ITIL Service Strategy 2011

ITIL
SERVICE STRATEGY
Based on ITIL 2011 Service Strategy publication
Marvin Sirait
January 2017

Topics
Service
Strategy
Introduction
Service management as a practice
Service strategy principles
Service strategy processes
Service strategy, governance, architecture and ITSM implementation
strategies
Organizing for service strategy
Technology considerations
Implementing service strategy
Challenges, risks and critical success factors

Service Strategy
Introduction
Overview
Context
ITIL in relation to other
publications in the Best
Management Practice
portfolio
Why is ITIL so
successful
Chapter summary
Service management
as a practice
Services and service
management
Basic concepts
Governance and
management systems
The service life cycle
Service strategy
principles
Strategy
Customers and
services
Service providers
How to define services
Strategies for customer
satisfaction
Service economics
Sourcing strategy
Service structures in
the value network
Service strategy inputs
and outputs
Service strategy
processes
Strategy management
for IT services
Service portfolio
management
Financial management
for IT services
Demand management
Business relationship
management
Service strategy,
governance,
architecture and ITSM
implementation
strategies
Governance
Establishing and
maintaining a service
management system
IT service strategy and
the business
enterprise architecture
application
development
Creating a strategy for
implementing service
management
Organizing for service
strategy
Organizational
development
Organizational change
Organizational
departmentalization
Organizational design
Organizational culture
Functions
A logical organization
structure for an IT
service provider
Roles
Responsibility model –
RACI
Competence and
training
Technology
considerations
Service automation
Service interfaces
Tools for service
strategy
Implementing service
strategy
Implementation through
the lifecycle
Service strategy
implementation
activities following a
lifecycle approach
The impact of service
strategy on other
lifecycle stages
Challenges, risks and
critical success factors
Challenges
Risks
Critical success factors

INTRODUCTION
• Overview
• Context
• ITIL in relation to other publications in the Best
Management Practice portfolio
• Why is ITIL so successful
• Chapter summary

Overview
• Purpose
• to define the perspective, position, plans and patterns that a service provider needs
to be able to execute to meet an organization’s business outcomes
• Objectives
• An understanding of what strategy is
• A clear identification of the definition of services and the customers who use them
• The ability to define how value is created and delivered
• A means to identify opportunities to provide services and how to exploit them
• A clear service provision model, that articulates how services will be delivered and
funded, and to whom they will be delivered and for what purpose
• The means to understand the organizational capability required to deliver the
strategy
• Documentation and coordination of how service assets are used to deliver services,
and how to optimize their performance
• Processes that define the strategy of the organization, which services will achieve
the strategy, what level of investment will be required, at what levels of demand, and
the means to ensure a working relationship exists between the customer and
service provider.

Overview
• Value to business
• Support the ability to link activities performed by the service provider to
outcomes that are critical to internal or external customers.
• Enable the service provider to have a clear understanding of what
types and levels of service will make its customers successful and
then organize itself optimally to deliver and support those services.
• Enable the service provider to respond quickly and effectively to
changes in the business environment, ensuring increased competitive
advantage over time.
• Support the creation and maintenance of a portfolio of quantified
services that will enable the business to achieve positive return on its
investment in services.
• Facilitate functional and transparent communication between the
customer and the service provider, so that both have a consistent
understanding of what is required and how it will be delivered.
• Provide the means for the service provider to organize itself so that it
can provide services in an efficient and effective manner.

Context
• ITIL Service Strategy
• provides guidance on how to view service management not only as an
organizational capability but as a strategic asset
• ITIL Service Design
• provides guidance for the design and development of services and service
management practices
• ITIL Service Transition
• provides guidance for the development and improvement of capabilities for
introducing new and changed services into supported environments
• ITIL Service Operation
• provides guidance on achieving effectiveness and efficiency in the delivery and
support of services to ensure value for the customer, the users and the service
provider
• ITIL Continual Service Improvement
• provides guidance on creating and maintaining value for customers through better
strategy, design, transition and operation of services

ITIL in relation to other publications in the
Best Management Practice portfolio
• ITIL is part of a portfolio of best-practice publications
(known collectively as Best Management Practice or
BMP) aimed at helping organizations and individuals
manage projects, programs and services consistently and
effectively
• BMP publications include:
• Management of Portfolios
• Management of Risk
• Management of Value
• Managing Successful Programmes
• Managing Successful Projects
• Portfolio, Programme and Project Offices

Why is ITIL so successful
• Vendor-neutral
• ITIL service management practices are applicable in any IT
organization because they are not based on any particular technology
platform or industry type.
• Non-prescriptive
• ITIL offers robust, mature and time-tested practices that have
applicability to all types of service organization.
• It continues to be useful and relevant in public and private small,
medium and large enterprises, and within any technical environment.
• Best practice
• ITIL represents the learning experiences and thought leadership of the
world’s best-in-class service providers.

Why is ITIL so successful
• ITIL is adopted by organizations to enable them to:
• Deliver value for customers through services
• Integrate the strategy for services with the business strategy and customer
needs
• Measure, monitor and optimize IT services and service provider performance
• Manage the IT investment and budget
• Manage risk
• Manage knowledge
• Manage capabilities and resources to deliver services effectively and efficiently
• Enable adoption of a standard approach to service management across the
enterprise
• Change the organizational culture to support the achievement of sustained
success
• Improve the interaction and relationship with customers
• Coordinate the delivery of goods and services across the value network
• Optimize and reduce costs.

Chapter summary
• Service management as a practice
• explains the concepts of service management and services, and
describes how these can be used to create value
• Service strategy principles
• describes the terminology and key principles which form the building
blocks of service strategy best practice
• Service strategy processes
• sets out the processes and activities on which effective service
strategy depends and how they integrate with the other stages of the
lifecycle
• Service strategy, governance, architecture and ITSM
implementation strategies
• deals with some of the major strategic interfaces between service
strategy, the business context and service management

Chapter summary
• Organizing for service strategy
• identifies the organizational roles and responsibilities that are needed
to manage the service strategy lifecycle stage and processes
• Technology considerations
• provides recommendations for the use of technology in service
strategy and the basic requirements a service provider will need to
consider when choosing service management tools
• Implementing service strategy
• outlines effective ways to implement the service strategy lifecycle
stage
• Challenges, risks and critical success factors
• discusses typical examples of challenges, risks and critical success
factors for the service strategy lifecycle stage

SERVICE MANAGEMENTAS A
PRACTICE
• Services and service management
• Basic concepts
• Governance and management systems
• The service lifecycle

Services and service management
• Services
• means of delivering value to customers by facilitating the outcomes
customers want to achieve without the ownership of specific costs and
risks
• Outcome
• The result of carrying out an activity, following a process, or delivering
an IT service etc. The term is used to refer to intended results, as well
as to actual results.
• Core services
• deliver the basic outcomes desired by one or more customers.
• Enabling services
• needed in order for a core service to be delivered.
• Enhancing services
• added to a core service to make it more exciting or enticing to the
customer.

• Service management
• a set of specialized organizational capabilities for providing value to
customers in the form of services.
• Service provider
• An organization supplying services to one or more internal or
external customers.
• IT service management (ITSM)
• The implementation and management of quality IT services that
meet the needs of the business. IT service management is
performed by IT service providers through an appropriate mix of
people, process and information technology.
• IT service provider
• A service provider that provides IT services to internal or external
customers.

• A service level agreement (SLA) is used to document
agreements between an IT service provider and a
customer. An SLA describes the IT service, documents
service level targets, and specifies the responsibilities of
the IT service provider and the customer.
• Main types of service provider
• Type I – internal service provider
• An internal service provider that is embedded within a business unit.
There may be several Type I service providers within an organization.
• Type II – shared services unit
• An internal service provider that provides shared IT services to more
than one business unit.
• Type III – external service provider
• A service provider that provides IT services to external customers

• Within the service provider organization there are many
different stakeholders including the functions, groups and
teams that deliver the services.
• There are also many stakeholders external to the service
provider organization, for example:
• Customers
• Those who buy goods or services. The customer of an IT service provider is
the person or group who defines and agrees the service level targets.
• Users
• Those who use the service on a day-today basis. Users are distinct from
customers, as some customers do not use the IT service directly.
• Suppliers
• Third parties responsible for supplying goods or services that are required to
deliver IT services. Examples of suppliers include commodity hardware and
software vendors, network and telecom providers, and outsourcing
organizations.

• The value of a service is created by combining two
primary elements: utility (fitness for purpose) and warranty
(fitness for use).
• Utility
• functionality offered by a product or service to meet a particular
need
• Warranty
• assurance that a product or service will meet its agreed
requirements
• Utility is what the service does, and warranty is how it is
delivered.

• Public frameworks and standards are attractive when
compared with proprietary knowledge for the following reasons:
• Proprietary knowledge is deeply embedded in organizations and
therefore difficult to adopt, replicate or even transfer with the
cooperation of the owners.
• Proprietary knowledge is customized for the local context and the
specific needs of the business to the point of being idiosyncratic.
• Owners of proprietary knowledge expect to be rewarded for their
investments.
• Publicly available frameworks and standards such as ITIL, LEAN, Six
Sigma, COBIT, CMMI, PRINCE2, PMBOK®, ISO 9000, ISO/IEC 20000
and ISO/IEC 27001 are validated across a diverse set of environments
and situations rather than the limited experience of a single
organization.
• The knowledge of public frameworks is more likely to be widely
distributed among a large community of professionals through publicly
available training and certification.

Basic concepts
• Asset
• Any resource or capability.
• Customer asset
• Any resource or capability used by a customer to achieve a business outcome.
• Service asset
• Any resource or capability used by a service provider to deliver services to a
customer.
• There are two types of asset used by both service providers and
customers – resources and capabilities. Organizations use them to
create value in the form of goods and services.
• Resources
• direct inputs for production.
• Capabilities
• organization’s ability to coordinate, control and deploy resources to produce
value.

Basic concepts
• Process
• structured set of activities designed to accomplish a specific objective.
A process takes one or more defined inputs and turns them into
defined outputs.
• Process characteristics include:
• Measurability
• We are able to measure the process in a relevant manner.
• Specific results
• The reason a process exists is to deliver a specific result. This result must
be individually identifiable and countable.
• Customers
• Every process delivers its primary results to a customer or stakeholder.
• Responsiveness to specific triggers
• While a process may be ongoing or iterative, it should be traceable to a
specific trigger.

Basic concepts
• Function
• team or group of people and the tools or other resources they use
to carry out one or more processes or activities
• Role
• a set of responsibilities, activities and authorities granted to a
person or team
• Organizational culture
• set of shared values and norms that control the service provider’s
interactions with all stakeholders.

Basic concepts
• Service portfolio
• complete set of services that is managed by a service provider and
represents the service provider’s commitments and investments
across all customers and market spaces
• represents all the resources presently engaged or being released
in various stages of the service lifecycle:
• Service pipeline
• All services that are under consideration or development, but are not yet
available to customers.
• Service catalogue
• All live IT services, including those available for deployment.
• Retired services
• All services that have been phased out or retired.

Basic concepts
• Service providers often find it useful to distinguish
customer-facing services from supporting services:
• Customer-facing services
• IT services that are visible to the customer. These are normally services
that support the customer’s business processes and facilitate one or
more outcomes desired by the customer.
• Supporting services
• IT services that support or ‘underpin’ the customer-facing services.
These are typically invisible to the customer, but are essential to the
delivery of customer-facing IT services.

Basic concepts
• Implementing an SKMS enables effective decision support and
reduces the risks that arise from a lack of proper mechanisms.
• Layers:
• Presentation layer
• enables searching, browsing, retrieving, updating, subscribing and
collaboration. The different views onto the other layers are suitable for
different audiences.
• Knowledge processing layer
• where the information is converted into useful knowledge which enables
decision-making.
• Information integration layer
• provides integrated information that may be gathered from data in multiple
sources in the data layer.
• Data layer
• includes tools for data discovery and data collection, and data items in
unstructured and structured forms.

Governance and management systems
• Governance is the single overarching area that ties IT and
the business together, and services are one way of
ensuring that the organization is able to execute that
governance.
• Governance is what defines the common directions,
policies and rules that both the business and IT use to
conduct business.
• Governance insures that policies and strategy are actually
implemented, and that required processes are correctly
followed.
• Governance includes defining roles and responsibilities,
measuring and reporting, and taking actions to resolve
any issues identified.

Governance and management systems
• Governance
• ensures that policies and strategy are actually implemented, and
that required processes are correctly followed.
• includes defining roles and responsibilities, measuring and
reporting, and taking actions to resolve any issues identified.
• Management systems (ISO 9001):
• The framework of policy, processes, functions, standards,
guidelines and tools that ensures an organization or part of an
organization can achieve its objectives.
• ISO management system standards use the Plan-Do-
Check-Act (PDCA) cycle.
• ISO/IEC 20000 is an internationally recognized standard
that allows organizations to demonstrate excellence and
prove best practice in ITSM.

The service lifecycle
• Specialization and coordination across the lifecycle
• Specialization allows for expert focus on components of the service
but components of the service also need to work together for value
• Coordination across the lifecycle creates an environment focused
on business and customer outcomes instead of just IT objectives
and projects
• Specialization combined with coordination helps to manage
expertise, improve focus and reduce overlaps and gaps in
processes
• Processes through the service lifecycle
• Service management is more effective if people have a clear
understanding of how processes interact throughout the service
lifecycle, within the organization and with other parties (users,
customers, suppliers).

SERVICE STRATEGY PRINCIPLES
• Strategy
• Customers and services
• Service providers
• How to define services
• Strategies for customer satisfaction
• Service economics
• Sourcing strategy
• Service structures in the value network
• Service strategy inputs and outputs

Strategy
• Strategy
• plan that outlines how an organization will meet a designed set of
objectives
• Service strategy
• defines how a service provider will use services to achieve the
business outcomes of its customers, thereby enabling the service
provider (whether internal or external) to meet its objectives.
• IT strategy
• focuses on how an organization intends to use and organize
technology to meet its business objectives

Strategy
• Fundamental aspects of strategy
• Using theory to support strategy
• Strategy must enable service providers to deliver value
• A basic approach to deciding a strategy
• acknowledge that there exist other organizations whose aim is to compete
with your organization
• decide on an objective or end-state that differentiates the value of what you
do, or how you do it, so that customers do not perceive greater value could
be generated from any other alternative
• Service management as a strategic asset
• Strategy synthesizes opposing dynamics
• future versus present
• operational effectiveness versus improvements in functionality that lead to
increased competitive advantage
• ‘value capture’ when innovations are launched versus the value captured
during ongoing operations
• Strategy as a means to outperform competitors

Strategy
• The four Ps of strategy
• Perspective
• Describes the vision and direction of the organization.
• Positions
• Describe how the service provider intends to compete against other
service providers in the market. The position refers to the attributes and
capabilities that the service provider has that sets them apart from their
competitors.
• Plans
• Describe how the service provider will transition from their current
situation to their desired situation. Plans describe the activities that the
service provider will need to take to be able to achieve their perspective
and positions.
• Patterns
• Describe the ongoing, repeatable actions that a service provider will
have to perform in order to continue to meet its strategic objectives.

Customers and services
• Customer
• person or group who defines and agrees the service level targets
• Users
• those who use an IT service on a day-to-day basis
• 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, or organizations
that are separate legal entities, that purchase services from the
service provider in terms of a legally binding contract or agreement

• Service
• a means of delivering value to customers by facilitating outcomes
customers want to achieve without the ownership of specific costs and
risks.
• Outcome
• result of carrying out an activity, following a process, or delivering an IT
service etc.
• A good relationship between a service provider and its
customers relies on the customer receiving a service that
meets their needs, at an acceptable level of performance and
at a cost that they can afford
• Service triangle:
• Price
• Performance (warranty)
• Functionality (utility)

• Value of a service
• level to which that service meets a customer’s expectations
• Characteristics of value
• Value is defined by customers
• the ultimate decision about whether that service is valuable or not rests
with the customer
• Affordable mix of features
• customer will select the service or product that represents the best mix
of features at the price they are willing to pay
• Achievement of objectives
• customers do not always measure value in financial terms
• Value changes over time and circumstances
• What is valuable to a customer today might not be valuable in two years

• Components of value
• Business outcomes
• Preferences
• Perception
• Value chain
• sequence of processes that creates a product or service that is of
value to a customer
• each step of the sequence builds on the previous steps and
contributes to the overall product or service
• Value is realized when a service is provided to an external
customer and meets their expectations
• Value capture
• the ability of a service provider to retain a portion of the value that has
been created and realized

• The value of a service is created by combining two
primary elements: utility (fitness for purpose) and warranty
(fitness for use)
• Improving the utility of a service
• increasing the functionality of a service or what it does for the
customer, thus increasing the type and range of outcomes that can
be achieved
• Improving warranty of a service
• the service will continue to do the same things, but more reliably
• higher probability that the desired outcomes will be achieved
• decreased risk that the customer will suffer losses due to variations
in service performance

• Communicating utility
• enable the customer to determine the extent to which utility is matched to their
functionality requirements, in terms of outcomes supported and ownership
costs and risks avoided.
• Communicating warranty
• Availability
• assures the customer that services will be available for use under agreed terms and
conditions
• Capacity
• assurance that the service will support a specified level of business activity or demand
at a specified level of quality
• Reliability
• ensures that both the service provider and customers know the level of performance
that can be expected under the agreed conditions of delivery
• Continuity
• assures the service will continue to support the business through major failures or
disruptive events
• Security
• assures that services are provided to authorized customers, and that the confidentiality
of information and intellectual property is protected when services are delivered

• Customer asset
• used to drive the achievement of business outcomes.
• The better the customer assets perform, the more business
outcomes can be achieved
• Service asset
• Service providers use service assets to deliver services (in this
case, IT services) to the business unit
• These services are designed to enhance the performance of the
customer assets and/or to reduce the effect of constraints
• Strategic asset
• any asset (customer or service) that provides the basis for core
competence, distinctive performance or sustainable competitive
advantage, or which qualifies a business unit to participate in
business opportunities

Service providers
• Type I – internal service provider
• Type II – shared services unit
• Type III – external service provider.
• The principle of transaction costs is useful for explaining
why customers may prefer one type of provider to
another. Transaction costs are overall costs of conducting
a business with a service provider.

Service providers
• Customer decisions on service provider types
• Functional reorganization
• In this strategy, the business has undergone a functional reorganization,
which requires a new structure of Type I service providers, thus the
current service provider is reorganized to be able to provide better or
more cost-effective services.
• Corporate reorganization
• In this strategy, a Type II service provider model is retained, but the
shared services units are reorganized to provide better or more cost-
effective services.
• Value net reconfiguration
• This strategy requires a reorganization of the current way in which value
is delivered and created by external service providers. Some new
providers are integrated into the value network, others are moved out,
and yet others will play a different role. An example of this is the
emergence of cloud computing models.

Service providers
• Customer decisions on service provider types (cont.)
• Aggregation
• In this strategy, services are centralized (combined) under a single Type
II provider.
• Disaggregation
• This strategy involves decentralizing (unbundling) the shared services
unit so that the service is provided by a dedicated service provider for
each BU, service or activity.
• Outsourcing
• This strategy involves using a Type III service provider to provide a
service that was previously delivered by an internal service provider.
• Insourcing
• This strategy requires an internal service provider to begin providing a
service that was previously provided by an external service provider.

Service providers
• Relative advantage of incumbency
• Customers find it less attractive to turn away from well-performing
incumbents because of switching costs.
• Service providers must therefore focus on providing the basis for a
lasting relationship with customers

Step 1 – Define the market and identify customers
• Market
• The group of customers that are interested in and can afford to purchase the service
a service provider offers, and to whom the service provider is able legally and
logistically to supply those services
• Markets definition criteria
• Industry (e.g. manufacturing, retail, financial services, healthcare, transportation
etc.)
• Geographical (e.g. a specific country or region)
• A service provider may provide a best-in-class service, but decide to limit its availability to a
single geographical region.
• Demographic
• The service provider may deliver a service geared towards a specific cultural group (e.g.
television programming for a Spanish speaking customer in the USA) or a group of
customers with similar incomes (e.g. luxury or economy services).
• Corporate relationships
• Some service providers have specifically been set up to provide services to a group of
companies with a common shareholding, and may not market those services to competitors
of those companies.

Step 2 – Understand the customer
• Understanding the customer involves understanding:
• Desired business outcomes
• The customers use their assets to achieve specific outcomes. Understanding what
these outcomes are will help the service provider to define the warranty and utility of
the services, and to prioritize service needs.
• Customer assets
• Services enable and support the performance of the assets the customer uses to
achieve their business outcomes. Therefore, it is necessary when defining services to
understand the linkage between the service and the customer assets.
• Constraints
• Every customer asset will be limited by some form of constraint – a lack of funding,
lack of knowledge, regulations, legislation etc. Understanding those constraints will
enable the service provider to define boundaries for the service, and also help the
customer overcome, or work within, many of them.
• How value will be perceived and measured
• It is vital that the service provider understands how the customer measures the service

Step 3 – Quantify the outcomes
• The service provider will work with the customer to identify their desired
outcomes. These definitions need to be clear and measurable and they
need to be something that can be linked to the service.
Step 4 – Classify and visualize the service
• Creating a way to classify services and represent them visually will help
in identifying whether a new service requirement fits within the current
strategy, or whether it will represent an expansion of that strategy
Step 5 – Understand the opportunities (market spaces)
• Market space
• a set of business outcomes, which can be facilitated by a service
• the opportunities that an IT service provider could exploit to meet the
business needs of customers

Step 6 – Define services based on outcomes
• An outcome-based definition of services
• ensures that managers plan and execute all aspects of service management
entirely from the perspective of what is valuable to the customer
• ensures that services not only create value for customers but also capture
value for the service provider
Step 7 – Service models
• Definition
• a model that shows how service assets interact with customer assets to create
value
• describe the structure of a service (how the configuration items fit together)
and the dynamics of the service (activities, flow of resources and interactions).
Step 8 – Define service units and packages
• A service package is a collection of two or more services that have been
combined to offer a solution to a specific type of customer need or to underpin
specific business outcomes.

Strategies for customer satisfaction
• The Kano model shows that there are three different types
of factors involved in customer satisfaction:
• Basic factors
• aspects of the service that have to be in place for the customer to
receive the service
• Performance factors
• factors that enable a customer to get more of something that they need,
or a higher level of service quality.
• Excitement factors
• attributes of a service that are generous, and which customers do not
expect

Service economics
• Service economics relate to the balance between:
• the cost of providing services
• the value of the outcomes achieved
• the returns that the services enable the service provider to achieve
• Four main areas:
• Service portfolio management
• the process that defines the outcomes the business desires to achieve, and the
services that will be used to achieve them.
• Financial management for IT services
• the process by which service providers (and other business units) calculate, forecast
and track costs and income related to services.
• Return on investment (ROI)
• a measurement of the expected or actual benefit of an investment.
• Business impact analysis (BIA)
• a method used to evaluate the relative value of services
• allows an organization to establish the relative priorities of services based on their
effect on the business if they are not available for a period of time.

Sourcing strategy
• Sourcing
• how to most effectively source and deploy the resources and
capabilities required to deliver outcomes to customers
• deciding on the best combination of supplier types to support the
objectives of the organization and the effective and efficient
delivery of services
• Deciding what to source
• finding ways to improve competitive differentiation by redeploying
resources and capabilities
• Sourcing structure
• regardless of where services, capabilities or resources are sourced
from, the organization retains responsibility for their adequacy

Sourcing strategy
Sourcing structures
• Insourcing
• relies on utilizing internal organizational resources in the design, development, transition, maintenance,
operation and/or support of new, changed or revised services.
• Outsourcing
• utilizes the resources of an external organization or organizations in a formal arrangement to provide a
well-defined portion of a service’s design, development, maintenance, operations and/or support.
• Co-sourcing or multi sourcing
• using a number of external organizations working together to design, develop, transition, maintain,
operate and/or support a portion of a service.
• Partnership
• Formal arrangements between two or more organizations to work together to design, develop,
transition, maintain, operate and/or support IT service(s).
• Business process outsourcing (BPO)
• relocating entire business functions using formal arrangements between organizations where one
organization provides and manages the other organization’s entire business process(es) or function(s)
in a low-cost location. Common examples are accounting, payroll and call centre operations.

Sourcing strategy
Sourcing structures
• Application service provision
• Involves formal arrangements with an application service provider (ASP) organization that will
provide shared computer-based services to customer organizations over a network from the
service provider’s premises.
• Knowledge process outsourcing (KPO)
• KPO organizations provide domain-based processes and business expertise rather than just
process expertise. In other words the organization is not only required to execute a process, but
also to make certain low-level decisions based on knowledge of local conditions or industry-
specific information.
• ‘Cloud’
• Cloud service providers offer specific pre-defined services, usually on demand. Services are
usually standard, but can be customized to a specific organization if there is enough demand for
the service.
• Multi-vendor sourcing
• This type of sourcing involves sourcing different sources from different vendors, often
representing different sourcing options from the above.

Sourcing strategy
Multi-vendor sourcing
• When sourcing multiple providers, the following issues should be
carefully evaluated:
• Technical complexity
• Sourcing services from external service providers is useful for standardized service
processes (although as customization increases it is more difficult to achieve the
desired efficiencies).
• Organizational interdependencies
• Contractual vehicles should be carefully structured to address the dynamics of multiple
organizations, ensuring that all providers undergo consistent training in the customer
organization’s processes etc.
• Integration planning
• The processes, data and tools of each organization may be different or they may be
duplicated. Either case will require the integration of certain processes, data and tools.
• Managed sourcing
• This refers to the need for a single interface to the multiple vendors wherever
appropriate.

Sourcing strategy
• Service provider interfaces
• A service provider interface is a formally defined reference point
which identifies some interaction between a service provider and a
user, customer, process or one or more suppliers
• Sourcing governance
• Critical success factors
• Desired outcomes, such as cost reduction, improved service quality
or diminished business risk
• The optimal model for delivering the service
• The best location to deliver the service, such as local, onshore,
near-shore or offshore.

Service structures in the value network
• From value chains to value networks
• Value chain model is based on the industrial age production line: a
series of value-adding activities connecting an organization’s
supply side with its demand side
• A value network is a web of relationships that generates tangible
and intangible value through complex dynamic exchanges through
two or more organizations.

Service strategy inputs and outputs
• The main outputs from service strategy are the vision and
mission, strategies and strategic plans, the service
portfolio, change proposals and financial information.

SERVICE STRATEGY PROCESSES
• Strategy management for IT services
• Service portfolio management
• Financial management for IT services
• Demand management
• Business relationship management

Strategy management for IT services
• Strategy management for IT services is the process of defining and
maintaining an organization’s perspective, position, plans and patterns
with regard to its services and the management of those services
• Objectives:
• Analyze the internal and external environments in which the service provider exists,
to identify opportunities that will benefit the organization.
• Identify constraints that might prevent the achievement of business outcomes, the
delivery of services or the management of services; and define how those
constraints could be removed or their effects reduced.
• Agree the service provider’s perspective and review regularly to ensure continued
relevance.
• Establish the position of the service provider relative to its customers and other
service providers.
• Produce and maintain strategy planning documents and ensure that all relevant
stakeholders have updated copies of the appropriate documents.
• Ensure that strategic plans have been translated into tactical and operational plans
for each organizational unit that is expected to deliver on the strategy.
• Manage changes to the strategies and related documents, ensuring that strategies
keep pace with changes to the internal and external environments.

• Process activities
• Strategic assessment
• Analyze the internal environment
• Existing services, Financial analysis, Human resources, Operations,
Relationship with the business units, Resources and capabilities, Existing
projects
• Analyze the external environment
• Industry and market analysis, Customers, Suppliers, Partners, Competitors,
Legislation and regulation, Political, Socio-economic, Technology
• Define market spaces
• Identify strategic industry factors
• a set of executable critical success factors for each market space
• Establish objectives
• output of the strategic assessment are the results the service provider expects
to achieve by pursuing a strategy

• Process activities (cont.)
• Strategy generation, evaluation and selection
• Strategy generation
• Determine perspective
• Form a position
• Craft a plan
• Adopt patterns of action
• Strategy execution
• Other service management processes
• Align assets with customer outcomes
• Optimize critical success factors
• Prioritize investments
• Measurement and evaluation
• Continual service improvement
• Expansion and growth

• Triggers
• Annual planning cycles
• New business opportunity
• Changes to internal or external environments
• Mergers or acquisitions
• Inputs
• Existing plans
• Research on aspects of the environment by specialized research organizations
• Vendor strategies and product roadmaps, that indicate the impact (and
possible opportunities) of new or changing technology
• Customer interviews and strategic plans to indicate potential future
requirements
• Service portfolio to indicate the current and planned future service
commitments
• Service reporting to indicate the effectiveness of the strategy
• Audit reports that indicate compliance with (or deviation from) the
organization’s strategy.

• Outputs
• Strategic plans – in this context especially the service strategy
• Tactical plans that identify how the strategy will be executed
• Strategy review schedules and documentation
• Mission and vision statements
• Policies that show how the plans should be executed, how services
will be designed, transitioned, operated and improved
• Strategic requirements for new services, and input into which
existing services need to be changed.

Service portfolio management
• Purpose
• To ensure that the service provider has the right mix of services to balance the
investment in IT with the ability to meet business outcomes
• 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 it to
achieve its strategy, and to respond to changes in its 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, thus enabling the
organization to evaluate its strategy, as well as its ability to execute against
that strategy.
• Analyze which services are no longer viable and when they should be retired.

• Service portfolio
• represents the commitments and investments made by a service
provider across all customers and market spaces
• Service pipeline
• database or structured document listing all services that are under
consideration or development, but are not yet available to
customers
• database or structured document with information about all live IT
services, including those available for deployment
• Retired services

• Configuration management system (CMS)
• a set of tools and databases that are used to manage an IT service
provider’s configuration data
• Application portfolio
• database or structured document used to manage applications
throughout their lifecycle
• Customer portfolio
• database or structured 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 its customers
• Project portfolio
• database or structured document used to manage projects that have
been chartered

• Main phases:
• Define
• documenting and understanding existing services and new services
• Analyze
• indicate whether the service is able to optimize value, and how supply
and demand can be prioritized and balanced.
• Approve
• every service needs to be approved and the level of investment
authorized to ensure sufficient resources to deliver the anticipated levels
of service
• Charter
• a document authorizing the project and stating its scope, terms and
references

• Process activities:
• Process initiation
• Strategy management for IT services
• Business relationship management
• Continual service improvement
• Other service management processes
• Define
• Strategy
• Request from business
• Service improvement opportunities and plans
• Service suggestion
• Existing service?
• Service, customers, business outcomes (new services)
• Service model (new services)
• Impact on service portfolio (existing services)
• Impact on service model (existing services)

• Process activities:
• Analyze
• Service portfolio review
• Analyze investments, value and priorities
• Articulate value proposition
• Approve
• Is the service or change feasible?
• Change proposal
• Change management authorization
• Change proposal authorized?
• Charter
• Communicate with stakeholders
• Service design and transition processes
• Track progress and update service portfolio
• Service successful?
• Retiring services
• Refreshing the portfolio

• Triggers
• A new strategy has been devised, or an existing strategy is being
changed.
• Business relationship management receives a request for a new
service or a change to an existing service.
• Service improvement opportunities from CSI.
• Feedback from design, build and transition teams to indicate the
status of the service during the charter stage of the process.
• Service level management reviews that identify a service is not
meeting its expected outcomes or that it is not being used in the
way it was intended.
• Financial management for IT services indicates that a service costs
significantly more or less than anticipated, thus impacting the
potential return on investment for that service.

• Inputs
• Strategy plans
• Service improvement opportunities
• Financial reports
• Requests, suggestions or complaints from the business
• Project updates for services in the charter stage of the process.
• Outputs
• An up-to-date service portfolio
• Service charters that authorize the work for designing and building new
services or changes to existing services
• Reports on the status of new or changed services
• Reports on the investment made in services in the service portfolio, and the
returns on that investment
• Change proposals that are used to allow change management to assess and
schedule the work and resources required to charter services
• Identified strategic risks.

Financial management for IT services
• Definition
• the process responsible for managing an IT service provider’s
budgeting, accounting and charging requirements
• the process that is used to quantify the value that IT services
contribute to the business
• Purpose
• to secure the appropriate level of funding to design, develop and
deliver services that meet the strategy of the organization

• Objectives
• Defining and maintaining a framework to identify, manage and communicate
the cost of providing services.
• Evaluating the financial impact of new or changed strategies on the service
provider.
• Securing funding to manage the provision of services.
• Facilitating good stewardship of service and customer assets to ensure the
organization meets its objectives. This should be done together with service
asset and configuration management and knowledge management.
• Understanding the relationship between expenses and income and ensuring
that the two are balanced according to the organization’s financial policies.
• Managing and reporting expenditure on service provision on behalf of the
organization’s stakeholders.
• Executing the financial policies and practices in the provision of services.
• Accounting for money spent on the creation, delivery and support of services.
• Forecasting 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, defining a framework to recover the costs of service
provision from the customer.

• Financial management consists of three main processes:
• Budgeting
• This is the process of predicting and controlling the income and
expenditure of money within the organization.
• Accounting
• This is the process that enables the IT organization to account fully for
the way its money is spent (particularly the ability to identify costs by
customer, by service and by activity).
• Charging
• This is the process required to bill customers for the services supplied to
them.

• Inputs
• Regulatory requirements
• Enterprise financial management policies
• Service management processes
• Service, contract, customer, application and project portfolios
• Service knowledge management system
• Accounting
• Cost models
• Cost centers and cost units
• Cost types and cost elements
• Cost classification
• Chart of accounts
• Analysis and reporting
• Action plans
• Budgeting
• Analysis of previous budget
• Assessment of plans
• Cost and income estimation
• Budget

• Charging
• Charging policies
• Decide chargeable items
• Pricing
• Billing
• Outputs
• Service valuation
• Investment analysis
• Compliance
• Business impact analysis
• Cost optimization

• Triggers
• Monthly, quarterly and annual financial reporting cycles are mandated and form
part of the standard financial management policies and standards of any
organization.
• Audits will indicate actions that need to be taken to adjust some aspect of the
accounting, budgeting or charging system.
• Requests for financial information from other service management processes –
for example, return on investment information for services in the service
portfolio, or information to determine the cost of making a change.
• Investigation into a new service opportunity, either during the definition of a
strategy (high level financial value of the opportunity), or during service
portfolio management where a more specific financial assessment is required.
• The introduction of charging for IT services (internal service provider) or the
need to determine the price of a service (external service provider).
• A request for change will trigger the need for financial information about the
cost of making changes, and the ongoing financial impact of the change.

Demand management
• Demand management
• the process that seeks to understand, anticipate and influence
customer demand for services and the provision of capacity to
meet these demands
• 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

Demand management
• Objectives
• Identify and analyze patterns of business activity to understand the
levels of demand that will be placed on a service
• Define and analyze user profiles to understand the typical profiles
of demand for services from different types of user
• Ensure that services are designed to meet the patterns of business
activity and the ability to meet business outcomes
• Work with capacity management to ensure that adequate
resources are available at the appropriate levels of capacity to
meet the demand for services, thus maintaining a balance between
the cost of service and the value that it achieves
• Anticipate and prevent or manage situations where demand for a
service exceeds the capacity to deliver it
• Gear the utilization of resources that deliver services to meet the
fluctuating levels of demand for those services.

Demand management
• Process activities
• Identify sources of demand forecasting
• Patterns of business activity
• User profiles
• Activity-based demand management
• Develop differentiated offerings
• Management of operational demand

Demand management
• Triggers
• A request from a customer for a new service, or change to an existing service.
• A new service is being created to meet a strategic initiative – this will be initiated through service
portfolio management.
• A service model needs to be defined, and patterns of business activity and/or user profiles must
be defined.
• Utilization rates are causing potential performance issues, or a potential breach of an SLA.
• An exception has occurred to forecast patterns of business activity.
• Inputs
• Initiative to create a new service, or to change an existing service.
• Service models need to be validated and patterns of business activity associated with each
service model will need to be defined.
• The customer portfolio, service portfolio and customer agreement portfolio, all of which will
contain information about demand and supply for services.
• Charging models will be assessed to ensure that under- or over-recovery does not occur in
internal service providers; or that pricing will be profitable for external service providers.
• Chargeable items will need to be validated to ensure that customers actually perceive them and
use them as defined.
• Service improvement opportunities and plans will need to be assessed in terms of their impact
on demand.

Demand management
• Outputs
• User profiles
• Patterns of business activity will be formally documented and
included in the service and customer portfolios
• Policies for management of demand when resources are over-
utilized
• Policies for how to deal with situations where service utilization is
higher or lower than anticipated by the customer
• Documentation of options for differentiated offerings that can be
used to create service packages.

Business relationship management
• Purpose
• To establish and maintain a business relationship between the
service provider and the customer based on understanding the
customer and their business needs.
• To identify customer needs and ensure that the service provider is
able to meet these needs as business needs change over time and
between circumstances.

• Objectives
• Ensure that the service provider understands the customer’s perspective of service,
and is therefore able to prioritize its services and service assets appropriately
• Ensure high levels of customer satisfaction, indicating that the service provider is
meeting the customer’s requirements
• Establish and maintain a constructive relationship between the service provider and
the customer based on understanding the customer and their business drivers
• Identify changes to the customer environment that could potentially impact the type,
level or utilization of services provided
• Identify technology trends that could potentially impact the type, level or utilization of
services provided
• Establish and articulate business requirements for new services or changes to
existing services
• Ensure that the service provider is meeting the business needs of the customer
• Work with customers to ensure that services and service levels are able to deliver
value
• Mediate in cases where there are conflicting requirements for services from different
business units
• Establish formal complaints and escalation processes for the customer.

• Customer portfolio
• database or structured document used to record all customers of the IT service
provider
• business relationship management’s view of the customers who receive
services from the IT service provider
• Customer agreement portfolio
• database or structured document used to manage service contracts or
agreements between an IT service provider and its customers
• Customer satisfaction
• business relationship management measures customer satisfaction and
compares service provider performance with customer satisfaction targets and
previous scores.
• Service requirements
• business relationship management is involved in defining and clarifying
requirements for service

• Triggers
• A new strategic initiative
• A new service, or a change to an existing service, has been
initiated
• A new opportunity has been identified
• A service has been chartered by service portfolio management
• Customer requests or suggestions
• Customer complaints
• A customer meeting has been scheduled
• A customer satisfaction survey has been scheduled.

• Inputs
• Customer requirements
• Customer requests, complaints, escalations or compliments
• The service strategy
• Where possible, the customer’s strategy
• The service portfolio
• The project portfolio to ensure that requirements are gathered in a
timely fashion, and that all projects include business relationship
management activity where appropriate
• Service level agreements
• Requests for change
• Patterns of business activity and user profiles defined by demand
management, and which need to be validated through business
relationship management.

• Outputs
• Stakeholder definitions
• Defined business outcomes
• Agreement to fund (internal) or pay for (external) services
• The customer portfolio
• Service requirements for strategy, design and transition
• Customer satisfaction surveys, and the published results of these
surveys
• Schedules of customer activity in various service management
process activities
• Schedule of training and awareness events
• Reports on the customer perception of service performance.

SERVICE STRATEGY, GOVERNANCE,
ARCHITECTURE AND ITSM
IMPLEMENTATION STRATEGIES
• Governance
• Establishing and maintaining a service management
system
• IT service strategy and the business
• IT service strategy and enterprise architecture
• IT service strategy and application development
• Creating a strategy for implementing service management

Governance
• Definition
• the rules, policies and processes (and in some cases, laws) by
which businesses are operated, regulated and controlled.
• Setting the strategy, policies and plan
• Evaluate
• ongoing evaluation of the organization’s performance and its
environment.
• Direct
• communicating the strategy, policies and plans to, and through,
management
• Monitor
• determine whether governance is being fulfilled effectively, and whether
there are any exceptions

Governance
• Governance framework
• categorized and structured set of documents that clearly articulate
the strategy, policies and plans of the organization
• Domains of governance
• Establish responsibilities
• Strategy to set and meet the organization’s objectives
• Acquire for valid reasons
• Ensure performance when required
• Ensure conformance with rules
• Ensure respect for human factors.

Establishing and maintaining a service
management system
• A service management system (SMS)
• is used to direct and control the service management activities to
enable effective implementation and management of the services
• includes all service management strategies, policies, objectives,
plans, processes, documentation and resources required to deliver
services to customers
• identifies the organizational structure, authorities, roles and
responsibilities associated with the oversight of service
management processes

IT service strategy and the business
• Aligning the IT service strategy with the business
• The overarching IT service strategy and underpinning
service provider strategies should be examined and
validated with the business to ensure that they serve the
desired business outcome.

IT service strategy and enterprise
architecture
• Enterprise architecture
• describes the organizational relationship with systems, sub-
systems and external environments along with the
interdependencies that exist between them
• describes the relationship with enterprise goals, business functions,
business processes, roles, organizational structures, business
information, software applications and computer systems – and
how each of these interoperate to ensure the viability and growth of
the organization

IT service strategy and application
development
• The IT strategy combined with the underpinning service
strategy lifecycle will serve as a primary feed into
governance and application development
• Application development teams should maintain
alignment with service strategy by incorporating it into
individual product line strategies and internal development
efforts
• Application development providers should examine and
validate their strategy (4 Ps of service strategy) within the
context of the overarching IT strategy

Creating a strategy for implementing
service management
• Types of service management implementation
• Even keel mode
• Trouble mode
• Growth mode
• Radical change mode
• Defining a vision and mission for the service management
implementation
• A clear vision enables the implementation project team and all of its
stakeholders to understand the strategic value initiative and thus
achieve greater support.

service management
• Service management assessment
• confirm the current situation, identify strengths and weaknesses and propose an
approach for service management implementation
• What should be assessed:
• Processes
• Organization
• Technology
• External environment
• Compliance-based assessments
• evaluating whether an organization meets some type of external criteria or not
• Maturity-based assessments
• evaluate where an organization is located on a journey from one state to another
• Exception-based assessment
• accumulates evidence of business failures (including outages) caused by poor
service management and uses these to justify a deeper analysis

service management
• Objectives for implementing service management
• Using assessment outputs to define objectives
• Setting and managing objectives
• Identifying and managing risks
• Planning for risk management
• Managing risks
• Preparing a business case
• Estimating the costs
• Quantifying indirect and intangible benefits
• Obtaining accurate information about the business and IT
performance

service management
• Project charter
• consolidated overview of the project, outlining the objectives and organization
of the project, together with reference to the background, scope and reason for
the project
• allows all stakeholders of the project to document what has been agreed about
the objective, scope and deliverables of the project
• Go / no go
• The final step of the service management process implementation strategy is
to obtain agreement to proceed
• A ‘go’ decision for the strategy usually depends on the following factors:
• A good awareness campaign
• Effective communication of the vision to all stakeholders
• A business case that outlines the appropriate level of benefit to the organization
• A realistic assessment and communication of the threats and how they will be
mitigated
• A clear alignment between the project charter and the strategy of the organization as a
whole.

ORGANIZING FOR SERVICE
STRATEGY
• Organizational development
• Organizational change
• Organizational departmentalization
• Organizational design
• Organizational culture
• Functions
• A logical organization structure for an IT service provider
• Roles
• Responsibility model – RACI
• Competence and training

Organizational development
• Stages of organizational development
• Stage 1: Network
• Stage 2: Directive
• Stage 3: Delegation
• Stage 4: Coordination
• Stage 5: Collaboration

Organizational change
• Steps:
• Diagnosis
• acknowledge the need for change and the factors prompting it
• Determining the desired state
• begins with the organization’s strategy and desired structure
• Implementation
• Unfreeze the organization from its present state
• Make the desired type of change
• Freeze the organization in the new desired state

Organizational departmentalization
• Department
• an organizational activity involving more than a certain number of people.
• Orientation
• Function
• Preferred for specialization, the pooling of resources and reducing duplication
• Product
• Preferred for servicing businesses with strategies of diverse and new products, usually
manufacturing businesses
• Market space or customer
• Preferred for organizing around market structures. Provides differentiation in the form
of increased knowledge of and response to customer preferences
• Geography
• The use of geography depends on the industry. By providing services in close
geographical proximity, travel and distribution costs are minimized while local
knowledge is leveraged
• Process
• Preferred for an end-to-end coverage of a process.

Organizational design
• The starting point for organizational design is strategy. It
sets the direction and guides the criteria for each step of
the design process.
• It is recommended to decide on a departmentalization
structure prior to designing key processes.

Organizational culture
• Definition
• the set of shared values and norms that control the IT
organization’s internal and external interactions
• Types
• Terminal values
• desired outcomes or end states.
• IT organizations can adopt any of the following as terminal values:
quality, excellence, reliability, innovativeness or profitability.
• Instrumental values
• desired modes of behavior.
• IT organizations can adopt any of the following as instrumental values:
high standards, respecting tradition and authority, acting cautiously and
conservatively or being frugal.

Functions
• Definition
• a team or group of people and the tools or other resources they use
to carry out one or more processes or activities
• In larger organizations, a function may be broken out and
performed by several departments, teams and groups, or
it may be embodied within a single organizational unit
(e.g. the service desk). In smaller organizations, one
person or group can perform multiple functions – e.g. a
technical management department could also incorporate
the service desk function.

A logical organization structure for an IT
service provider
• Components
• Strategic
• Tactical
• Operational

Roles
• Definition
• a set of responsibilities, activities and authorities granted to a
person or team
• Categories
• Generic
• Service owner, process owner, process manager, process practitioner
• Specific
• Change administrator, knowledge management process owner

Responsibility model – RACI
• Responsible
• The person or people responsible for correct execution – for getting
the job done
• Accountable
• The person who has ownership of quality and the end result. Only
one person can be accountable for each task
• Consulted
• The people who are consulted and whose opinions are sought.
They have involvement through input of knowledge and information
• Informed
• The people who are kept up to date on progress. They receive
information about process execution and quality.

Competence and training
• Competence and skills for service management
• Awareness of the business priorities, objectives and business
drivers
• Awareness of the role IT plays in enabling the business objectives
to be met
• Customer service skills
• Awareness of what IT can deliver to the business, including latest
capabilities
• The competence, knowledge and information necessary to
complete their role
• The ability to use, understand and interpret the best practice,
policies and procedures to ensure adherence.

Competence and training
• Competence and skill framework
• Many service providers use a common framework of reference for
competence and skills to support activities such as skill audits,
planning future skill requirements, organizational development
programs and resource allocation
• Training
• Training in service management helps service providers to build
and maintain their service management capability.
• Training needs must be matched to the requirements for
competence and professional development.

TECHNOLOGY CONSIDERATIONS
• Service automation
• Service interfaces
• Tools for service strategy

Service automation
• The following are some of the areas where service
management can benefit from automation:
• Design and modeling
• Pattern recognition and analysis
• Classification, prioritization and routing
• Detection and monitoring
• Optimization.
• Preparing for automation
• Simplify the service processes before automating them
• Clarify the flow of activities, allocation of tasks, need for information
and interactions
• In self-service situations, reduce the surface area of the contact users
have with the underlying systems and processes

Service automation
• Service analytics and instrumentation
• Service analytics involves both analysis, to produce knowledge,
and synthesis, to provide understanding.
• The term instrumentation describes the technologies and
techniques for measuring the behaviors of infrastructure elements.
• Instrumentation reports actual or potential problems and provides
feedback after adjustments

Service interfaces
• Characteristics of good service interfaces
• easily located or ubiquitous enough, or simply embedded in the
immediate environment or business context, as in the case of
interfaces to software applications.
• available in forms or media that allow choice and flexibility for users.
• available with enough capacity to avoid queuing or backlog when
supporting concurrent use by many users.
• accommodate users with varying levels of skills, competencies,
backgrounds and disabilities.
• keep interfaces low-profile and low-overhead to avoid undue stress on
the customer’s use context or the business environment.
• simple and reliable, having only the functions required for users to tap
the utility of the service.
• self-reliant, requiring little or no intervention from service agents other
than the dialogue necessary to carry out the service transaction.

Service interfaces
• Types of service technology encounters
• Mode A : technology-free
• Technology is not involved in the service encounter.
• Mode B: technology-assisted
• A service encounter where only the service provider has access to the
technology.
• Mode C : technology-facilitated
• A service encounter where both the service provider and the customer
have access to the same technology.
• Mode D: technology-mediated
• A service encounter where the service provider and the customer are
not in physical proximity. Communication may be through a phone.
• Mode E : technology-generated
• A service encounter where the service provider is represented entirely
by technology, commonly known as self-service.

Tools for service strategy
• Simulation
• System dynamics is a methodology for understanding and
managing the complex problems of IT organizations.
• It offers a means to capture and model the feedback processes,
stocks and flows, time delays and other sources of complexity
associated with IT organizations.
• Analytical models
• Good examples of the use of analytical models are service desk
and call center staffing, which can be visualized as a system of
queues.

IMPLEMENTING SERVICE STRATEGY
• Implementation through the lifecycle
• Service strategy implementation activities following a
lifecycle approach
• The impact of service strategy on other lifecycle stages

Implementation through the lifecycle
• Strategic positions and perspectives are converted into
strategic plans and patterns with goals and objectives for
execution through the service lifecycle
• New strategic positions are adopted based on patterns
that emerge from executing the service lifecycle. This
bottom-up development of service strategy is combined
with the traditional top-down approach to form a closed-
loop planning and control system for service strategies

Service strategy implementation activities
following a lifecycle approach
• The strategy for the implementation should include the following areas:
• Current state assessment
• Definition of the current environment
• Target state definition
• Description of the end state, in terms of strategic perspective and position
• Gap analysis
• Description of the differences (gaps) between the current state and the desired target state
• Project identification
• Logical groupings of activities, with specific objectives, that need to be undertaken to close
identified gaps
• Project estimation
• Analysis of the project’s scope, scale, interdependencies, risks, costs and resource
requirements
• Project consolidation
• Logical grouping of identified projects into ‘streams’ or initiatives that address key aspects of
the implementation, such as ‘governance’, ‘people’, ‘process’, ‘technologies’ and
‘management of change’ (the organizational change management)
• Roadmap
• Development of the time-bound action plan that will provide the instruction on sequence of
the initiatives and projects required to close the gaps.

The impact of service strategy on other
lifecycle stages
• Service strategy and service design
• Service strategy sets the broad direction for the design of services
and the objectives that services need to achieve
• Service strategy and service transition
• service strategy assists in moulding the strategy for how services
should be transitioned
• service strategy is instrumental in defining what needs to change,
when and to what extent.
• service transition will test and validate that the services being
introduced and changed are able to achieve the objectives and
outcomes that have been defined during service strategy and
service design

The impact of service strategy on other
lifecycle stages
• Service strategy and service operation
• Strategies must be mindful of operational capabilities and
constraints
• Operations, on the other hand, should clearly understand the
outcomes necessary for a given strategy and provide adequate
support with effectiveness and efficiency
• Service strategy and continual service improvement
• Continual service improvement takes its lead from service strategy
in that it uses the defined strategies and desired outcomes as a
basis for evaluating whether services are successful

CHALLENGES, RISKS AND CRITICAL
SUCCESS FACTORS
• Challenges
• Risks
• Critical success factors

Challenges
• Complexity
• Coordination and control
• Preserving value
• Effective measurement

Risks
• Inaccurate information
• Risk of taking, or failing to take, opportunities
• Design risks
• Operational risks
• Market risks

Critical success factors
• All of the challenges and risks already mentioned can be
inverted to become critical success factors
• Other factors:
• Experienced, skilled and trained staff with the strategic vision and
decision-making skills needed for success
• Adequate support (and, importantly, funding) from the business
which must recognize the potential value IT service management
can offer
• Appropriate and effective support tools to allow the processes to be
quickly and successfully implemented and operated in a cost-
effective way.

ITIL Service Strategy 2011

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