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FIT9020 – Data Communications ITECH7400 – IT Service Management and Professional Culture Week 2 Lecture: The Service Life Cycle Copyright 2012 BCS, The Chartered Institute for IT IT SERVICE MANAGEMENT A Guide for ITIL Foundation Exam Candidates 2nd Edition, Ernest Brewster, Richard Griffiths, Aidan Lawes, and John Sansbury School of Science, Engineering & Information Technology Governance and Risk Service Strategy Service Design Service Transition Week 2: Lecture Outline School of Science, Engineering & Information Technology Governance is central to the sound operation and management of all healthy organizations. It covers various policies, processes and structures established by senior management to ensure the smooth running and effective control of the organization. The standard for IT governance, ISO/IEC 38500:2008, provides a framework to assist those at the highest level of organizations to understand and fulfil their legal, regulatory and ethical obligations w.r.t. their organizations' use of IT’. This framework sets out six principles for good corporate governance of IT, covering responsibility, strategy, acquisition, performance, conformance and human behavior. Governance School of Science, Engineering & Information Technology 3 The ITIL framework can be a key part of the foundations for excellent IT governance. IT is a service business, and the adoption of ITIL service management practices is an effective way to address IT governance. For example: Service strategy ensures that IT investments not only address issues that are important to the business, but also that they are sound investments that take proper account of costs, benefits and risks. Continual service improvement helps the business achieve greater value and higher levels of efficiency while conforming to standards such as ISO/IEC 20000. ITIL Framework For IT Governance School of Science, Engineering & Information Technology 4 Risk is defined as a possible event that could cause harm or loss, or affect the ability to achieve objectives. Risk can also be defined as the uncertainty of outcome (a range of oucomes). The effective management of risk, an important issue for all successful organizations, is a key component of governance. Risk School of Science, Engineering & Information Technology 5 Business relationship management; Financial management for IT services; and Service portfolio management. Key Processes In Service Strategy School of Science, Engineering & Information Technology 6 Type I – Internal service provider: In-house IT unit typically positioned within the business. Usually, these small scale IT units are consolidated into a corporate IT department that has to balance the interests, demands and priorities of the corporate organization. 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. IT Service Provider Types School of Science, Engineering & Information Technology 7 Strategy as a Perspective: relates to vision, direction and IT service provider’s philosophy for doing business with its customers. Strategy as a Position: describes strategy in terms of 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: 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: describes strategy as a consistent way of making decisions. The Four Ps of Strategy School of Science, Engineering & Information Technology 8 Service strategy has two components: Developing strategies for the delivery of specific services 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. Components Of Service Strategy School of Science, Engineering & Information Technology 9 Assets that provide the basis for core competence, distinctive performance, durable advantage, and qualifications to participate in business opportunities. IT organizations can use the guidance provided by ITIL to transform their service management capabilities into strategic assets. Strategic Asset School of Science, Engineering & Information Technology 10 The key elements are: 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; and Developing through demand management an understanding of the customer’s priorities in relation to Patterns of Business Activity (PBAs). Developing Strategy School of Science, Engineering & Information Technology 11 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. 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. Developing Strategy (Cont.) School of Science, Engineering & Information Technology 12 The business case, developed in conjunction with financial management, will explain why the developed service strategy 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. Developing Strategy (Cont.) School of Science, Engineering & Information Technology 13 A service package is 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. A service package can consist of a combination of core services, enabling services and enhancing services. A service package provides a specific level of utility and warranty. Service Package School of Science, Engineering & Information Technology 14 A service option is a choice of utility and warranty offered to customers by a core service or service package. Service options are sometimes referred to as service level packages. Service Option School of Science, Engineering & Information Technology 15 Value Generation From Service And Customer Assets Service Asset: Any resource or capability of a service provider. (See Week 1 Lecture Slides) Customer Asset: Any resource or capability of a Customer. School of Science, Engineering & Information Technology 16 In Week 1 Lecture Slides, we discussed how value is created through utility or fitness for purpose, and warranty or fitness for use. The idea that services add value is fundamental to IT service delivery and is a key input to the development of service strategy. There is little point in developing services that have no recognized value. ITIL definition of a service: A service delivers value to customers by facilitating outcomes customers want to achieve without the ownership of specific costs and risks. Value School of Science, Engineering & Information Technology 17 We can measure value not only in terms of quantifiable benefits such as financial savings or increased income, but also in terms of benefits such as service quality, which are less easily quantified and often depend on the perception of the customer or service user. Value depends on customer perception. Effective service strategy requires a ‘marketing mindset’, which captures the customer’s perspective, through which we can understand both the customer and the outcomes that the customer really values and why, and to what extent they are valued. Value (Cont.) School of Science, Engineering & Information Technology 18 Automating business processes delivers higher utility and warranty, thereby generating better performance and value from service and customer assets. The same applies to IT service management. Earlier in the lecture, we identified IT service management capability as a strategic asset. Building this capability through automation is fundamental to providing value to the business by remaining competitive. Automating Service Management Processes School of Science, Engineering & Information Technology 19 At a more basic level, automation increases productivity, enables us to handle fluctuating demand and generally do more for less. Without a level of automation, effective service management in all but the smallest organizations is inconceivable. For example, configuration management based on paper records could hardly deliver in an organization of any significant scale. Automating Service Management Processes (Cont.) School of Science, Engineering & Information Technology 20 We can identify a number of areas where automation can improve capability. For example: Monitoring and measuring to an extent not possible by other means, handling high levels of complexity and volume irrespective of time or location. Generating automated alerts helps us respond more rapidly to events, helping us maintain service availability. Discovery tools enable us to maintain an up-to-date configuration management system and identify and deal with a range of control related problems. Automating Service Management Processes (Cont.) School of Science, Engineering & Information Technology 21 Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between the service provider and its customers. Service Design establishes solutions to meet requirements. Service design processes are focused on operational control. Contribution of the service design phase: ensuring the creation of cost-effective services that provide the level of quality required to satisfy customers and stakeholders throughout the life of the service. Service Design School of Science, Engineering & Information Technology 22 Business requirements change over time and generate the need for further improvement. This means that even an organization with mature service design processes will need to make changes to services throughout their life. Service design has an important role to play in supporting continual service improvement and is as important for managing changes to existing services as it is in designing new services. Service design must consider the impact of its activities on the overall services, systems, architecture, tools and measurements in order to minimize the potential for disruption when a new or changed service is introduced. Service Design (Cont.) School of Science, Engineering & Information Technology 23 Good service design provides: Lower cost services because of the lower support and enhancement costs, leading to lower total cost of ownership. Services that consistently provide the required level of quality and alignment to business and customer needs. Faster