Chapter 2 & 3 - Service Strategy

Service Strategy
Overview
Objectives
After completion of this lesson, you will
learn:
Overview of Service Strategy

Value of Services
Service Assets
Creating Value through Services
Defining Services
Service Strategy
Service Strategy
Improve the ability to think
and act in a strategic manner
Ask the why we are doing

something before the how we
do it
Value of service strategy
Link provider activities to

outcomes
Provides understanding of
services
Ability to respond to changing

business needs
Facilitates communication
(c) Crown copyright 2011. Reproduced under license from the Cabinet Office
Provides a means for

organization
Value of Service
Service provide both
utility and warranty
Performance
supported?
Constraints removed?
OR
T/F
Definition of Utility
Utility is the functionality
offered of a product or service
to meet a particular need. i.e.
What it does
Definition of Warranty
Warranty is a promise or
guarantee that a product or
service will meet its
requirements, i.e. How well it
Fitdoes
for it
purpose?
AND
Available enough?
Capacity enough?
Continuous enough?
Secure enough?
AND
WARRANTY
Fit for
use?
T/F
Value-created
T/F
T: True
F: False
(c) Crown copyright 2011. Reproduced under license from the Cabinet O
Value is Subjective
Perceptions
Preferences
filter
Business
outcomes
context
Attributes
Crown
Crown copyright
copyright 2011
2011 Reproduced
Reproduced under
under license
license from
from the
the Cabinet
Cabinet Office
Office
Service Assets
Capabilities
Resources
(Intangible)
(Tangible)
Management
Financial Capital
Organization
Infrastructure
Processes
Applications
Knowledge
Information
People
People
Definition of Service Asset

A Service Asset is any
capability or resource of a
Service Provider.
(c) Crown copyright 2011. Reproduced under license from the Cabinet Office
Creating Value Through

Services
Business
Outcomes
Value
Potential
Customer
Assets
Services
Service
Potential
Service Assets
(Capabilities and Resources)
Performance
Potential
Defining Services
Services are determined

by the customer
perspective
Engineering and operations

perspectives are
insufficient
Customer perspective questions:
What is our business?

Who is our customer?
What does the customer value?
Who depends on our services?
How do they use our services?
Why are they valuable to them?
Service Portfolio
Definition of Service
Portfolio
The Service Portfolio is the
complete set of services
that are managed by the
service provider.
Three Catalogs
Service Pipeline
Service Catalog
Retired Services
10
Business Case
Decision support and planning
tool that projects the likely
consequences of a business
action
Business Case Structure
Introduction
Methods and Assumptions
Business Impacts
Risks and Contingencies
Recommendations
Service Strategy
Processes
Business Relationship Management (BRM)

Communicating with customers
Service Portfolio Management (SPM)

Making decisions regarding services
Demand Management
Understanding demand
Ensuring steady demand exists
Financial Management for IT Services

Managing the finances
Ensuring good stewardship of funds
Accounting, budgeting and charging
12
Service Strategy
Processes
Business Relationship
Management
14
Lesson Objectives
During this lesson, you will learn:
Purpose of business relationship

management
Objectives of business relationship
management
Scope of business relationship
management
15
Purpose
Two-fold
Establish and maintain a business

relationship between the service
provider and the customer based on
understanding business needs
Identify customer needs and providers
ability to meet those needs
16
Objectives
Ensure understanding of customers

perspective of services
Ensure customer satisfaction
Establish and maintain relationship with
customer
Identify changes to customer environment
Mediate conflicting requirements
Establish formal complaint and escalation
process for the customer
17
Scope
Scope focuses on understanding how
services meet customer requirements
This requires understanding
Business outcomes
Services offered and the way they are used
Understanding services, responsibilities, service

levels, anticipated changes
Technology trends that could impact services
Levels of customer satisfaction
How to optimize services
How the service provider is represented to the

customer
18
BRM and SLM

Differences between business relationship management and
service level management
Business Relationship
Management
Purpose
To establish a business
relationship between the
provider and the
customer
Service Level
Management
To negotiate service level
agreements, operational
level agreements, and
underpinning contracts
To identify customer
needs
Focus
Strategic and tactical
Tactical and operational
Primary
measure
Customer satisfaction
Achieving agreed levels of

service
Demand
Management
20
Lesson Objectives
Types of Demand Management

Patterns of Business Activity
Demand Management across the Service
Lifecycle
Types of Services
21
Demand Management
Tactical Demand
Management
Involves use of Differential
Charging to encourage use
during less busy times
Strategic Demand
Management
Involves analysis of Patterns of
Business Activity (PBAs)
Definition of Demand
Management
Demand Management is a set
of activities that understand
and influence customer
demand for services and the
provision of capacity to meet
these demands.
22
Demand Management
Patterns of
Business
Activity
(PBAs)
Sources of
Demand
PBAs consider
People
Frequency
Volume
Location
Duration
Demand
Processes
Applications
Supply
User Profiles
(UPs)
PBAs under
Change
Control
IT Service
Management
User Profiles (UPs)
Service Strategy
Approves additional
capacity
Approves new or changed
services
Financial Management
uses incentives to
influence demand
Service Operation
Adjusts workload based
on demand
Demand will influence
resource scheduling
23
Demand
Management and
the Service Lifecycle
Service Design
Optimizes design
based on demand
patterns
Adjusts and plans
capacity based on
demand patterns
Service Transition
Maps demand to
services
24
Service Package
Service Package
Definition of Service
Package
A Service Package is a
detailed description of an IT
Service that is available to be
delivered
toof
customers.
Definition
Core Service
A Core Service is a service
that delivers basic outcomes
desired by one or more
customers.
Definition of Supporting
Service
A Supporting Service is a
service that enhances or
enables a core service.
Financial
Management for IT
Services
26
Lesson Objectives
Purpose of Financial Management for IT

Services
Objectives of Financial Management for IT
Services
Scope of Financial Management for IT
Services
Value of Financial Management for IT
Services
Activities of Financial Management for IT
Services
27
Purpose
The purpose of Financial
Management for IT Services
is to secure the appropriate
level of funding to design,
develop and deliver services
that meet the strategy of the
organization.
28
Objectives
Define and maintain a framework to identify, manage and

communicate the cost of providing services
Evaluate the financial impact of new or changed strategies
on the service provider
Secure funding to manage the provision of services
Facilitate good stewardship of service and customer assets
Understand the relationship between expenses and income
Manage and report expenditure on service provision
Execute the financial policies and practices in the provision
of services
Account for money spent on the creation, delivery and
support of services
Forecast the financial requirements for the organization to
be able to meet its service commitments to its customers,
and compliance with regulatory and legislative requirements
Where appropriate, define a framework to recover the costs
29
Scope
Financial management consists of three main
processes:
Budgeting
Accounting
Predicting and controlling the income and expenditure of

money within the organization
Enables the IT organization to account fully for the way
its money is spent
Charging
Process required to bill customers for the services

supplied to them (where appropriate).
Requires sound IT accounting practices and systems
30
Value to Business
Improved decision making
Better evaluation of
change
Improved Service Portfolio
Improved financial
compliance and control
Improved operational
control
Communication of value
capture and creation
Definition of Confidence
Financial ComplianceConfidence is the notion that financial
inputs and models for service demand
Accounting
and supply represent statistically
significant measures of accuracy.
Service Provisioning Optimization
Variable Cost Dynamics
Service Portfolio Management and

Optimization
Service Investment Analytics
Service Consumption Modeling
Improved Confidence
31
Financial Management
Activities
32
Cost Classifications
Direct
vs.
Costs which are allocated

entirely to a customer or
service
Fixed
Costs which are not

allocated entirely to a
customer or service
vs.
Costs which remain constant

regardless of rate of use or
consumption
Capital
Costs spent for an asset for
the organization
Indirect
Variable
Costs which vary
depending on use or
consumption
vs.
Operational
Costs incurred for day-today operation
Service Portfolio
Management
34
Lesson Objectives
Purpose of Service Portfolio Management

Objectives of Service Portfolio
Management
Scope of Service Portfolio Management
Questions answered by the Service
Portfolio
Activities of Service Portfolio
Management
35
Purpose
The purpose of
Service Portfolio
Management is to
ensure that the
service provider has
the right mix of
services to balance
the investment in IT
with the ability to
meet business
Definition of Service Portfolio

Management (SPM)
Service Portfolio Management is a
dynamic method for governing
investments in Service
Management across the enterprise
and managing them for value.
36
Objectives
Provide a process and mechanisms to enable an

organization to investigate and decide on which
services to provide, based on an analysis of the
potential return and acceptable level of risk
Maintain the definitive portfolio of services provided,
articulating the business needs each service meets and
the business outcomes it supports
Provide a mechanism for the organization to evaluate
how services enable them to achieve their strategy,
and to respond to changes in their internal or external
environments
Control which services are offered, under what
conditions and at what level of investment
Track the investment in services throughout their
lifecycle
37
Scope
The scope of service portfolio
management is all services a service
provider plans to deliver, those
currently delivered and those that have
been withdrawn from service.
Determine whether the service
provider is able to generate value
from the services.
Track investments in services and
compare them to the desired
business outcomes.
Why should a customer buy these services?
Why should they buy these services from us?
What are the pricing or chargeback models?
What are our strengths, weaknesses, priorities

and risks?
How should our resources and capabilities be

allocated?
38
Questions Answered
by the Service
Portfolio
39
Service Portfolio
Management Activities

Chapter 2 & 3 - Service Strategy

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Service Strategy

Overview of Service Strategy

Ask the why we are doing

Link provider activities to

Ability to respond to changing

Provides a means for

Definition of Service Asset

Creating Value Through

(Capabilities and Resources)

Services are determined

Engineering and operations

What is our business?

Business Relationship Management (BRM)

Service Portfolio Management (SPM)

Financial Management for IT Services

During this lesson, you will learn:

Purpose of business relationship

Establish and maintain a business

Ensure understanding of customers

Services offered and the way they are used

Understanding services, responsibilities, service

Technology trends that could impact services

Levels of customer satisfaction

How to optimize services

How the service provider is represented to the

BRM and SLM

Strategic and tactical

Tactical and operational

Achieving agreed levels of

During this lesson, you will learn:

Types of Demand Management

User Profiles (UPs)

During this lesson, you will learn:

Purpose of Financial Management for IT

Define and maintain a framework to identify, manage and

Predicting and controlling the income and expenditure of

Process required to bill customers for the services

Improved decision making

Improved Service Portfolio

Service Provisioning Optimization

Variable Cost Dynamics

Service Portfolio Management and

Service Investment Analytics

Service Consumption Modeling

Costs which are allocated

Costs which are not

Costs which remain constant

During this lesson, you will learn:

Purpose of Service Portfolio Management

Definition of Service Portfolio

Provide a process and mechanisms to enable an

Why should a customer buy these services?

Why should they buy these services from us?

What are the pricing or chargeback models?

What are our strengths, weaknesses, priorities

How should our resources and capabilities be

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