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Customer’s portfolio with a Service Portfolio

Market Space

Critical Success Factors

Customer Portfolio

Service Portfolio

Critical Success Factors in a market

• Critical Success Factors are decisive for success ina market. They are also useful for evaluating thestrategic position of a service provider. This meansthe critical success factors must be even furtherdefined in specific value propositions to thecustomer.

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Critical Success Factors in a market

• In many markets cost effectiveness is a customarycritical success factor, while in other marketsspecialized domain knowledge or reliability of theinfrastructure is much more important.

• ITIL advices that a strategic analysis be performedfor every market, major customer and ServicePortfolio in order to determine the currentstrategic positions for success.

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Investigation of business potential

• Services providers can be active in more than onemarket. A component of strategic planning is theanalysis of the presence in various markets:

o an analysis of strong and weak points,

o opportunities and risks in every market.

• Service providers also analyze the possibleexpansion of the potential market.

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Providers determine which customer needs can be effectively andefficiently satisfied by their services, while at the same timedeciding which markets will be served and which will be ignored.

• FIRST, IDENTIFY THE:

Markets can that best be served with existingassets.

Markets that must be avoided with the existingassets.

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Providers determine which customer needs can be effectively andefficiently satisfied by their services, while at the same timedeciding which markets will be served and which will be ignored.

• Next determine for the selected markets:

What is the service offering (Service Portfolio)

Which customers (Customer Portfolio)

Critical Success Factors

Service models and service assets

Service pipeline and Service Catalogue

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Synchronizing with the customer’s needs:

It is essential to understand the relationship with thecustomer and market. Customers can cover one ormore markets. Markets can include one or morecustomers. The market of Type I providers is internal to the

organizational unit of which it is a part. The market of Type II providers is internal to the

enterprise, but it is distributed through businessunits.

The market of Type III providers is divided over morethan one enterprise.

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Expansion and growth

GROWTH IN A SPECIFIC MARKET IS MADEPOSSIBLE THROUGH:

• Extensions of existing contracts

• Increasing requests

• Expansions with complimentary services

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Processes

ITIL version 3 distinguishes three processes at thestrategic level:

Financial Management

Demand Management

Service Portfolio Management

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Financial management

• is an integral component of service management.

• Service valuation ensures that the businessunderstands precisely what is being deliveredthrough IT.

• ITIL defines two essential value concepts for servicevaluation:

1. the provisioning value (the production costs)

2. the service value potential (the value-addingcomponent)

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ITIL divides planning into 3 primary areas:

• Operating & capital planning

• Demand planning

• Regulatory & environmental

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Investment Analysis (Service Investment Analysis)

• is to derive a value-indication of a specific servicefrom the attained value and incurred costs of thetotal lifecycle.

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Accounting

• results from a service oriented bookkeepingfunction is that far more details andunderstanding are obtained in regard to thedelivery and consumption of services and theproduction of data that are directly relevant tothe planning process.

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Variables Cost Dynamic (VCD)

• focuses on analyzing and understanding the manyvariables that influence service costs.

• can be used as an analysis of the anticipatedimpact of events such as

o acquisitions

odisinvestments

o changes to the Service Portfolio or service alternatives

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Fundamental decisions for financial management:

ITIL concepts for an organization to decide which options are best for their service strategies:

Cost recovery, Value center or Accounting center?

Chargeback: to charge or not to charge

Financial management implementation checklist

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Demand Management (DM)

• Is an essential aspect of service management inwhich the offer is harmonized with the demand.

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Service packages

• consists of a Core Service Package and one ormore Service Level Packages. These combine toprovide a Differentiated Offering. Service LevelPackages are ways of differentiating the offeringby providing specific units of Utility and/orWarranty for a given service.

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Service Portfolio Management (SPM)

• is a method to manage all service managementinvestments.

• The objective of SPM is to achieve maximumvalue creation while at the same time managingthe risks and costs.

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Service Portfolio Management (SPM)

SPM is dynamic and ongoing process and comprises thefollowing work methods:

• Define – inventory the services and business cases andvalidate the portfolio data

• Analyze – maximize the value of portfolio; synchronize andset priorities and balance from request to offer

• Approve – completion of the proposedportfolio, authorization of services and resources; decisionfor the future

• Charter – communication of decisions, allocation ofresources and charter services

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Organization

• IT organizations are complex system within agreater complex system of thebusiness, customers and industry.

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Organizational value creation cycle

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Ability to obtain resources

Allows an organization to

create

An organizational strategy

and invest resources to develop

Capabilities

enabling theorganizationalto create

Distinctiveness

Which increases it

ITIL describes five phases in organizational development:

Phase 1: NETWORK- An organization focuses on fat, informal and provision

of services. Innovation and entrepreneurship areimportant organizational values.

ADVANTAGES OF NETWORK STRUCTURE:• Avoid high bureaucratic costs associated withy

complex organizations• A flat organization in which fewer managers are

necessary• Flexibility allows for quick modifications or changes

to the structure

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DISADVANTAGES OF A NETWORK STRUCTURE:

• Managers must oversee the integration of activities

• Co-ordination problems

• Opportunities for outsourcing functional activities

ADVICE: a change in leadership style is necessary to grow beyond these challenges.

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Phase 2: DIRECTIVE

- Can be resolved with a strong management team

ADVICE: to grow beyond this challenge, more delegation is necessary.

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Phase 3: DELEGATION

- Efforts are made to enhance technical efficiencyand provide space for innovation in and improveservices.

ADVICE: improve the co-ordination within theorganization by initiating systems and programs.

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Phase 4: CO-ORDINATION

- is directed the towards the use of formal systemsas a means of achieving better co-ordination.

ADVICE: if everything is in order internally, the netorder of business is to improve co-operation withthe customer.

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Phase 5: COLLABORATION

- the focus is on the improvement of co-operationwith the business. A commonly used structure is thematrix structure with the flow of functionalresponsibilities.

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Advantages of a matrix structure:

• Minimizes and overcomes functional barriers

• Increases speed of response to changing product orcustomer needs

• Opening up communication among the functionalspecialists

• Creation of opportunities for team members ofdiverse functions to learn from each other

• Use of the skills of specialist staff who can move fromproduct to product and from customer to customer

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Disadvantages of a matrix structure:

• Lack of a monitoring structure that the staff canuse to build a stable pattern of expectations

• Conflicting roles can demoralize staff

• Possible conflict situation between functions andproduct or customer teams

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From work group to department:

BASIC STRUCTURE DESCRIPTION STRATEGIC CONSIDERATIONS

Function Organizing by function is the bestway of specializing. Pooling ofresources and minimizingduplication.

• Specialization• Development of standards• Small-scale

Product Organizing by product is preferred byorganizations that are focused onnew and diverse products. Thisorganization is found primarily inprocessing industries.

• Focus on product• Strong product knowledge

Market or customer Organizing by market or customeroffers differentiation in the form ofincreased knowledge and responseto the wishes of the customer.

• Services is unique for each segment

• Customer service• Powerful consumer • Quick service

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From work group to department:

BASIC STRUCTURE DESCRIPTION STRATEGIC CONSIDERATION

Geography Organizing by geography ispreferred when providingservices in close proximity.Minimizes travel and distributioncosts while benefiting fromknowledge of local area.

• On-site services• Close to customers for

delivery and support• Organization is viewed as

a local enterprise

Process Organizing by process ispreferred in executing processesfrom start to finish.

• Need to shortened process cycle time

• Process excellence

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Organization design

The key to organizational design is strategy.

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Strategic Forces

Process FocusOrganizational

Structure

Partnership

Control andHarmonization

Process and Decentralization

Structure and Centralization

Speed and Creativity

High

Low

Collaboration

Co-ordination

Delegation

Directive

Network

Organizational culture

- is a set of values an norms that determine the courseof both internal and external interactions.

There are two types of values:

END VALUES – the desired results in terms ofquality, excellence, reliability, innovation andprofitability.

INSTRUMENTAL VALUES – the desired behavior interms of standards, respect for tradition andauthority, careful and conservative treatment andmoderation.

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Sourcing strategy

• is to improve the core competencies.

• A risk in outsourcing of services is outsourcingthem to a competitor:

Substitution – the vendor can replace thesourcing organization

Disruption – the vendor can damage yourreputation

Distinctiveness – you can develop a dependenceon another organization

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Outsourcing structures

The dynamic of the outsourcing of services requiresthat organizations formally determine the provisions ofan outsourcing strategy. The following generic forms ofoutsourcing can be delineated:• Internal outsourcingo Type 1 Internal – provision and delivery of services by

internal staff; this offers the most control, but islimited in scale.

o Type 2 Shared services – working with internal Bus;offer lower costs than Type 1 and morestandardization, but is still limited in scale.

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Outsourcing structures

• Traditional outsourcingo Complete sourcing of a service – a single contract with one service provider;

better in terms of scaling opportunities, but limited in best-in-class capabilities.• Multi-vendor outsourcingo Prime – a single contract with one service provider who works with multiple

providers; improved capabilities and risk, but increased complexity.o Consortium – a selection of multiple service provides; the advantage is best-in-

class with more oversight; the disadvantage is the risk of necessity of workingwithy the competition.

o Selective outsourcing – a pool of services providers selected and managedthrough the service receiver; this is the most difficult structure to manage.

o Co-sourcing – a variation of selective outsourcing in which the service receivercombines a structure of internal or shared services with external providers, inthis case; the service receiver is the service integrator.

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Outsourcing with multiple providers

• Is a good method because the organization can maintainstrong relationships with each provider.

Checklist for the selection of providers:o Demonstrated competencies – staff, use of

technology, innovation, experience and certification whereapplicable

o Track record – quality, financial value, dedicationo Relationship dynamics – do the vision and strategy fit with

those of the organizationo Quality of solutions – have the services been delivered as

requestedo Overall capabilities – financial

stability, resources, management systems, scope and rangeof services 46

Service Provider interfaces (SPI)

Offer theses reference points:

During contract discussions the responsibilities andservice levels should be negotiated:

Identification of integration points of variousmanagement processes.

Identification of specific roles and responsibilities.

Identification of management information that isrelative to the customer.

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Sourcing governance

is the framework of decision rights that encouragethe desired behavior in outsourcing.

With a few simple interventions, the first inroadtowards governance can be made:

• Establish a governance body

• Differentiate between governance domains

• Establish a fixed decision rights matrix

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Critical success factors

• Desired results

• Optimum model for delivering services

• Best location from which to deliver services

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Two types of metrics:

• Business metrics – financial savings, service levelimprovements, business process efficiency

• Customer metrics – availability and consistency ofservices, more supply, service quality

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Roles and responsibilities

• Director of service management – supervises theprovider on behalf of the business

• Contract manager – manages the services contractfrom the perspective of the service provider

• Product manager - manages the services in theservice provider's organization

• Process owner – manages the process models thathave been developed on behalf of the users

• Business representative – represent the customers’interests and manage the sourcing relationship fromthe perspective.

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Service automation

impact on the performance of service assets such asmanagement, organization, people, processes, knowledge and information.

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Service analysis and instrumentation

Service analysis is the placing of information in acontext of patterns. Through understanding ofpatterns of information we can answer the followingquestions:

• How does this incident influence the service?

• How does this incident impact the business?

• How should we respond?

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Service interferences

Characteristics of good service interfaces:

The interface must be easy to find, and simple to use.

The interfaces must be available and in a form thatensures opportunities for choice and flexibility forusers.

The interfaces must have sufficient capacity so thatthere is no waiting period if a large number of userstry to make of the interface simultaneously.

The interfaces must accommodate users with varyingskills, competencies, backgrounds and handicaps.

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Combination of service and technology:

Advances in communication technology influence the interaction between serviceproviders and their customers.Five ways in which technology contributes to communication with the customer:1. Communication without technology – such as with consulting services.2. Communication assisted by technology - only the service provider has access

to the technology; for example, an airport representative uses a terminal tocheck-in customers.

3. Communication facilitated by technology - both the customer and theprovider have access to the same technology.

4. Communication accomplished through technology – service provider andcustomer are not in close proximity; for example, a customer who receivesinformation via a help desk.

5. Communication generated by technology – the customer sees the serviceprovider only in the form of technology, via a self service interface;appropriate for routine activities, such as automated teller machines (ATMs).

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Self-service channels

Automation is of added value to a capacity. Thecapacity of channels for self service has a lowmarginal cost, is infinitely scalable, does not gettired, offers unlimited consistent performances, andis available 24/7 for a relatively low cost.

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Simulation

System dynamics is a methodology for understandingand managing the complex problems of ITorganizations.

System dynamics can provide insights in the followingsituations:

Capability trap – in order to pressure the staff workharder, the organization unconsciously sets the stagein which an increasingly higher level of tension isneeded to arrive at the same level of performance.

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Simulation

Tool trap – although tools are often very useful, theyalso required the development of knowledge andexperience; organizations overlook the impacts of theincrease short-term work pressure through trainingand learning and practical activities, and end uprunning additional unintended risks.

Fire-fighter trap – when an organization rewardsmanagers for putting out fires quickly, theperformance can suffer over the long-term; in thiscase it might be better not to reward extinguishingthe small fires.

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Analytical modeling

There is a lot depth and diversity in analyticalmodeling. The Service Strategy as well as otherfunctions and processes in the Service Lifecycle canbenefit from the knowledge that comes fromanalytical modeling for improving performance inlight of technical, financial and time constraints.

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Return on investment

• Business case – a way of identifying businessobjectives that are dependent on servicemanagement.

• Pre-Program ROI - techniques for quantitativelyanalyzing investments in service management.

• Post-Program ROI – techniques for retroactivelyanalyzing investments in service management.

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Education

ITIL