RiO Module 2 Capsule 2 Demand Management PDF

RiO Module 2 Capsule 2 Slide # 1 2 3 Artist NA 1 1 4 Grace 5 Grace 6 Grace 7 Grace 8 Grace Audio Script Background music Welcome to the video course on Application Operations. You are now watching Module 2 on Service Strategy. Capsule 2 introduces you to the basics of Service Demand Management. Hi,...

RiO Module 2 Capsule 2 Slide # 1 2 3 Artist NA 1 1 4 Grace 5 Grace 6 Grace 7 Grace 8 Grace Audio Script Background music Welcome to the video course on Application Operations. You are now watching Module 2 on Service Strategy. Capsule 2 introduces you to the basics of Service Demand Management. Hi, welcome back. In the previous sessions, we learned about Strategy Management for IT services and Service Portfolio Management. In this session, we shall learn about Demand Management. Let’s begin! At the end of this video, you will be able to explain: Key concepts of Demand Management. Demand Management evolved into yet another new process in ITIL 2011. Demand Management is knowing your customer and then identifying their requirements. Say you are a florist. You will need to know when your customers would come. The demand would be higher during Valentine’s day or during wedding season. You will have to identify what kind of flowers would be required by your customer. During Valentine’s day, the demand for red rose would be higher. During wedding season the demand for white rose may be higher. Here you are identifying what the requirement of the customer is. Demand Management plays a key role in Service Management. A service organization has to anticipate capacity and availability for future demand. It aligns supply with demand. As a service provider, IT is responsible for providing just enough capacity for services to meet their agreed service levels. Too much capacity is a wasted cost and too little puts service levels at risk. Service Operation is impossible if there is no demand for products or services as there will be nothing to support operationally. But on the other hand if frequent services are being introduced to production, then the service operations team should have enough resources to support the application. 9 Grace Supply cannot be stored waiting for demand to utilize it. The process of Demand Management is necessary for two main reasons: Predicting the Demand: The arrival rate of work, such as calls to a Service Desk, is not steady. In other words, there are peaks and troughs over the hour and day, as well as seasonal increases or decreases in demand. Managing the Risk: Fluctuations in demand and the challenge of providing just the right amount of capacity are sources of risk that the service provider should minimize. The decision on how much risk is acceptable is taken by the business, which may accept a level of spare capacity to reduce the risk. In order to be able to predict the demand, the provider has to understand clearly the Patterns of Business Activity (PBA) for every customer. For example, Let us take an example of credit card call center. Spikes in call volume will occur during holiday season, due to influx of shoppers seeking a way to buy, return products. So here we are Predicting the demand. What kind of risk can we foresee? Customers cannot reach the agents and will be placed on hold, leading to customer dissatisfaction. How do we manage the risk here? By replacing hold-time with a call-back, you’re giving back what the customer values most: their time. 10 Grace Pattern of Business Activity (PBA) is how a customer uses services, i.e. a workload profile of business activities. This is, basically, where everything starts. Customers’ business activities are triggers for demand for the service. For example Telecommunication companies have most of the resources used by businesses during working hours, but they have excess capacity outside of working hours. The better you understand how the customer uses the service, the better your estimate of capacity required to satisfy customer needs. 11 Grace Here are some attributes which are used to describe PBA: Frequency – how often does a particular pattern occur (e.g. daily, hourly…)? Volume – how many activities, e.g. how many calls per hour? Location – where does this activity happen, e.g. building number, etc.? Duration – how long does the activity last? 12 Grace Why is PBA so important? As seen in the figure, users consume our services and create demand. By creating demand, they consume service resources (e.g. technical resources like bandwidth or human resources like supporting technicians). If we relate this with the previous telecom example we can say the telecom company has excess bandwidth during non- working hours. Sometimes telecom companies offers economical calling plans when they have excess capacity outside of working hours, thereby creating demand. Service resources provide services to the customer and must meet demand that is set. Particular attention should be paid to detect and understand PBA because it will dictate an organization’s activity to satisfy customer needs and provide enough capacity. 13 Grace Value: Value is created by combining warranty and utility Utility or fit for purpose is what the customer gets. Warranty or fit for use is how it is delivered. When we buy a product or a service, we often would want to understand: What’s the use or the functionality of the product and we’d also want to have an assurance that the product or the service will function as per the specifications. ITIL classifies these two elements as Utility and Warranty, wherein: Utility is defined as ‘Fit for purpose’ and Warranty is defined as ‘Fit for use.’ Utility and Warranty help a service provider determine the value of a service. 14 Grace Suppose you subscribe for internet service on a mobile phone. Before you subscribed for the Internet Service, you would have thought, it would be great to have internet access on phone. This will avoid the inconvenience of walking to the internet center or look for a laptop and a wireless connection, every time you want to check an email or just browse. So you have a list of requirements. The requirements are you want internet service on phone, so that you can check mail or browse irrespective of the location you are in. So you purchase internet service from the service provider. The internet service on phone is fit for your purpose. It has high utility. Lot of the time, the Internet connection comes with the warranty. We subscribe to the service with certain expectations that    The service will be Available when I need it The service has enough capacity(bandwidth) The service is continuous and that the service is safe. These expectations become the core drivers for a customer when they purchase services from service provider. So the service is fit for Use. It has high warranty. 15 Grace Some customers have high utility requirements, some have high warranty requirements, and some require high levels of both. To accommodate this, Service Providers can seek to satisfy one or more of these types of customers by packaging different levels of Service Utility and Service Warranty, and pricing these packages accordingly.  Service Packages - Service Package is a bundle of core services and/or supporting services which is offered to customer. Service Package includes Service Level Package  Service Level Package (SLP) - A specified level of warranty and utility for a particular Service Package, a subset of the 16 Grace above. These SLPs should meet the need of the PBAs. Different ways in which you can deal with demand are: Anticipating Demand: For example, Telecommunication companies have most of the resources used by businesses during working hours, but they have excess capacity outside of working hours. Influencing Demand of the Service: A Telecommunication company will usually charge more for a call at 11:00 a.m. than for a call at 11:30 p.m. They will even release marketing promotions so encourage customers talking during nights and weekends. Why? Because they want to encourage people to talk more during the time when their networks are less used, to get more money from this infrastructure that is being underutilized. On the other hand, they are discouraging users from talking more during the peak hours of network utilization, because otherwise they would have to make non-optimal investments to grow their network. Creating Demand for new Services: On the other hand, maybe the telecommunication company has reached 99% of penetration in a market. In this case, they want to encourage growth by introducing new services, which might not exist in this market, like data services, media content, push-to-talk, etc. So Demand Management is not only about restricting demand, but can also be about encouraging demand to make more money or reinvent the market. User demand is the reason for the existence of services and therefore it is not always good enough to play catch-up with required capacities. Quite the contrary. You should stay one step ahead and be ready when demand takes place. 17 Grace We are at the end of this session. Let’s meet tomorrow to discuss about Financial Management for IT Services and Business Relationship Management. 18 1 19 1 In this video, you learnt that:  Demand management is to know your customer and then identify their requirements.  The process of Demand Management is necessary for two reasons: Predicting the demand and Managing the Risk.  Pattern of Business Activity (PBA) is how a customer uses services.  Value is created by combining warranty and utility.  Service Package is a bundle of core services and/or supporting services which is offered to customer. Service Level Package (SLP) is a specified level of warranty and utility for a particular Service Package.  Different ways to deal with Demand are Anticipating Demand, Influencing Demand and Creating Demand for New Services Thank you for watching this video on the Demand Management phase of Service Strategy. Let us discuss the remaining service strategy processes in the subsequent sessions.