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Tuesday, December 20, 2011

Service Strategy Development

A good strategy is mandatory for any business to be successful. Be it the overall strategy for the business or a strategy for the service that is being provided.

The long-term success of a business can be analyzed in terms of three strategic factors or building blocks:
• The market focus and position of the organization, which define where and how to compete in the marketplace.
• Performance anatomy, which is about the cultural and organizational, attributes of the service provider; it is about values and mindsets that color key decisions taken by the organization and the individuals within it.
• Distinctive capabilities, which are capabilities the organization has that the competition would find difficult to equal or copy. These differentiate the service provider at the delivery level.

Before we jump into the topic of how to create a good strategy, lets first look at the different types of Service Providers in the IT Industry

IT Service Provider Types

In the IT Industry, there are numerous types of IT service providers. Different providers are characterized by their relationship with customers and their positioning in relation to the business or businesses they service. It is helpful to simplify this complexity and identify a small number of provider types that represent the wider variety in the marketplace. This simplification leads to the following three types:
• Type I — Internal service provider: This is the in-house IT unit typically positioned within the business units they serve, although it is common for these smaller scale IT units to be consolidated into a corporate IT department that has to balance the interests, demands and priorities of the corporate organization against those of individual business units. Ex: The IT Departments of Banks or other institutions that exclusively serve their parent organizations.
• Type II — shared services unit: This is where a range of functions, regarded as non-core to the business, are grouped together into a corporate shared service unit. The functions involved are typically IT, finance and HR, sometimes with legal service, logistics and facilities management.
• Type III — External service provider: This is a separate commercial entity from the businesses it services, and operates as a competitive business in the marketplace. Ex: The IT company’s in India (like Infosys, TCS etc) provide IT Services to customers across the globe. Apart from the service they provide, they have no further relationships with their customers.

The Four P's of Strategy

Having considered the IT service provider’s strategic approach to the marketplace, the next part of the strategic equation is the IT service provider’s approach to Service Strategy. This may be analyzed in terms of the four Ps:
• Strategy as a Perspective: This relates to vision, direction and the IT service provider’s philosophy for doing business with its customers.
• Strategy as a Position: This describes strategy in terms of the IT service provider’s general approach to its service offerings (e.g. high value or low cost, emphasis on utility or warranty).
• Strategy as a Plan: This describes strategy as a plan showing how the IT service provider will move from where it is today to where it wants to be.
• Strategy as a Pattern: This describes strategy as a consistent way of making decisions.

Service Management as a Strategic Asset

There are two components of Service Strategy. Service strategy is clearly about developing strategies for the delivery of specific services, but there is also the development of Service Management as a competence for providing services as part of the business strategy and as a basis for good governance.

The development of Service Management as a strategic asset is central to Service Strategy.

Strategic Asset - Strategic assets are assets that provide the basis for core competence, distinctive performance, durable advantage, and qualifications to participate in business opportunities. IT organisations can use the guidance provided by ITIL to transform their Service Management capabilities into strategic assets.

Service Management provides the framework within which value is delivered to the customer in the shape of specific services represented collectively in the Service Catalogue. The customer’s confidence in commissioning new service offerings depends on the Service Management capabilities of the IT service provider.

Developing Strategy for Specific Services

In terms of the development of a strategy for a specific service offering, the key elements are concerned with a series of activities that involve:
• understanding the customer and the ways IT can deliver value to them
• understanding the outcomes the customer wants from the service and how the service will deliver benefit
• defining critical success factors for the service
• developing a specification based on the outcomes required by the customer, including the utility and warranty required
• Developing through Demand Management an understanding of the customer’s priorities in relation to Patterns of Business Activity (PBAs).

It is important to remember that individual services have to operate in a broader context. New services must fit into the framework of existing services and any other new services with which they will likely share common services and compete for resources. The development of a Service Strategy has to take this fully into account.

At an early stage in the development of the Service Strategy, the initial, conceptual details of the new service will be captured in the Service Portfolio and the new service will begin its journey through its lifecycle. Through Service Portfolio Management, the new service offering will be put into the broader context of other services, business trends, regulation, the developing marketplace, emerging technologies, competition, risks and so on. The business case, developed in conjunction with Financial Management, will reflect these factors and explain why the Service Strategy developed represents the best way forward as well as describing how and to what extent it will deliver value.

The outcome of the Service Strategy process is a decision to continue with the service or not. Approved services are ‘chartered’ at which point they are ready to move forward to Service Design. The transfer into Service Design requires the production of a Service Package, which describes in detail the IT service to be delivered to the customer, including the service levels to be achieved and the supporting services that will underpin its delivery.

Service Package - ITIL defines a Service Package as a detailed description of an IT service that is available to be delivered to customers. A Service Package includes a Service Level Package (SLP) and one or more Core Services and Supporting Services.

Service Level Package - A Service Level Package is a defined level of Utility and Warranty for a particular Service Package. Each SLP is designed to meet the needs of a particular Pattern of Business Activity.

Previous: Introduction to Service Strategy

Next: Service Assets

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