A strategy delineates a territory in which a company seeks to be unique.
—Michael Porter
A strategy can make or break a company’s present and future. All companies need direction to be governed and directed in the path that brings value to the customer and sustenance to the service provider. In this chapter, I will discuss the service strategy phase in detail and all the associated processes.
A strategy is nothing but a plan, a plan for a company to survive, grow, and accomplish the set objectives. Likewise, in the IT service management industry, an IT services organization requires a strategy to develop and offer services to its customers. These services must cater to the customer, as well as the well-being of the service provider organization.
The official definition of ITIL service strategy defines how a service provider will use services to achieve the business outcomes of its customers, thereby enabling the service provider to meet its objectives.
4.1 Purpose of Service Strategy
Why does service strategy exist? Why does any other strategy exist? If you are a student of finances and understand business, you know that any business exists for the purpose of making money and expanding the company. In an IT services organization, the business grows by offering services that customers want to buy. Customers buy services that help them, either personally or through servicing their customers. For the customer, the service offered must meet their requirements of value, if not, the customer goes elsewhere.
If you were to procure the services of an Internet service provider, you might realize that after using the services for a month it is not meeting your needs in terms of speed and latency. You then are bound to look for an alternate Internet service provider who can meet your expectations. The world of IT services is all about meeting customer’s requirements, ensuring that the customer derives value from the delivered services and thereby growing the coffers of the IT service provider organization.
To understand the purpose of the service strategy better, let me introduce the concept of the four Ps that provide a framework for the service strategy. This concept was defined by Henry Mintzberg in 1994. The four Ps of service strategy are:
Perspective
Positions
Plans
Patterns
The purpose of service strategy is to define the perspective, position, plans, and patterns that a service provider needs to be able to execute to meet an organization’s business outcomes.
4.1.1 Perspective
Perspective gives the service provider organization the direction and the vision in developing IT services. It states what the company’s focus is going to be. It provides directions on how the company will be viewed and how the services will be offered.
In the airline industry, for example, Cathay Pacific is viewed as an airline where the service offered by its cabin and ground crew is exemplary.
4.1.2 Positions
Position provides the strategy around competing with others in the industry. It provides direction on how the company would differentiate itself from others and how it is going to position itself in taking on competition. The service provider could teeter off anything that glistens in the eye of the customer; it could be low cost, excellent service, or a wide range of services to choose from.
For example, Jetstar Airways in Australia is viewed as a low-cost air carrier that has an excellent safety rating. People are aware of the limited amenities on the flight, yet they prefer to fly on Jetstar for financial and safety reasons.
4.1.3 Plans
This one is straightforward. Plans describe the actions that need to be taken for the company to reach its goals from its current position. Plans look at the perspective and positions as the end goal and chart the strategic activities for reaching it.
All organizations typically come up with plans and goals to achieve in the next quarter, next year, and in five years to come. These plans and objectives are dictated by the company’s board members. Such plans act as a guiding star for all the upcoming organizational activities.
4.1.4 Patterns
The plans that are set forth may not be a one-time activity. A plan needs to be repeated and duplicated over a period of time, such as reaching out to customers with a marketing campaign over a period of time with appropriate gaps.
Patterns are critical for an organization’s survival. One such example is the timing for when consumers buy certain products. In the United States and other Western countries, Christmas is the time when people shop like no other time. So, organizations plan to launch their products just before Christmas. Typically, you will see Apple release their products during the September to October period.
4.2 Objectives of Service Strategy
Service strategy as a phase has specific goals and objectives to achieve in order for the service provider organization to become competent and a major player in the market. The following are the objectives of service strategy:
Define the strategy for the service provider organization and provide direction for the company to head toward.
Identify which services are going to be developed as a part of service offerings.
Identify the customer base.
Roadmap for identifying and exploiting market opportunities in the IT service industry.
Plan to obtain funds for developing services.
Plan on how services will be delivered to the customer.
4.3 Value of Service Strategy
The whole premise of ITIL is creating value for the customer through IT services. Value blooms from the seeds sown in the service strategy phase. When I say value, it can be interpreted in a number of ways and is highly subjective. Value to one customer may not be value for another. Value is defined from the perspective of the customer. So, the customer’s perception of value dictates the well-being of the IT service management organization.
Service strategy can influence the customer’s perception of value by:
Being proactive to customer’s demands rather than reacting to increased loads.
Understanding customer’s explicit and implicit needs and delivering on both counts.
Making certain that there are competitive advantages for the customer.
Ensuring that the customer makes a positive return on investment on the IT services’ costs.
Opening a transparent communication channel between the customer and the IT service provider to ensure that the implicit requirements don’t fall through the cracks.
4.4 Value Creation
How do you know that you have created value for the customer through IT services? There is no easy answer for this. Perhaps, if you were running a courier company, you could have confidently claimed that you delivered the tendered papers to a government organization, there were no delays, you charged economically, and you have quantified value to your customer.
What if you are running a service whose value cannot be quantified, like an insurance company where customers haven’t yet filed claims? How will the customer know that you have created value? You could say that you have given your customers peace of mind by covering all eventualities. But, the reality is, you don’t know if the customer has perceived your definition of value.
So, in effect, whether value is created for the customer is judged and perceived by the customer. The service provider, at best, can research his customers and come up with possible solutions that can make the customer happy. And in the end, he still cannot be sure that value was created for the customer. This is due to the fact that value is always measured through the eyes of the customer. However, there are two other components that define value apart from customer perception. They are illustrated in Figure 4-1.
Figure 4-1. Components of value
Service strategy defines value based on three components:
Business outcomes
Customers’ preferences
Customers’ perception
Value is defined not only strictly in terms of the customer’s business outcomes; it is also highly dependent on the customer’s perceptions and preferences.
The value depends on what the business is able to achieve as a result of the services that you provide. If the service does not meet the customer’s preferences, then it is not in tune with what the customer expects. Lastly, customers’ perception matters. It is the customer who must see the value; it cannot be measured, and it can only be understood by the customer.
Perception is a funny thing. It may depend on a number of factors such as the various bells and whistles that a service comes plugged with, the service provider’s track record, the service provider’s brand value, the customer’s self-image, and the customer’s past experiences with other service providers. So, from this list, you can see that the service provider is not at an advantage when it comes to the perception component of value, as things that are out of their control seem to dictate the value proposition. The best the service provider can hope to do is influence the perception toward positivity. Figure 4-2 illustrates how the customer perceives value from the delivered services.
Figure 4-2. Perception of value
The first vertical bar from the left is the reference value for the customer. This is the benchmark that the customer has set, based on the current engagements or DIY (do it yourself) strategies. The bar next to it indicates the positive difference that the service has provided. An example could be HD streaming that the customer is able to enjoy, thanks to high-speed Internet. The world is not without problems. When the Internet goes down or acts erratically, it leaves a bad taste in the customer’s mouth. This leads to negative difference resulting from the service. These are the perceived losses from utilizing the service.
The difference between the positive and negative differences is the actual value, as perceived by the customer. The overall economic value of a service is the difference between the positive and negative differences, plus the reference value that the customer has set.
4.5 Patterns of Business Activity
IT services are aligned with business activities. Business activities in turn are aligned with business outcomes. In other words, IT services drive business activities and business activities deliver business outcomes.
Whenever business activities are performed, IT services are expected to deliver. This cycle generates demand for IT services, and when IT services are leveraged, customer assets are utilized. The customer assets are generally leveraged in a pattern.
For example, in a bank, there are month-end activities that are run on the last day of the month. These activities in turn bring about special focus for the people involved, additional activities they perform, additional load on the IT infrastructure, usage of applications, and a host of other activities.
To support the business activities, an IT service provider must understand the patterns of business activity to ensure that:
All people resources are fully available.
Infrastructure is error free.
Sufficient network bandwidth and storage space are provided.
Escalation channels are in place.
In effect, the month-end activities present a pattern of business activity (PBA) and are dynamic in nature. It is also important to note that the same set of services cater to various PBAs. In the same example, the infrastructure support caters to month-end activities as well as the daily routine activities. Since the same services support multiple PBAs, it is critical that they are well understood and planned for.
4.5.1 PBA with Example
Let’s say that a customer hires personnel based on a number of factors, such as attrition due to appraisals, salary hikes, customer deliveries, new projects, etc. The service provider is tasked with providing all IT services to employees when they are onboarded.
Figure 4-3 illustrates the hiring pattern. It has a couple of dips, once in mid-year and the second during Christmas. Otherwise, the pattern ascends and descends between the troughs.
Figure 4-3. Hiring pattern for a customer organization
The service provider needs to provide IT services when employees are onboarded. This includes laptop provisioning, creating e-mail addresses, login ID creation, and access to business applications. The service provider can provide IT services if he is aware of the patterns of the business activity, in this case hiring. When he knows the pattern, he can plan ahead and order the necessary hardware, software, and plan respective IT activities around the pattern.
Let’s say that the service provider is unaware of the PBA. He will be forced to work reactively during the peak months by placing hardware orders and mobilizing IT resources at the twelfth hour and breaching all the SLAs pertaining to IT provisioning. Likewise, if the service provider can build PBA profiles for all the customers, he will be better placed to plan IT activities well ahead of time and to mobilize resources in time.
4.6 Risk Management
The greatest risk is really to take no risk at all. You’ve got to go out there, jump off the cliff, and take chances.
—Patrick Warburton
Risks are inherent in every business, including the business of providing IT services. The world’s most popular entrepreneurs wouldn’t have reached peaking heights if they hadn’t taken risks at various instances. An IT service provider has to take risks in order to come out on top.
When a service is conceived, it comes inherent with risks. They cannot be avoided. The smart thing would be to identify and manage them. It is like harnessing the sun’s rays for power generation rather than staying indoors during the day.
A risk is a possible event that could cause harm or loss or affect the ability to achieve objectives.
There are two parts to risks:
The first is being pro-active and assessing risk. Based on the assessments, mitigation activities are planned and implemented.
No matter how pro-active an organization is, it may not be able to avoid the risk triggers (e.g., economic recessions). For such instances, risks need to be managed when they materialize.
4.6.1 Risk Assessment
Planning plays a major role in ITIL and it involves assessing risks before they materialize. It is an exercise that needs to be done at various stages of the service lifecycle. In most organizations, there are separate risk management teams that think of the worst possible thing that can happen to an IT service and start mapping it out with the impacts and the possible mitigations that can be achieved. Who said there is no place for pessimists in ITIL?
Under assessment of risks, there are two major activities:
Risk identification
Risk analysis
4.6.1.1 Risk Identification
Risks have to be identified before they happen. The best way to do this is by having brainstorming sessions with all stakeholders. When you brainstorm risks, just start listing them out. It could be as silly as the janitor tripping over power cables in the datacenter. Well, it’s not silly really, as there have been instances of it that have been widely case studied.
After identifying the risks, add a column for identifying the possible impact coming from the risk. For the janitor tripping over power cables, the impact is not primarily servers shutting down, but the impact that the customer faces, say web sites going offline or business applications losing connection to databases.
The placeholder for this information is a risk register. It is a fancy name for the spreadsheet or Word document where all the identified risks are recorded.
4.6.1.2 Risk Analysis
After you think you have identified all the risks (which is impossible), add another column next to the risk to identify the probability that the risk could materialize:
Datacenter losing power during janitorial activities: Low
End users losing connectivity to business applications: Medium
Employees taking sick leave in December: High
Also, you would expound on the potential impact that you identified in the previous activity—risk identification. There are two ways to analyze an impact: quantitative and qualitative. In one column, you could quantify the impact by providing numbers for the impact, such as 100 users impacted and losses amount to $10,000. In the next column, you can describe the impact in words, the things that cannot be quantified. Such as the company losing the brand image and facing legal action from customers.
The next item on the agenda to analyze is the mitigation actions. For every identified risk, you need to come up with a plan to mitigate it. Remember that you cannot avoid all risks, so you need a concrete plan to handle them when risk events are realized.
4.6.2 Risk Management
Risk management is twofold: pro-active and reactive, with the emphasis being on being pro-active.
Reactive risk management is straightforward. You have a risk register that lists all the risks against the mitigation actions. When it happens, whoever is in charge needs to take mitigation action and see it through the day. Nothing fancy about it, but it’s a necessity.
Pro-active risks can be managed by reviewing the risk register regularly. Basically in this activity, smart people in the room look at every risk and the probability of it happening and review if it is still the case. If the probability has changed, the risk register is updated. It is possible that the janitor tripping over the power line is no longer a risk one year after it was recorded, as janitors are no longer allowed to enter datacenters. Perhaps air quality issues where resolved because there is a new technology in place that automatically sucks all the dust through its ducts, and the air conditioning comes with improved air purifying filters that ensure 99.99% dust-free air.
Risk management overall is an interesting activity. Although you play the devil’s advocate, it helps you understand the stability of the service and keeps you better prepared for the worst to come. As the adage goes, expect the best and plan for the worst.
4.7 Governance
Governance is a way of organizing, amplifying, and constraining power.
—Rebecca MacKinnon
IT must be tightly aligned with the business to ensure that the business gets what it needs. Governance helps IT service providers achieve this alignment. In fact, governance is perhaps the only thing that brings the customer and the service provider under the same umbrella and achieves synchronization.
The alignment is brought about by defining common vision, policies, processes, and the governance structure for regular engagements.
Governance ensures the service provider’s strategy is in sync with the customer. It ensures that there are sufficient touch points and control mechanisms to define the processes, roles, responsibilities, and measurements. They police the implemented processes for compliance and adherence.
The lack of governance leads to chaos. The business does not get what it wants, because the policies and processes would not be defined based on its needs. It would be a matter of time before things start to wrap up and end the business relationship. In the IT service management world, lack of a proper governance model has been identified as the major reason for failure to deliver on contractual obligations, leading to loss of the customer base.
4.8 Service Strategy Processes
There are five service strategy processes in the ITIL 2011 version. These processes are aligned to the service strategy phase’s objectives and are aimed toward providing guidance for the service provider to strategize, govern, and manage the outcome of the services. However, for the ITIL foundation examination, three processes are in scope:
Service portfolio management
Financial management for IT services
Business relationship management
I have touched on some concepts pertaining to the two processes that are omitted from the ITIL Foundation syllabus in the preceding sections. These processes are:
Strategy management for IT services: I explained the concept of value that comes out of this process.
Demand management: Patterns of the business activity concept are tagged under this process.
All the service strategy processes will come into play across the service lifecycle, although it has been explicitly mentioned under the service strategy phase.
4.8.1 Service Portfolio Management
A portfolio is a collection of assets. A financial portfolio is a familiar term where in all the assets we own, such as shares, money in the bank, and bonds, among others, are collectively addressed by the term. Likewise, in the IT service management world, a service provider’s assets are the services that it has in its repertoire. These services are known as the service portfolio; I will explain this further in the next section. Management of the service portfolio is the essence of service portfolio management.
The service portfolio is the asset that makes or breaks the service provider. It is the only arrow in the quiver that will differentiate one provider from the other service providers in the market. It is the only reason why customers would do business with a provider. In short, it is everything!
Portfolio management is the process where the service provider starts to take shape. It defines what services can make it to the assets, based on the business outcomes and the strategic objectives. Furthermore, the process provides guidance around measuring, tracking, and monitoring the services.
4.8.1.1 Service Portfolio
The service portfolio is a database that consists of all the services in various stages of its lifecycle. It represents where the investments are made, across various markets and all customers. It consists of services that are in use, that are retired, those getting developed, and those undergoing improvements. In all, it provides a bird’s eye view into the service provider’s assets—the services.
There are three parts to a service portfolio, as represented in Figure 4-4:
Figure 4-4. Service portfolio
Service pipeline
Service catalog
Retired services
4.8.1.1.1 Service Pipeline
The service pipeline is a subsection of the service portfolio that consists of all services that are under development, including the ones that are in the conception stage. It also represents where the majority of new investments go in. This list is generally not visible to the customer, except when services are nearing the end of development stages and entering into testing and pilot phases. This helps service providers get assured business even before the service is implemented.
To state an example, a service provider who is in the business of mobile phone service has to launch new services every few months to stay competitive and ahead in the market. If it is developing new services, the provider may not want its competitors to have knowledge of the new service. Ideally, it would like to inform the market once the service is ready to be launched. That’s when the competitors would learn about it as well, most likely too late for them to react and start matching services.
For this example, the mobile phone service provider needs to create new services fairly regularly to stay competitive. This is perhaps true for all service providers in other areas of IT as well. Every company must apportion some of their budget toward creating new services and improving existing services. If new services fail to kick off on a regular basis, the service provider will soon find itself in the back of the line and playing catch up for the rest of its lifetime. This showcases the importance of the service pipeline and the criticality it brings to the table.
What are some of the triggers for creating new services or improving existing services? Here are some:
Feedback regarding existing service
Customer requests for a new service
Competitors launching a new service
Service provider has new strategic objectives
New technological advancements
Lack of outcome from existing services
4.8.1.1.2 Service Catalog
The service catalog is the database of all services that are currently available. The service catalog is visible to the customer, in fact, the service provider will showcase it every time he sits down with the customer in order to get new business.
Service catalog is discussed at length in Chapter 5. Service catalog management is a process that resides in the service design phase. However, as the service catalog is an integral part of the service portfolio, I will discuss the topic here and connect it to the interfacing databases.
A service catalog is like a restaurant menu. It has all the live services listed, including the ones that are going to be live in the near future. For every listed service, there a brief description of what the service delivers, how to request it, who to contact, and, most importantly, the cost of availing the service.
The services listed in the service catalog are in the operational phase, in the sense that the service has been fully developed and is working as per the design. There could be improvements to the service, but they are not made public unless they are ready for deployment.
Imagine you head to a restaurant and glance through the menu items: appetizers, entrees, soups, meals, desserts, etc. All the items listed are available for delivery. They would not list items in there that are not delivered, right?
It is common for a service provider to maintain multiple service catalogs, depending on the customers and market spaces. For example, a service provider may rank the customers as gold, platinum, or diamond and provide varied services, with differentiating SLAs and cost points.
4.8.1.1.3 Retired Services
Services once conceived, developed, and operationalized will not run forever. Everything has a shelf life, and it’s the same case with services too. Some services move out of the service catalog into another database called retired services. This repository contains all the services that have been disengaged. This is not visible to the customer, unless they specifically ask for it.
There are a number of reasons why services get disbanded:
Technological advancements bring in new services, and new services replace the existing ones
Lack of interest from customers
Operationalizing services does not meet the financial objectives of the service provider
Legislative ruling could bring an end to services, like Voice over Internet Protocols (VoIP) in certain countries
It is also worthwhile thinking about why we need to maintain an additional database featuring all the retired services. Here are some reasons to do so:
Rule of the land might impose keeping records of all retired services
Legislative policies can change and bring some services back to life, like VoIP
New services that replaced the existing ones are not meeting business objectives, so there is a dire need to fall back to the old and tested (also a popular Hollywood theme where antiquated soldiers are better than the new breeds)
Recycling is popular with services too. New services might leverage certain parts of the older services to deliver outcomes. Why reinvent when you can rebadge?
4.8.1.2 Objectives of Service Portfolio Management
Service portfolio management exists to support the service provider in creating the right mix of services that make them competitive and attractive and achieve business outcomes. It also ensures that the investments are getting tracked, and if there are any services that are not generating income or not achieving business outcomes, then providing guidance toward retiring them.
The overall objectives of the service portfolio management are:
Before a service gets developed, there is a lot of analyses and investigations that are done to ensure that the right services that generate regular income and provide business outcomes are incepted. This is the primary objective.
Manage the portfolio of services that are offered to customers.
Track investments across the lifecycle of a service to ensure that the majority of the funds are going toward services that are bearing maximum fruits and achieving business outcomes.
Control what services are being offered, at what service levels, and at what level of investment.
Keep a finger on the pulse whether the services are on the path of strategic objectives of the organization and appropriately responding to events (like technological breakthroughs, market orientation, and customer preferences) appropriately.
Retire services that are no longer viable for the organization to continue maintaining.
4.8.1.3 Scope of Service Portfolio Management
All the services that are developed by the service provider, the services that are offered to customers, and the services for which customers pay for come under the scope of service portfolio management.
More specifically:
Services that are in the development stage
Services that are in the operational phase, offered to customers
Services that are no longer in use, retired
4.8.2 Financial Management for IT Services
Financial management for IT services is needed to do business. It is the process that enables the service provider to understand what is being spent, how much is being allocated, and what is being charged to the customers. This process has the highest visibility across the echelons of the organization. It is controlled by the top tier in the organization but it flows down to every nook and corner of the organization. Every single team in IT will have a budget to play with, need to account for expenses, and advise on charging the customer.
For example, if the service provider is providing technical support to a customer’s base, the service provider would have accounted for the number of PCs, servers, and other IT equipment that needs to be managed. A contract would be signed between the two parties listing the number of systems to be managed, at what costs, and at what levels, and how quickly the service provider can respond, resolve, and support the service.
Suppose the customer procures additional laptops and a couple more servers during the period of a contract; the service provider will have to charge the customer accordingly based on the updated numbers. Suppose computer administrators were asked to work through the night due to month-end activities; the service provider must charge the customer accordingly. This mechanism of keeping track of what services were offered, and at what levels, and quantifying them accordingly is one of the key objectives of financial management of IT services.
Going deeper, I would like to rethink the definition of quantifying the returns to the customer. In fact, the goal of this process is not only to quantify the money part but also to quantify the value that the customer generated due to the service. If the customer can get the visibility due to value quantification, he will be keen on appreciating the service that is helping his organization rather than believing that IT is a necessary burden that he needs to learn to live with.
4.8.2.1 Objectives of Financial Management for IT Services
Financial management is a complex process as IT services are measured and charged in small fragments, including pay as you use. For the scope of ITIL foundation, I will discuss the high-level objectives of the process. They are:
Evaluate financial impact due to new strategies being conceived of or changing for the existing strategies. For example, when IBM went from being a product company to a service organization.
Secure funding for developing new services and operating new services.
Budget the expenses for the organization based on the projected incomes.
Account for the money spent on various services, on various customer-related activities, and other administrative costs.
Comply with regulatory and legislative requirements by carrying out appropriate financial activities.
Charge the customers as per contracts and recover costs if any.
4.8.2.2 Scope of Financial Management for IT Services
The entire service provider’s organization comes under the scope of financial management. Generally, this process is handled separately by a team of finance experts, accountants, and legal experts with the process rolling up to the chief financial officer (CFO). For managing IT services, however, you need people who understand the service landscape, people who can speak the language of services and communicate better.
At a high level, financial management for IT services can be broken down into:
Budgeting: This is a process that involves forecasting expenses for a finite term. It involves understanding all the intricacies of the organization and understanding expenses coming from all quarters of the organization. Budgeting does not stop at creating budgets for the service provider but also controls the flow of money to these avenues.
Accounting: Once the budgets are set, expenses start to come in, usually from a number of channels, most expected and some unexpected. The accounting part of the process ensures that every penny spent by the organization is accounted for and is placed under a silo where it rightly belongs. At the end of the day, the beauty of accounting is to report the costs based on various factors, such as customers, services, departments, and administration.
Charging: The service provider is required to recover the costs by charging the customer on a regular basis. The terms and conditions for recovery are most often mandated by the contracts. In addition, there could be cases where additional charging needs to be made. The source of charging, therefore, comes from sound accounting practices.
4.8.2.3 Business Case
A business case is a documented justification for supporting decision making. Business cases are used when a business objective needs to be achieved, for which certain actions need to be taken. They may or may not involve costs.
This document brings out the potential benefits or consequences if the recommendation is to be ratified. Also they look at the benefits and consequences from both qualitative and quantitative perspectives.
A business case will generally contain the following sections:
Business objective to be achieved/problems to solve
Analysis and assumptions
Quantitative business impact
Qualitative business impact
Risks and mitigations involved
Recommendations
Business cases are different for every service provider, as every service provider is different and their business objectives and the corresponding business impacts differ as well. Also, the perspective or the lens through which they view problems can also be different. The commonality between the service providers hinges on the business impacts that the recommended action is likely to cause and the associated risks. An internal service provider may weigh the case in tight alignment with the business unit, whereas an external service provider may have eyes on the brand image and the financial impacts along with meeting the business obligations.
4.8.3 Business Relationship Management
Business relationship management (BRM) is a fairly new process to ITIL; although it existed in principle, it did not have a process on its own until the 2011 version. This process acts as a bridge between the customer and the service provider to ensure that the customer’s requirements are well understood and the services are delivering business outcomes.
There is another process under the service design phase called the service-level management (SLM) , which has existed for as long as I can remember. SLM links the customer on the service levels of the services and ensures that the services are delivered as per the signed contract. I will discuss the SLM process in detail in Chapter 5.
The process objectives for the BRM and the SLM are similar from a distance, but they differ in terms of what kind of touch points take place between the processes and the customers. BRM looks at the strategic and tactical levels, while SLM concentrates on the operational level. In essence, BRM acts as a big brother to SLM to ensure there is alignment between the processes and the list of items agreed to at strategic and tactical levels are materializing in the operations. The relationship between BRM and SLM in explained in detail in Chapter 5.
4.8.3.1 Objectives of Business Relationship Management
Do you remember the cartoon that depicts what the customer conceived as a deliverable and what the project actually delivered? Well, let’s just say that the customer wanted a monster truck and he got a tractor instead. This kind of mismatch can be avoided if there is a communication line open at the highest levels of echelon of the organizations, to understand the customer’s deepest needs and to meet those needs, rather than delivering just what is asked for. There are a number of case studies that suggest that business partnerships break not because of communication, but rather the lack of it. BRM plugs this gap.
These are the objectives of BRM:
Understands customer’s perspective of IT services delivering business outcomes, leading to prioritizing services and service assets.
Ensure customer satisfaction levels are at a high, which is a good indicator whether or not the service provider is fulfilling the customer’s needs.
Understand the customer’s business, customer’s pain points, and business drivers to facilitate services, providing value as the customer sees it.
Engage new and upgraded technology to serve the customer better with fitter service levels and quality of service.
Understand customer’s requirements for developing new services or changing existing services.
Manage conflicts where necessary.
Provide a path for the customer to initiate and lodge complaints if services are not up to the expected levels. This ensures that the customer reaches out to the identified chain of command rather than going after the customer’s favorites (usually the CEO).
4.8.3.2 Scope of Business Relationship Management
BRM is generally known as account management in most of the top service organizations. Each customer or a set of customers is assigned an account manager, depending on the size of the customer. The account managers are tasked with meeting customers on a regular basis, taking them out for dinner and drinks with the sole purpose of feeling the pulse of the customer and ensuring corrective actions if all is not well.
In the case of an internal service provider, it is unlikely that an account manager role is set up. One of the senior managers in the IT organization is tasked with putting on the hat of a business relationship manager and understanding the needs and pains of the customer’s business.
The following come under the scope of BRM:
The business outcomes that the customer wants to achieve through service providers
All the services that are offered to the customer, pitched to the customer, how, when, where, and other details of the service
Technological advancements that could potentially impact the existing services
Customer satisfaction levels
Growth of services to meet customer’s future needs
Feeling the pulse of the customer pertaining to the service provider
4.9 Practice Exercises
Which of these is NOT on of the four Ps associated with service strategy?
Patterns
Plans
Process
Positions
Value is defined from whose standpoint?
Customer
External service provider
Supplier
Internal service provider
Which of the following is NOT a component of the service portfolio?
Service pipeline
Service plan
Service catalog
Retired services
Why does the financial management process exist?
To secure funding for IT services
To develop finance processes for the service strategy phase
To develop a relationship with the customer for getting more business
To manage the service portfolio and the cost of all offered IT services
Which of the following is NOT an objective of BRM?
Understand the customer’s requirements
Measure and report on the individual SLAs
Manage conflicts
Ensure customer is satisfied with the offered services
4.10 Summary
In this chapter, I explained the four Ps of service strategy and the value creation principle. I also discussed the patterns of business activity, risk management, and governance. I discussed the first set of processes in the ITIL framework, the processes that are embedded in the service strategy phase. I covered the following processes: service portfolio management, financial management, and business relationship management.
In the next chapter, you will learn about the second phase of ITIL service lifecycle—service design—the concepts of designing a service and the processes that belong to this phase.