ITIL is a de facto standard for IT service management. However, service management per se is based on certain management basics that need to be well understood before I start to explain the specifics.
In this chapter, I will introduce a number of service management concepts. These concepts are generic, and whether or not you are dealing with ITIL, you probably either have already used them or will soon start using them. This chapter lays the foundation for understanding ITIL.
2.1 Utility and Warranty
ITIL has something to offer to IT professionals from all technical and management areas. The concepts of utility and warranty are dear for those who are geeks by nature and academics at heart. ITIL derives heavily from digital electronics , so if you can read the circuit, you will pretty much understand the logic. Figure 2-1 diagrams the logic of the utility and warranty of ITIL.
Figure 2-1. Utility and warranty logic diagram
Chapter 1 discussed IT service. A service provides value to the customer; nothing more, nothing less. The value is seen by the customer, not just as defined by the service provider. A service provider may embellish the features of a service by uplifting its capabilities and downplaying its competitors. At the end of the day, this is a marketing tactic. But what counts is what the customer perceives about the service that the service provider has to offer. The customer may not buy into all the facts and figures and, based on the customer’s previous experience, they might downplay a service.
For example, a lawn mowing company might claim to provide unparalleled lawn mowing service , where the lawn will be mowed within the agreed timeline, the length of the grass will be even across the yard, and the service provided will be noiseless and hassle free. But the customer has used this service provider once before and knows that some of the things claimed are to taken with a grain of salt. So, here, the customer sees value in this service from his standpoint but not from the way the service provider projects it.
2.1.1 Elements That Create Value
Value is created from a service. I have already discussed IT service in Chapter 1 and described its value proposition. To break it down further, let’s say that it creates value only if it is fit for the purpose and fit for the use. Most of the time, these terms are used and abused in IT organizations without anyone knowing the actual meaning of them. So let’s try to understand what these two terms actually mean. Figure 2-2 presents a diagram of this concept.
Figure 2-2. Value creation logic gate
Fit for purpose refers to a service’s functionality . Does the service come with all the features and functions that it is supposed to carry? Does the service meet all the functional requirements? If yes, then one of the inputs into the AND gate will be TRUE, and that takes us one step closer to creating value. A mobile service provider’s core service is to provide the ability to talk over cellular phones. If this is achieved, then we can consider it fit for purpose.
On the other hand, fit for use refers to the ability to make use of the service functionality. Through the service functionality , you are given the capability to achieve certain outcomes. But can you make use of the service? If you can, this input to the AND gate will be TRUE. If fit for purpose is also TRUE, then you create value. If any one of the inputs is FALSE, then value cannot be created. It’s like having a mobile network and a capable mobile instrument but lacking sufficient bandwidth to allow you to slot your calls through. It’s like having a top-notch, state-of-the-art television set but no electricity to run it.
Creating value is represented through an AND gate . Refer to Table 2-1 to help you understand when the value is created.
Table 2-1. Creating Value Through the AND Gate
Fit for Purpose | Fit for Use | Value Created? |
|---|---|---|
TRUE | TRUE | YES |
TRUE | FALSE | NO |
FALSE | FALSE | NO |
FALSE | TRUE | NO |
2.1.2 Utility of a Service
The utility is the functionality offered by a product or a service to meet a particular need.
The logic diagram in Figure 2-3 shows an OR gate for the utility part of a service .
Figure 2-3. Utility of a service
For a service to be fit for purpose, it needs to meet any one (or both) of the following criteria:
Performance supported
Constraints removed
These criteria are represented through an OR gate, and Table 2-2 provides the conditions when the service would be fit for purpose.
Table 2-2. Conditions for a Service to Be a Fit for Purpose
Performance Supported? | Constraints Removed? | Fit for Purpose? |
|---|---|---|
TRUE | TRUE | YES |
TRUE | FALSE | YES |
FALSE | FALSE | NO |
FALSE | TRUE | YES |
For a service to create value, it needs to meet certain criteria. One such case is its performance . A service must inherently improve the performance of the business outcomes that the customer desires. For example, a mobile phone service must provide the customer efficiency to enable better communication.
The second criterion for which fit for purpose is applicable is the constraints that can be removed through the service. If the service can remove the barricades for a customer, it might fulfill the terms of the service being fit for the purpose. The mobile service provider, by providing the ability to make calls while you golf, removes the constraints that usually would exist if you had to stop midgame, head back to your office, and make the call. In this instance the constraints have been removed through the service the mobile phone offers.
For a service to be fit for purpose, it should boost performance or remove the constraints. If it can do both, even better.
2.1.3 Warranty of a Service
Warranty provides assurance that a product or a service will meet its agreed requirements.
Warranty comprises four parts :
Is the service available when needed?
Is there sufficient capacity available?
Is the service continuous?
Is the service secure?
All four criteria must be met for the service to be fit for use. This is represented through an AND diagram , as shown in Figure 2-4.
Figure 2-4. Warranty of a service
Table 2-3 provides the criteria for ensuring that the service is fit for use. It is not complete for all permutations and combinations. The AND gate provides a FALSE output whenever any of the inputs are FALSE.
Table 2-3. Criteria for a Service Fit
Available Enough? | Capacity Enough? | Continuous Enough? | Secure Enough? | Fit for Use? |
|---|---|---|---|---|
TRUE | TRUE | TRUE | TRUE | YES |
TRUE | TRUE | TRUE | FALSE | NO |
TRUE | TRUE | FALSE | TRUE | NO |
TRUE | FALSE | TRUE | TRUE | NO |
FALSE | TRUE | TRUE | TRUE | NO |
In the following illustrations, I provide examples for each criterion that needs to be met for the service to be fit for use.
2.1.3.1 Available Enough?
You subscribe to a cell phone service and pay a premium for that service. You are now head out on holiday. When you reach your resort, you are flabbergasted to see that the mobile service provider does not have coverage inside the resort. Is the service providing you any value, although the provider claimed to provide many features? Definitely not!
2.1.3.2 Capacity Enough?
You are stuck in a traffic jam. You want to call your partner to inform him that you wouldn’t be joining him for dinner, thanks to the awful city traffic. You have service coverage, but the call does not go through. The service provider does not have sufficient capacity to handle calls from that particular cell tower. Even though there is coverage, if you are not able to make calls, is the service adding value? Nope.
2.1.3.3 Continuous Enough?
You are in the midst of the telephone round of an interview for a company based overseas. The call drops every few minutes, distracting you from the ideas you want to state and thereby causing you to lose your train of thought. The service has coverage and sufficient capacity, but is it giving you the value you perceive? Heck no!
2.1.3.4 Secure Enough?
You are calling your human resources department to discuss the appraisal your manager has given you. How would you feel if the conversation you are having from the confines of your home, with the HR person on a different continent, is accessible over the cloud by your manager? Is the service giving you value? You know the answer.
To sum up from these example, for the cell phone service warranty conditions to be met, the service must be available, have sufficient capacity, must be continuous, and must be secure. Without any one of these elements in place, the cell phone service is not fit for use and does not add value.
2.2 Assets, Resources, and Capabilities
Earlier I mentioned the functional aspects of a service that create value for customers. Now let’s look at the practicalities that support creating value from services. Figure 2-5 illustrates the various resources and capabilities that typically contribute toward creating value from services.
Figure 2-5. Resources and capabilities
You need both resources and capabilities to create value from services.
2.2.1 Resources
Resources are direct inputs that are needed upfront to create value. Resources generally include:
Financial capital: Think of it as the seed money needed to start a business to deliver services.
Infrastructure: Various IT and non-IT infrastructures that contribute toward service creation (servers, routers, offices, data centers, etc.).
Applications: The many applications that you need to leverage to create a service (analyzer tools, BI, accounting, auditing tools, etc.).
Information: The basic information needed to start a service, like what the requirements are, who is looking for what kind of service, etc.
People: The most important component of a service. In this case, I am not referring to the skill sets but rather the manpower needed to carry out service activities.
2.2.2 Capabilities
Capabilities are a direct representation of an organization’s maturity, history, and its experience. It is driven mainly by components that are impalpable such as experience, leadership, and knowledge. The main components of capabilities are:
Management: A company driven by good management skills, extracting profits, brand value, and customers by motivating the resources in the right direction.
Organization: Much like management, where the organizational skills come in handy in using the time, energy, finances, and people and turning them into something of value.
Processes: The building blocks of a service; they need to be at their optimal best, structured around ruggedness, and bound by objectives.
Knowledge: Companies mature just like individuals do with experience. A company’s knowledge and experience in dealing with various situations and the capabilities that are needed to provide solutions make it an apt component of value creation.
People (again): Under resources, we considered people by themselves, but under capabilities, it is the skill sets of people that are the focus. In this case, people’s maturity, technical and managerial capacity, and experience make up the capabilities.
2.2.3 Assets
Each of the items discussed under resources and capabilities are generally called assets.
If these assets (resources and capabilities) contribute toward designing and running a service (thus creating value), they are referred to as service assets. Examples of service assets are infrastructure, networks, applications, and the organizational leadership that provides direction and governance.
When the resources and capabilities are leveraged by a customer to achieve business outcomes, these resources and capabilities are referred to as customer assets. Examples of customer assets are people (both as a resource and capability), applications, and processes. Note that it is highly likely that service assets and customer assets can be the same, as the same set of assets are leveraged to deliver services to a customer (service asset) and are leveraged by a customer to achieve business objectives (customer asset).
Asset: Any resource or capability.
Service asset: Any resource or capability used by a service provider to deliver services to a customer.
Customer asset: Any resource or capability used by a customer to achieve a business outcome.
2.3 Types of Service Providers
A service provider is someone who provides service to the customer. In today’s world, the person offering the service could be embedded in your team or your organization or an outside entity.
In ITIL, and in this book, when I refer to the term service provider, I am referring to the nuance of an entity delivering service , and it is applicable to each of the service provider types that I am going to discuss.
2.3.1 Type 1: Internal Service Provider
The first type is an internal service provider. When I say internal, I am referring to the service provider organization that is embedded inside business units. The service provider is exclusive to each of the business units.
Business units are also referred to as towers (or verticals) in an organization. Examples include a banking business unit, a retail business unit, and a research and development business unit. So, in each of these business units, a service provider team exists. In this structure, an organization will end up having as many service provider teams as the number of business units.
Pros: The service provider is localized to the business unit and the customers can expect personalized service. This structure allows the service provider to be aware of the business unit’s requirements, expectations, and unstated needs. This is a distinct advantage in servicing the customer.
Cons: The financial side of things will not look pretty. This is an expensive proposition for an organization as the organization decentralizes the service provider organization by setting up multiple service providers (one each in a business unit).
2.3.2 Type 2: Shared Service Unit
Let’s say that an organization has multiple business units, and each business unit has an IT team sitting inside it. If the organization were to pull the IT teams out, centralize them, and reallocate responsibilities to the centralized team to cater to all of the business units, you would be looking at a type 2 shared service unit kind of a service provider.
Pros: Shared service units are more economical versus internal service providers. Centralization helps optimize the manpower, infrastructure, and the applications needed to deliver services.
Cons: Customers will start to miss the personalized service that is available with the internal service provider. This may lead to possible gaps between expectations and reality.
2.3.3 Type 3: External Service Provider
Outsourcing has been in vogue for a couple of decades, and it is the way of the present and the future. In this type, the service provider it outside your organization but does everything the same as an internal or shared service provider would.
Pros: Outsourcing works for the simple reason that businesses can concentrate on their core activities and let someone else take care of IT. And, it is also evident that delivering services through external service providers is an economical option as compared to hosting your own service providers. When you are a customer, outside the organization, you can demand what you want and how you want it. If the service provider is inside your organization, the process might not go as smoothly simply because of the office politics at play.
Cons: More often than not, your service provider might communicate in a way you are not used to. This might have made some people uncomfortable a few years ago, but is not as much of a factor today.
2.4 Types of Services
Next up on the list are the types of services that exist. Let’s dissect it from a higher altitude and identify the boundaries that exist.
Figure 2-6 shows three subsets of services . This is the area of focus in this section. The customer is still in view as well. I discussed this role enough already, so the customer has the basic roles of enjoying the services and paying for it.
Figure 2-6. Types of services
A service can be divided into three components:
Core service
Enabling service
Enhancing service
2.4.1 Core Service
A core service is at the heart of the service that is delivered to the customer. It delivers the basic outcomes that the customer is interested in. The value representation for the customer starts with the core service, and it drives the money the customer is willing to pay for.
Example: I signed on with a cellular service provider to make and receive calls on the go. The most basic service that a cell phone service provider offers is the ability to make and receive calls. This is the core service.
2.4.2 Enabling Service
For the core service to work, you need services that can support it. These services are the enabling or supporting services. Enabling services are generally not customer facing, and the customer may or may not see them. The customer does not pay for them individually, but the payment that goes toward a core service gets back charged internally for the enabling service.
Example: Sticking with the cellular service example, what services do you think are needed to support the core service: making and receiving calls? 1. A service for installing and maintain cell towers. 2. A network service for routing your calls. 3. Software service for accounting and billing. This list could get pretty long. I hope you get the idea. All the aforementioned services work in the background and exist to support the core service, without which, the cell phone service may not function like it should.
2.4.3 Enhancing Service
Enhancing services provide the excitement factor to the customer. They add on to the core service, providing a number of services that most often excite the customer into paying more for the service. The enhancing services on their own may not function, so it is necessary for them to be piggybacked on the core service for their deliverance.
A core service can exist without enhancing service but the reverse is not possible. But the presence of enhancing services differentiates the service provider from others in the market.
Example: I can make and receive calls. Okay. What else? When I looked at the service brochure, I was more interested in what else the service provider could offer as the calling part was a given. I was offered 4G Internet, Internet hotspots around the city, voicemail, SMS, and others. These additional features helped me make my decision in choosing the service provider.
2.5 Contracts and Agreements
There are contracts and agreements that exist between various entities in the service management world. It is a formality that helps set the expectations and, in some cases, legally binds them to it. In a generic sense, an agreement is a formal understanding between two parties and a contract brings legality into the picture. A contract may be appended to an agreement to legalize the underlying expectation. Let’s look at the types of agreements and contracts that are normally used in IT service management.
2.5.1 Service-Level Agreement
A service-level agreement (SLA) is a formal understanding between the service provider and the customer. It defines the customer’s expectations in terms of the service levels. The document is usually drafted, agreed to, and signed by signatories from both sides of the table. Figure 2-7 illustrates the service-level agreement.
Figure 2-7. Service-level agreement
Example: When I signed on with my Internet service provider, I was given the following SLA:
Internet speed: 100MBps for wired connection
Resolution response: 6 business hours
Issue resolution: 16 business hours
My service provider was basically setting the expectations by stating that I would get a minimum of 100MBps when I connect my laptop directly to their fiber optic line. If I report an issue, such as loss of Internet connection or slow speeds, they were allowed a maximum of six business hours to respond to my request and 16 business hours to resolve the issue. These are published on their web site, and even in the e-mails that I received. Through the SLA, the serviceprovideris setting an expectation on when the services will be back up.
2.5.2 Operational-Level Agreement
Operational-level agreement (OLA) is similar to SLA, except that it’s signed between a service provider and another entity within the same organization. The agreement exists to facilitate the provision of services to the customer, as shown in Figure 2-8.
Figure 2-8. Operational-level agreement
Example: The OLA exists to support the SLA. In the example provided for SLA, if the customer is expecting resolution in under 16 business hours, the service provider must have OLAs that are aligned to it.
One form of the OLA could be:
Service desk will spend no more than two hours to resolve the issue.
If service desk is unable to resolve the issue within two hours, then the incident gets escalated to the Level 2 support team.
The Level 2 support team has ten business hours to resolve theincident. If they are unable to do it within that time, the incident gets escalated to the Level 3 support team.
The Level 3 support team is expected to be the expert in resolution, and they are given six hours to resolve the incident.
The idea behind setting the OLAs in this example is to ensure that the SLA is adhered to.
2.5.3 Underpinning Contract
Underpinning contracts (UC) are signed between service providers and suppliers. The suppliers include those who deliver products or external services. The service or products sourced from the suppliers support directly or indirectly the delivery of service to the customers. This contract documents the targets that are to be achieved by the supplier. It also provides the supplier’s and service provider’s responsibilities in the context of receiving services and products from the supplier. The UC targets must be aligned with the SLA targets that are defined and agreed to with the customer. Figure 2-9 provides an illustration.
Figure 2-9. Underpinning contracts
Example: In the same example, let’s say that a component needs to be replaced. So the service provider needs to have a contract with a multiple hardware supplier(s) to meet the SLA agreed with the customer. The SLA might state that the maximum amount of time that can be taken to fix the breakdown is four hours. To make this happen, the service provider agrees to a UC with thesupplierto delivery the component within two business hours to ensure that the component can be replaced and services be brought back up before the four-hour deadline.
2.6 Practice Exercises
Which of these statements are correct?
Utility of a service is fit for use.
Warranty of a service is fit for purpose.
i and ii
i
ii
Neither i nor ii
Who are the customers for type 1 service providers?
External customers
Suppliers
Entire organization
Entire business unit
For a service provider who provides cable TV, what type of a service is the cabling?
Enabling service
Enhancing service
Business service
Core service
What does an IT service offer customers?
Value and outcomes
Contracts and agreements
Customer service and technology
Processes and functions
A service-level agreement is signed between which of these two parties?
Customer and supplier
Supplier and service provider
Service provider and customer
Customer and government
2.7 Summary
In this chapter, I touched on various management topics that are not unique to ITIL alone. These included the concept of creating value through utility and warranty and the various components (assets, resources, and capabilities) that create an IT service. Further, I discussed the three types of service providers and the three types of services. Lastly, I described the various agreements that exist in IT service management: SLAs, OLAs, and UCs.
In the next chapter, you will be introduced to the ITIL service lifecycle, which consists of five distinct phases.