Service Design - Building PDF

28/8/07 14:01 Page 25 | Service Strategy – governance and decision-making equirements The business/customers Service Strategy Policies Resource and Constraints Objectives from Requirements Strategies core of the ITIL Service Lifecycle, Service Strategy e stage for developing a service provider’s cor...

28/8/07 14:01 Page 25 | Service Strategy – governance and decision-making equirements The business/customers Service Strategy Policies Resource and Constraints Objectives from Requirements Strategies core of the ITIL Service Lifecycle, Service Strategy e stage for developing a service provider’s core lities. This chapter will discuss a selection of the key pts from the Service Strategy book to help aid the tanding of the role of Service Strategy in the ITIL e Lifecycle.  Defining the service market e you have been given responsibility for an IT zation. This organization could be internal or al, commercial or not-for-profit. How would you go deciding on a strategy to serve customers? What if ve a variety of customers, all with specific needs emands? How do you define your service strategy to all of them?  Return on investment.  Developing service offerings  Financial Management  Service Portfolios  Demand Management  Service assessment 4.1 STRATEGIC ASSESSMENT e Strategy provides guidance to help answer that estion. It is comprised of the following key pts. In crafting a service strategy, a provider should first take a careful look at what it does already. It is likely there already exists a core of differentiation. An established service provider frequently lacks an understanding of its own unique differentiators. The following questions can help expose a service provider’s distinctive capabilities: ue creation Which of our services or service varieties are the most 25 28/8/07 14:01 Page 26 Service Strategy – governance and decision-making customer’s business or the broadness of service gs. Or it may be in the form of raised switching due to lower cost structures generated through ization or service sourcing. It may be a particular te not readily found elsewhere, such as product edge, regulatory compliance, provisioning speeds, cal capabilities or global support structures. of our services or service varieties are the most able? rm of value may be monetary, as in higher profits or expenses, or social, as in saving lives or collecting For non-profit organizations, are there services that he organization to perform its mission better? ute ‘profit’ with ‘benefits realized’. Which of our customers and stakeholders are the most satisfied? Which customers, channels or purchase occasions are the most profitable? Again, the form of value can be monetary, social or other. Which of our activities in our value chain or value network are the most different and effective? The answers to these questions will likely reveal patterns that lend insight to future strategic decisions. These decisions, and related objectives, form the basis of a strategic assessment. Service Providers can be present in more than one market space. As part of strategic planning, Service Providers should analyse their presence across various market spaces. Strategic reviews include the analysis of strengths, weaknesses, opportunities and threats in each market space. Service Providers also analyse their business 4.1 Factors in strategic assessment Description hs and weaknesses The attributes of the organization. For example, resources and capabilities, service quality, operating leverage, experience, skills, cost structures, customer service, global reach, product knowledge, customer relationships and so on. ive competencies As discussed throughout the chapter, ‘What makes the service provider special to its business or customers?’ s strategy The perspective, position, plans and patterns received from a business strategy. For example, a Type I and II may be directed, as part of a new business model, to expose services to external partners or over the internet. This is also where the discussion on customer outcomes begins and is carried forward into objectives setting. success factors How will the Service Provider know when it is successful? When must those factors be 28/8/07 14:01 Page 27 Service Strategy – governance and decision-making | 27 ial based on un-served or underserved market. This is an important aspect of leadership and on provided by the senior management of Service ers. The long-term vitality of the Service Provider n supporting customer needs as they change or as well exploiting new opportunities that emerge. nalysis identifies opportunities with current and ctive customers. It also prioritizes investments in assets based on their potential to serve market of interest. For example, if a Service Provider has capabilities and resources in service recovery, it es all those market spaces where such assets can value for customers. A multi-disciplinary approach is required to answer such questions. Technical knowledge of IT is necessary but not sufficient. The guidance is pollinated with knowledge from the disciplines such as operations management, marketing, finance, information systems, organizational development, systems dynamics and industrial engineering. The result is a body of knowledge robust enough to be effective across a wide range of business environments. Some organizations are putting in place the foundational elements of service management. Others are further up the adoption curve, ready to tackle challenges and opportunities with higher levels of complexity and uncertainty. DEVELOPING STRATEGIC CAPABILITIES 4.3 SERVICE PROVIDER TYPES – MATCHING NEED TO CAPABILITY rate and grow successfully in the long term, service ers must have the ability to think and act in a ic manner. The purpose of Service Strategy is to rganizations develop such abilities. The achievement tegic goals or objectives requires the use of strategic The guidance shows how to transform service ement into a strategic asset. Readers benefit from the relationships between various services, systems cesses they manage and the business models, ies or objectives they support. The guidance rs questions of the following kind: at services should we offer and to whom? w do we differentiate ourselves from competing ernatives? w do we truly create value for our customers? w can we make a case for strategic investments? w should we define service quality? w do we efficiently allocate resources across a The aim of service management is to make available capabilities and resources useful to the customer in the highly usable form of services at acceptable levels of quality, cost and risks. Service Providers help relax the constraints on customers of ownership and control of specific resources. In addition to the value from utilizing such resources now offered as services, customers are freed to focus on what they consider to be their core competence. The relationship between customers and Service Providers varies by specialization in ownership and control of resources and the coordination of dependencies between different pools of resources. Service Strategy defines three broad types of Service Providers with whom a customer is likely to engage in accessing services.  Type I – Internal Service Provider Type I providers are typically business functions 28/8/07 14:01 Page 28 Service Strategy – governance and decision-making ources and IT provide services required by various ts of the business. They are funded by overheads d are required to operate strictly within the ndates of the business. Type I providers have the nefit of tight coupling with their owner-customers, oiding certain costs and risks associated with nducting business with external parties. pe II – Shared Service Provider siness functions such as finance, IT, human resources d logistics are not always at the core of an anization’s competitive advantage. Hence, they ed not be maintained at the corporate level where y demand the attention of the chief executive’s m. Instead, the services of such shared functions are nsolidated into an autonomous special unit called a red services unit (SSU). This model allows a more volved governing structure under which an SSU can us on serving business units as direct customers. Us can create, grow and sustain an internal market their services and model themselves along the lines service providers in the open market. Like corporate siness functions, they can leverage opportunities oss the enterprise and spread their costs and risks oss a wider base. pe III – External Service Provider pe III providers can offer competitive prices and drive wn unit costs by consolidating demand. Certain siness strategies are not adequately served by ernal Service Providers such as Type I and Type II. stomers may pursue sourcing strategies requiring vices from external providers. The motivation may access to knowledge, experience, scale, scope, pabilities and resources that are either beyond the ch of the organization or outside the scope of a often require customers to have flexible and lean structures. In such cases it is better to buy services rather than own and operate the assets necessary to execute certain business functions and processes. For such customers, Type III is the best choice for a given set of services. Today, it is common to see all three types combining capabilities to manage services for a customer. The power of this approach lies in selecting the right blend and balance. The Service Strategy publication provides detailed guidance on provider types and how to decide on the right blend. 4.4 SERVICES AS ASSETS – VALUE CREATION A good business model describes the means of fulfilling an organization’s objectives. However, without a strategy that in some way makes a Service Provider uniquely valuable to the customer, there is little to prevent alternatives from displacing the organization, degrading its mission or entering its market space. A service strategy therefore defines a unique approach for delivering better value. The need for having a service strategy is not limited to Service Providers who are commercial enterprises. Internal Service Providers need just as much to have a clear perspective, positioning and plans to ensure they remain relevant to the business strategies of their enterprises. Service assets have two main characteristics:  Utility is perceived by the customer from the attributes of the service that have a positive effect on the performance of tasks associated with desired business outcomes. This is fit for purpose. 28/8/07 14:01 Page 29 Service Strategy – governance and decision-making | is what the customer gets, and warranty is how it is ed. ces and capabilities are types of assets that, when ned in various ways, produce service utility and ty. Organizations use them to create value in the f goods and services. Resources are direct inputs for ction. Management, organization, people and edge are used to transform resources. Capabilities ent an organization’s ability to coordinate, control eploy resources to produce value. They are typically ence-driven, knowledge-intensive, information-based mly embedded within an organization’s people, s, processes and technologies. mers perceive benefits in a continued relationship, ntrust the provider with the business of increasing and also adding new customers and market spaces realm of possibilities. This justifies further ments in service management in terms of lities and resources, which have a tendency to ce each other. mers may initially trust the provider with low-value cts or non-critical services. Service management responds by delivering the performance expected of a strategic asset. The performance is rewarded with contract renewals, new services and customers, which together represent a larger value of business. To handle this increase in value, service management must invest further in assets such as process, knowledge, people, applications and infrastructure. Successful learning and growth enables commitments of higher service levels as service management gets conditioned to handle bigger challenges. 4.5 DEFINING THE MARKET SPACE A market space is defined by a set of business outcomes, which can be facilitated by a service. The opportunity to facilitate those outcomes defines a market space. The following are examples of business outcomes that can be the bases of one or more market spaces:  Sales teams are productive with sales management system on wireless computers  E-commerce website is linked to the warehouse management system  Key business applications are monitored and secure 4.1 Service Provider capabilities and resources Capabilities Resources A1 Management Financial capital A9 A2 Organization Infrastructure A8 A3 Processes Applications A7 29 28/8/07 14:01 Page 30 Service Strategy – governance and decision-making an officers have faster access to information required loan applicants line bill payment service offers more options for oppers to pay siness continuity is assured. f the conditions is related to one or more categories omer assets, such as people, infrastructure, ation, accounts receivables and purchase orders, n then be linked to the services that make them le. mers will prefer the one that means lower costs and ervice Providers create these conditions through vices they deliver and thereby provide support for mers to achieve specific business outcomes. ket space therefore represents a set of opportunities vice Providers to deliver value to a customer’s ss through one or more services. This approach has e value for Service Providers in building strong nships with customers. Often it is not clear how services create value for customers. Services are often defined in terms of resources made available for use by customers. Service definitions lack clarity in the context in which such resources are useful, and the business outcomes that justify their cost from a customer’s perspective. This problem leads to poor designs, ineffective operation and lacklustre performance in service contracts. Service improvements are difficult when it is not clear where improvements are truly required. Customers can understand and appreciate improvements only within the context of their own business assets, performances and outcomes. It is therefore important the Service Providers identify their market spaces by ensuring they define service by business outcomes such as those described above and in Figure 4.2. 4.6 SERVICE PORTFOLIOS The Service Portfolio (Figure 4.3) represents the commitments and investments made by a Service Provider across all customers and market spaces. It represents 4.2 Actionable components of service definitions in terms of utility Utility Part A Lines of Service field staff securely access enterprise applications Mobile workspace services Credit reporting services Business Utility Part B provide value to the customer when loans officers determine creditrating of applicants business processes being constrained by location or time without slowing down the loan process disruption or loss 28/8/07 14:01 Page 31 Service Strategy – governance and decision-making | t contractual commitments, new service pment, and ongoing service improvement mmes initiated by Continual Service Improvement. ortfolio also includes third-party services, which are egral part of service offerings to customers. Some arty services are visible to the customers while are not. rvice Portfolio represents all the resources presently ed or being released in various phases of the Service le. Each phase requires resources for completion of ts, initiatives and contracts. This is a very important governance aspect of Service Portfolio Management (SPM). Entry, progress and exit are approved only with approved funding and a financial plan for recovering costs or showing profit as necessary. The Portfolio should have the right mix of services in development for the market spaces and the Service Catalogue (Figure 4.4) to secure the financial viability of the Service Provider. The Service Catalogue is the only part of the Portfolio that recovers costs or earns profits. 4.3 Service Portfolio Service Improvement Plan Market Space 1 Customer 3 Linked by services Customer 2 Market Space 2 Service Portfolio Market potential for services Customer 1 31 Market Space 3 28/8/07 14:01 Page 32 Service Strategy – governance and decision-making 4.4 Elements of a Service Portfolio and Service Catalogue Service Portfolio Service Catalogue(s) Description Services Value proposition Supported products Business cases Policies Priorities Ordering and request procedures Risks Offerings and packages Cost and pricing hink of SPM as a dynamic and ongoing process set, ld include the following work methods: fine: inventory services, ensure business cases and date portfolio data alyse: minimize portfolio value, align and prioritize d balance supply and demand prove: finalize proposed portfolio, authorize services d resources arter: communicate decisions, allocate resources d charter services. Support terms and conditions Entry points and escalations Pricing and chargeback 28/8/07 14:01 Page 33 Service Strategy – governance and decision-making | 4.5 Service Portfolio management Service Strategy Define Inventories Business Case Analyse Value Proposition Prioritization Approve Service Portfolio Authorization Charter Communication Resource allocation Service Pipeline rvice Pipeline consists of services under pment for a given market space or customer. services are to be phased into operation by Service ion after completion of design, development and. The Pipeline represents the Service Provider’s h and strategic outlook for the future. The general of the provider is reflected in the Pipeline. It also s the extent to which new service concepts and or improvement are being fed by Service Strategy, 4.6.2 Service Catalogue The Service Catalogue is the subset of the Service Portfolio visible to customers. It consists of services presently active in the Service Operation phase and those approved to be readily offered to current or prospective customers. Items can enter the Service Catalogue only after due diligence has been performed on related costs and risks. Resources are engaged to fully support active services. The Service Catalogue is useful in developing suitable solutions for customers from one or more services. Items in the Service Catalogue can be configured and suitably priced to fulfil a particular need. The Service Catalogue is an important tool for Service Strategy because it is the virtual projection of the Service Provider’s actual and present capabilities. Many customers are only interested in what the provider can commit now, rather than in future. 4.7 SERVICE OUTSOURCING – PRACTICAL DECISION-MAKING A service strategy should enhance an organization’s special strengths and core competencies. Each component should reinforce the other. Change any one and you have a different model. As organizations seek to improve their performance, they should consider which competencies are essential and know when to extend their capabilities by partnering in areas both inside and outside their enterprise. Outsourcing is the moving of a value-creating activity that was performed inside the organization to outside the organization where it is performed by another company. What prompts an organization to outsource an activity is the same logic that determines whether an organization makes or buys inputs. Namely, does the extra value 33 28/8/07 14:01 Page 34 Service Strategy – governance and decision-making 4.2 Types of sourcing structures ng structure (Type I) services (Type II) vice outsourcing tium ve outsourcing Description The provision and delivery of services by internal staff. Does not typically include standardization of service delivery across business units. Provides the most control but also the most limited in terms of scale. An internal business unit. Typically operates its profit and loss, and a chargeback mechanism. If cost recovery is not used, then it is internal not shared services. Lower costs than Internal with a similar degree of control. Improved standardization but limited in terms of scale. A single contract with a single Service Provider. Typically involves significant asset transfer. Provides improved scale but limited in terms of best-in-class capabilities. Delivery risks are higher than prime, consortium or selective outsourcing as switching to an alternative is difficult. A single contract with a single Service Provider who manages service delivery but engages multiple providers to do so. The contract stipulates that the prime vendor will leverage the capabilities of other best-in-class Service Providers. Capabilities and risk are improved from single-vendor outsourcing but complexity is increased. A collection of Service Providers explicitly selected by the service recipient. All providers are required to come together and present a unified management interface. Fulfils a need that cannot be satisfied by any single-vendor outsourcer. Provides bestin-class capabilities with greater control than prime. Risk is introduced in the form of providers forced to collaborate with competitors. A collection of Service Providers explicitly selected and managed by the service recipient. This is the most difficult structure to manage. The service recipient is the service integrator, responsible for gaps or cross-provider disputes. The term ‘co-sourcing’ refers to a special case of selective outsourcing. In this variant, the service recipient maintains an internal or shared services structure and combines it with external providers. The service recipient is the service integrator. 28/8/07 14:01 Page 35 Service Strategy – governance and decision-making | ng requires businesses to formally consider a ng strategy, the structure and role of the retained zation, and how decisions are made. When sourcing s, the enterprise retains the responsibility for the acy of services delivered. Therefore, the enterprise key overall responsibility for governance. The rise should adopt a formal governance approach in o create a working model for managing its rced services as well as the assurance of value y. This includes planning for the organizational e precipitated by the sourcing strategy and a formal rifiable description as to how decisions on services ade. Table 4.2 describes the generic forms of service ng structures. ring with providers who are ISO/IEC 20000 ant can be an important element in reducing the service sourcing. Organizations who have achieved rtification are more likely to meet service levels on a ed basis. This credential is particularly important in ourced environments where a common framework tes better integration. Multi-sourced environments e common language, integrated processes and a ement structure between internal and external ers. ISO/IEC 20000 does not provide all of this but it es a foundation on which it can be built. Sourcing governance s a frequent misunderstanding of the definition of nance’, particularly in a sourcing context. Companies sed the word interchangeably with ‘vendor ement’, ‘retained staff’ and ‘sourcing management zation’. Governance is none of these. ement and governance are different disciplines. ement deals with making decisions and executing management and governance, they inevitably focus on execution at the expense of strategic decision-making. Both are vitally important. Further complicating matters is the requirement of sharing decision rights with the Service Providers. When a company places itself in a position to make operational decisions on behalf of an outsourcer, the outcomes are inevitably poor service levels and contentious relationship management. Governance is invariably the weakest link in a service sourcing strategy. A few simple constructs have been shown to be effective at improving that weakness:  A governance body – By forming a manageably sized governance body with a clear understanding of the service sourcing strategy, decisions can be made without escalating to the highest levels of senior management. By including representation from each Service Provider, stronger decisions can be made.  Governance domains – Domains can cover decisionmaking for a specific area of the service sourcing strategy. Domains can cover, for example, service delivery, communication, sourcing strategy or contract management. Remember, a governance domain does not include the responsibility for its execution, only its strategic decision-making.  Creation of a decision-rights matrix – This ties all three recommendations together. RACI or RASIC charts are common forms of a decision-rights matrix. 4.8 RETURN ON INVESTMENT (ROI) Return on investment (ROI) is a concept for quantifying the value of an investment. Its use and meaning are not always precise. When dealing with financial officers, ROI most likely means ROIC (return on invested capital), a 35 28/8/07 14:01 Page 36 Service Strategy – governance and decision-making sets invested. The resulting percentage is applied to additional top-line revenue or the elimination of m-line cost. t unexpected that companies seek to apply ROI in ng to adopt service management. ROI is appealing se it is self-evident. The measure either meets or ot meet a numerical criterion. The challenge is ROI calculations focus on the short term. The ation of service management has different degrees depending on business impact (see Figure 4.6). ver, there are often difficulties in quantifying the exities involved in implementations. While a service can be directly linked and justified through specific business imperatives, few companies can readily identify the financial return for the specific aspects of service management. It is often an investment that companies must make in advance of any return. 4.9 FINANCIAL MANAGEMENT Operational visibility, insight and superior decision-making are the core capabilities brought to the enterprise through the rigorous application of Financial Management. Just as business units accrue benefits through the analysis of 4.6 Business impact and ROI outcome Business Impact Business Objectives Improved Reliability Tangible Measure: MTBF (Mean Time Between Failure) Impact: MTBF to 200 hours from 600 hours Improved Maintainability Tangible Measure: MTRS (Mean Time to Restore) Impact: MTRS to 2 hours from 6 hours Improved Services Tangible Measure: Product orders can now be placed on-line Customer Satisfaction Tangible Measure: Repeat Rate of Business Target: Improve rate to 60% from 25% 28/8/07 14:01 Page 37 ct mix and margin data, or customer profiles and ct behaviour, a similar utility of financial data ues to increase the importance of Financial ement for IT and the business as well. ial Management as a strategic tool is equally able to all three Service Provider types. Internal providers are increasingly asked to operate with me levels of financial visibility and accountability as usiness unit and external counterparts. Moreover, ology and innovation have become the core e-generating capabilities of many companies. ial Management provides the business and IT with antification, in financial terms, of the value of IT s, the value of the assets underlying the oning of those services, and the qualification of ional forecasting. Talking about IT in terms of s is the crux of changing the perception of IT and ue to the business. Therefore, a significant portion of ial Management is working in tandem with IT and siness to help identify, document and agree on the of the services being received, and the enablement ice demand modelling and management. ike their business counterparts, IT organizations are ingly incorporating Financial Management in the of: hanced decision-making eed of change vice Portfolio Management ancial compliance and control erational control ue capture and creation. oal of Financial Management is to ensure proper g for the delivery and consumption of services. Service Strategy – governance and decision-making | 37 by focusing on demand and supply variances resulting from business strategy, capacity inputs and forecasting, rather than traditional individual line item expenditures or business cost accounts. As with planning for any other business organization, input should be collected from all areas of the IT organization and the business. Planning can be categorized into three main areas, each representing financial results that are required for continued visibility and service valuation:  Operating and capital planning processes are common and fairly standardized, and involve the translation of IT expenditures into corporate financial systems as part of the corporate planning cycle. Beyond this, the importance of this process is in communicating expected changes in the funding of IT services for consideration by other business domains. The impact of IT services on capital planning is largely underestimated, but is of interest to tax and fixed-asset departments if the status of an IT asset changes.  Demand representing the need and use of IT services.  Regulatory and environmental-related planning should get its triggers from within the business. However, Financial Management should apply the proper financial inputs to the related services value, whether cost-based or value-based. 4.9.1 Service valuation Service valuation quantifies, in financial terms, the funding sought by the business and IT for services delivered, based on the agreed value of those services. Financial Management calculates and assigns a monetary value to a service or service component so that they may be disseminated across the enterprise once the business customer and IT identify what services are actually desired. 28/8/07 14:01 Page 38 Service Strategy – governance and decision-making sonnel resources used in the support or intenance of a service ities, data centre or other facilities charges es, capital or interest charges mpliance costs. ial Management plays a translational role between ate financial systems and service management. The of a service-oriented accounting function is that far r detail and understanding is achieved regarding provisioning and consumption, and the generation a that feeds directly into the planning process. The ons and accounting characteristics that come into e discussed below: rvice recording – The assignment of a cost entry to appropriate service. Depending on how services defined, and the granularity of the definitions, re may be additional sub-service components st types – These are higher-level expenses egories such as hardware, software, labour, ministration etc. These attributes assist with orting and analysing demand and usage of services d their components in commonly used financial ms st classifications – There are also classifications hin services that designate the end purpose of the t. These include classifications such as: Capital/operational – this classification addresses different accounting methodologies that are required by the business and regulatory agencies Direct/indirect – this designation determines whether a cost will be assigned directly or indirectly to a consumer or service: – Direct costs are charged directly to a service since it is the only consumer of the expense  Fixed/variable – this segregation of costs is based on contractual commitments of time or price. The strategic issue around this classification is that the business should seek to optimize fixed service costs and minimize the variable in order to minimize predictability and stability  Cost units – a cost unit is the identified unit of consumption that is accounted for a particular service or service asset. 4.9.2 Variable cost dynamics Variable cost dynamics (VCD) focuses on analysing and understanding the multitude of variables that impact service cost, how sensitive those elements are to variation, and the related incremental value changes that result. Below is a very brief list of possible variable service cost components that could be included in such an analysis:  Number and type of users  Number of software licences  Cost/operating foot of data centre  Delivery mechanisms  Number and type of resources  Cost of adding one more storage device  Cost of adding one more end-user license. 4.10 INCREASING SERVICE POTENTIAL The capabilities and resources (service assets) of a Service Provider represent the service potential or the productive capacity available to customers through a set of services. Projects that develop or improve capabilities and resources increase the service potential. For example, implementation of a Configuration Management System leads to improved visibility and control over the 28/8/07 14:01 Page 39 Service Strategy – governance and decision-making | 4.3 Example of increased Service Potential management ve Increasing service potential from capabilities Increasing service potential from resources entre rationalization Better control over service operations Increases the capacity of assets Lower complexity in infrastructure Increases economies of scale and scope Development of infrastructure and technology assets Capacity building in service assets Knowledgeable staff in control of Service Lifecycle Staffing of key competencies g and certification Extension of Service Desk hours Improved analysis and decisions ent Incident Management Better response to Service Incidents Reducing losses in resource utilization Prioritization of recovery activities p service design process ent computing Systematic design of services Re-use of service components Enrichment of design portfolio Fewer service failures through design Increased flexibility in work locations Standardization and control of configurations Enhanced service continuity capabilities Centralization of administration functions r efficiency in the utilization of those assets and ore service potential because of capability vements in Configuration Management. Similar les are given in Table 4.3. One of the key objectives ice management is to improve the service potential apabilities and resources. ORGANIZATIONAL DEVELOPMENT senior managers adopt a service management ation, they are adopting a vision for the zation. Such a vision provides a model toward staff can work. Organizational change, however, is There is no one best way to organize. Elements of an organizational design, such as scale, scope and structure, are highly dependent on strategic objectives. Over time, an organization will likely outgrow its design. Certain organizational designs fit while others do not. The design challenge is to identify and select among often distinct choices. Thus the problem becomes much more solvable when there is an understanding of the factors that generate fit and the trade-offs involved, such as control and coordination. It is common to think of organizational hierarchies in terms of functions. As the functional groups become 39 28/8/07 14:01 Page 40 Service Strategy – governance and decision-making oup to one of the following areas or a hybrid f: Certain basic structures are preferred for certain service strategies, as shown in Table 4.4. nction – preferred for specialization, the pooling of ources and reducing duplication oduct – preferred for servicing businesses with ategies of diverse and new products, usually nufacturing businesses rket space or customer – preferred for organizing und market structures. Provides differentiation in form of increased knowledge of and response to tomer preferences ography – the use of geography depends on the ustry. By providing services in close geographical ximity, travel and distribution costs are minimized ile local knowledge is leveraged ocess – preferred for an end-to-end coverage of a cess. Service strategies are executed by delivering and supporting the contract portfolio in a given market space. Contracts specify the terms and conditions under which value is delivered to customer through services. From an operational point of view this translates into specific levels of utility and warranty for every service. Since every service is mapped to one or more market spaces, it follows that the design of a service is related to categories of customer assets and the service models. These are the basic inputs for service design. There is much more depth in Service Strategy than depicted in the preceding pages. As the core of the ITIL Service Lifecycle, Service Strategy is a prime component in a good service management practice. The key concepts have been outlined in this book to provide a basic understanding and illustrate the enormous benefits a 4.4 Basic organizational structures for types of service strategies tructure Strategic considerations nal Specialization t space or customer phy Common standards Small size Product focus Strong product knowledge Service unique to segment Customer service Buyer strength Rapid customer service Onsite services Proximity to customer for delivery and support 28/8/07 14:01 Page 41 service strategy offers to every IT organization and ustomers. You are encouraged to read the Service gy core guidance in its entirety as the best place to expanding your knowledge of service management es. Service Strategy – governance and decision-making | 41 28/8/07 14:01 Page 42 28/8/07 14:01 Page 43 28/8/07 14:01 Page 44